Episode 81 Homes Under the Hammer

It's easy to fall in love with a house, we've all done it.

But it's not such a good idea

if you're buying an investment property rather than a home.

So, let's see what turned our buyers' heads on today's programme.

From Manchester to Cardiff, Devon to Kent, you're never too far away

from the sound of an auctioneer's gavel.

Yes, thousands of places are sold at property auctions every year.

So let's find out what tantalised the buyers on today's show.

A busy main road nearby is just one of the problems with this detached house near Preston.

Look at this crack. Not good at all.

Will the new owner of this property in Southsea make the most of its student rental potential?

More rooms equal more rent, equals more money.

And near Durham, I take a look at a typical terrace, or is it?

Probably not too many surprises in store. Oh, I don't know!

All these properties have been sold at auction and we'll find out who bought them

and what they paid for them when they went under the hammer.

I'm in Bilsborrow, just north of Preston, three miles from the junction with the M6.

The property I'm here to see is right on the side of the A6 and, as you can see,

it's a very busy road, so that's not a good start. That's the house, though.

150,000 to 160,000 quid was the guide price, three bedroom detached.

It's known as the Rural Beat house because it used to be where the local bobby lived with his family

and carried out his duties in the community.

It's not the most attractive detached house I've ever seen,

but with a garage and ample off-street parking it's got some plus points.

That main road means you are well connected here,

so time for Roberts Of The Yard to inspect the site, I'd say!

It goes without saying that one of the first things to do

is make sure the house has got double or triple glazing to get rid of some of that road noise.

A nice entrance foyer here, somewhere to hang coats,

and an interesting sort of anteroom there.

Into the main part of the house and all the main rooms go off here.

Kitchen there - it looks a bit tired and dated,

so you'd want to spend money on that, but you'd definitely reap rewards.

Into this room, which is your lounge.

I quite like the design, it's been knocked through to give

a right big sort of space here, which we really like.

Open fires again, that's nice to see.

Big bay window, definitely again make sure that's got double glazing,

but it does let loads of light into the room.

And, all in all, yeah, I mean, it's fairly standard, but it seems a good sized house.

The decor maybe a bit dated, but the proportions here are good.

No quirky shape to contend with, but plenty of space and light.

What I like about this house is that it is as you hope it will be.

I mean, you could say it's a bit dull in some ways, the fact that things are exactly as they should be.

We've got three bedrooms, good sized doubles - there, there and there.

Obviously, they need redecorating. A bathroom there.

Everything is in the right place, but, hey, you shouldn't knock it.

There's a lot of modernisation to do here for sure, but with three good sized bedrooms...

..a large garden overlooking agricultural land at the back

and a garage and plenty of off-street parking at the front, I'm starting to forget all about that main road.

It was all going so well and then I see something which makes me think

maybe the house isn't as solid as I thought. Look at this crack.

Not good at all. In itself, that would be bad, but look above the window here and it continues there.

The simplest explanation for this could be

that we've got the double glazing, new, probably. Obviously not original from when the house was built,

so maybe that's been done badly, or maybe they messed around with the lintel.

It could be something much more serious, though. Either way,

check outside, see if there's any indication there and then get a structural surveyor in.

That crack could have a serious effect on the budget. Remember, this place had

a guide price of 150,000 to 160,000, but would sorting out this old police house

leave more than a few coppers left over?

I've invited a local estate agent along to assist me with my enquiries.

He sees the main road as a positive rather than a negative.

It's a busy road,

but I really don't think it would put anyone off at all.

We're about four miles from Preston, similar distance to Garstang

and so it is a good, popular location.

But could that location translate into a good investment?

This property does require extensive modernisation, but if you got it for close to

the £150,000 to £160,000 guide price then the rewards might be attractive.

Once renovated, I would expect this to achieve around about the £250,000 mark.

There's also plenty of room to extend here which could add another £50,000 to your asking price.

Bearing in mind its good location and the other towns nearby,

you should expect to get around £700 per calendar month in rental income.

So, a good sized house in a reasonable location.

The only two things I can see that would put people off

would be proximity of that road, and it is very busy and, of course,

that crack, which definitely needs further investigation.

Let's see who fancied it at the auction.

Lot number 105 is the Rural Beat House, Garstang Road.

A three bedroom detached house offered with vacant possession.

Someone give me 80? 80 here. Thank you, I'll take it. 90,000. 90 there. 100. I've got 90 here.

100, I'm looking for. And I have it. 110? 110. 120.

130, sir. 125, new bidder.

130 can I say? 130 I have. 135. 140. 145.

150, new bidder. 155, sir? 160, madam.

165. 170. 175.

180. 185? No, thinking about it.

Are we all finished at 180? 181. New bidder on my right. 182, madam.

183. 184.

185. 186. 187. 188. 189, sir? 190.

191. 192. 193. 194...

195.

196. 197? No? At £196,000, then.

Are we all finished at 196?

I'll take it half if it helps.

It does. 197 I need, madam.

197 and a half.

198. 199...

No, shaking his head. Are we all finished?

198,500 with you, madam. The first time and at 198,000...

The second time at £198,500.

Sold to you, madam.

At £198,500,

the property went for nearly £50,000 over the guide price.

The winning bidders were Sally and Jeff.

I met up with them back at the old rural beat house to find out what their plans were for it.

-Sally, Jeff, congratulations.

-Thank you.

-Thank you.

-Why did you want to buy this place?

-It was location for us.

It's only four miles from where we live now, on the busy A6 road and not far from the...

-Hang on a minute. It's good that it's on...

-Yes, absolutely, absolutely.

That's interesting. I didn't expect that.

There's a small amount of passing trade, always helpful.

-For what?

-Importing doors and windows from Europe and then we sell to the social housing market.

So the plan is what, then? You're not going to use it as a house?

No, it's for our business. We're bursting at the seams where we are now so we need to change offices.

I hadn't thought of this as a commercial premises,

but, now you mention it, I guess it makes perfect sense.

Tell me more about the business, Jeff?

We design sustainable construction products, in particular

-timber doors and windows, that we import from Estonia, Latvia, Lithuania and Poland.

-Right.

And a little bit from Liverpool, the fifth country there! And we...

-Well known for its forests!

-Absolutely, yes!

We design them here, so we need a design office with

a reasonable location for people to get to, but we don't need to have a manufacturing place.

So why not go for an existing commercial premises?

-Why buy a house and use that as a place to house your business?

-We couldn't find anywhere.

For a year we've been looking, and the last six to eight months

we've really upped the ante and this actually came up

a year or so ago, then it very quickly had a "sold" sign up so we ruled it out.

And there's just been nothing else that's been available.

Luckily for Jeff and Sally, the house eventually came up at auction so they jumped at the chance of getting it.

But changing its use won't be straightforward.

We've spoken to planning and highways and technically they see no issues with that.

Before you move on, "highways" - I would have thought being by the side of a busy road,

they'd want to make sure that parking was more than there is now.

No, they want the circle at the front, the little in and out, to stay the same,

and, apart from that, as long as we've got enough parking, and we've intimated five or six cars,

'and they've got room for that either side, they don't seem too bothered.'

'This building was already partly commercial - it was an old police station and police house,

'so when we spoke to highways, they were already in favour. We had to have their endorsement before'

we went to planning, which we did, and they're happy to change use from domestic to commercial.

It looks as though that's one major box ticked, the permission for change of use.

If they don't get it, it's back to the drawing board and they may have to redevelop this as a house.

But, all being well, how do they plan to go about converting it into offices?

Changing doors and windows because at the moment...

-No kidding!

-..they're PVC so they've got to go!

And we want to try and make it a little bit more contemporary without being too outlandish.

So, we want to change the bay at the front, new full length windows,

let in some more light, which we think will be a nice feature,

and definitely decorate, get rid of the lovely wallpaper(!),

the carpets, and generally, plumbing, electrics.

Get rid of the bathroom upstairs - that will be utilised as an office, so will just get blocked off.

Jeff and Sally will also need to make adjustments to the property to comply

with new legal requirements such as disabled access,

but before they do that, there is one major stumbling block which has to be sorted.

There's an issue with the water. There's no water on in the house!

-Really?

-No. And our solicitor was finding it very difficult

to get any information out regarding why the water's off

and how we can get it turned back on, but we're persevering and hopefully we'll get that sorted.

-You've got to get it sorted!

-We have to get it sorted, we need water!

They sure do, but it could be costly and might end up pushing Jeff and Sally's £30,000 to £40,000 budget

to the absolute limit.

So, how long until we see you in here?

-Three to four months, we're hoping.

-The pressure's on.

-To be realistic.

It's costing us money just sitting here, so the sooner we can move in the better,

but realistically, at least three to four months because of the planning.

It won't stop us getting on with the work inside, but if planning did say we can't go ahead,

that will just change our plans as how we would decorate it

and the kitchen and things would then have to be organised.

-Good luck with it all. I hope it turns out exactly as you hope.

-Thank you very much.

-Thank you.

Well, there you go.

It wouldn't necessarily have been my first thought of a use for this place, but now I'm thinking about it,

it makes a lot of sense and I'm sure that Jeff and Sally will do very well.

But I have to say, I am very concerned about this whole water issue.

That can add literally thousands of pounds to any development budget, obviously something to sort out.

How will they get on? You can find out later in the show.

This is Southsea in Hampshire,

a part of Portsmouth generally regarded as the sea side resort area.

There are grand Victorian townhouses, shops and cafes, which make it somewhere that attracts

both seasonal visitors and long-term residents.

One of the first recorded buildings here in Southsea was a fort built by Henry VIII in 1544.

Now, I'm not here to see anything quite so grand, or indeed quite so old, but this terrace property is

still worthy of our attention because it's a two-bedroom mid-terrace

and it's in a student catchment area near Portsmouth University, so it's got great potential

to become a student let, or has it? Let's have a look around.

The property had a guide price of £90,000.

The auction catalogue described it as requiring complete modernisation.

From the front, it's not in bad shape, but I'm guessing there's work to be done inside.

What a mess! Yes, I've got to say, this is an extremely dated property.

The front reception room there and a disaster area down here.

Now, you may not be able to see this, but there's a sort of faint water line along here,

and the joists and the floorboard underneath are feeling extremely spongy.

They're wobbling around.

I think there's probably rising damp here, it's come up from the bottom

up to the top and you can see this plaster is just coming off in my hands.

I would get an expert in to inject some silicon into that as soon as possible.

That could be quite an expensive job.

Reception room through here.

Now, as a developer, I quite like to open up spaces.

You've got some lovely light coming in here,

but I'm now thinking definite student let, so keep this wall up,

because the front lounge area will have to become a bedroom.

So, just remember, more rooms equal more rent equals more money.

Ching-ching!

Just how many rooms could you get in this place

and how much would you need to spend to get them?

So, this is the kitchen.

Loving that wallpaper(!)

All you've really got in here is a kitchen sink and, look, a downstairs bathroom.

You've got a stud partition wall here.

Now, my guess is that this toilet and bathroom is single skinned,

which just means one brick, there's no air gap so the damp can come straight through.

It's probably freezing cold in the winter. It's not really ideal.

I'm just wondering if you could get this toilet and bathroom upstairs.

There's definitely work to be done here.

For a student rental, I'd keep the makeover basic and functional, but hard wearing.

Obviously, things like the boiler will need to be checked and certified by a regular expert.

Off the kitchen is a small backyard, but there's not much room to extend

out here and I'm not sure if the expense would be worthwhile.

Upstairs, there are just too small double rooms, one at the front and one at the back.

On reflection, I really don't think it's worth

bringing that bathroom upstairs and reducing this bedroom size.

I think now I've had a good look around, I'd leave the layout as it is.

If you're developing for a student rental, I'd try to keep all the bedrooms a similar size.

It helps avoid arguments and makes the property easier to rent.

But what sort of income can you expect to get in this area

and just how far should you go with the renovation?

I asked a local estate agent for his opinion.

We're looking at a rewire, kitchen, bathroom, central heating. The bathroom is on the ground floor.

I don't think it's a major negative in this kind of scenario,

even though from looking at the bathroom, it does have a single-skinned structure to it.

With a student rental, there may be a bit more maintenance work,

but you'd be able to charge a significantly higher rent.

As a family home, you'd probably rent this out at around £700 per calendar month.

As a three bedroom student let you're probably looking between £850 to £900 per calendar month.

That could increase your rental income by about a third,

but what if you decided to renovate and sell it on?

How much value could you add to that £90,000 guide price?

Resale values for this property,

I would say once in A1 condition, would be around £140,000.

This is a pretty standard two-bed terrace.

It needs work. That damp has to be sorted out for a start,

but rent this out as a three bedroom property to students, and you've got a pretty good yield there.

Now, that excites me.

So, who spotted the potential here?

Let's find out at the auction.

Now we come to the next lot in your catalogue,

lot number five, Sutherland Road in Southsea, Hampshire.

Somebody wish to start at 75 for Sutherland Road?

75, I have got here in the centre.

And 76 bid, thank you. 77, I have.

78? Eight's bid. And nine?

80? 80,000. And one. Two.

Three. Four. Five. And six. 86,000.

The bidding's against you. Shaking the head.

It's with you, sir, at £85,000 directly in front. Looking for...

A new bidder on the left, at 86.

86,000. 87? 87. 88, thank you. 89?

Nine's bid. 90.

91? Shake of the head.

It's with you, sir, then at 90. Any of you two... OK, new bidder. You're close to each other. 91, 92.

Three. 93. 94 I have. 95.

I'll give you a half. 94 and a half? No? 94 and a half, new bidder.

94 and a half. And five, sir?

95. 95 and a half we have. And six?

96. And a half we have.

97. 97 and a half.

98. And a half, sir?

98,000 we have got. 98,000, I've got and I shall be selling.

98,000 I have then once.

98,000 twice.

98,000 for the third and final time.

Sold. It's your property, sir. 7022. Congratulations.

Not surprisingly, there was a great deal of interest in this one in the auction room,

but the man who made that winning bid of 98,000 was James.

Despite his apparent youth, he's no stranger to auctions or property developing.

I met up with him back at the Southsea terrace to find out more.

-James, congratulations.

-Thank you.

-Tell me why you bought this property.

-Well, I thought was a great location for students.

There wasn't that much work that needs to be done to it.

We can turn it over pretty quick and get rented out.

So, you've bought this property to let as a landlord to students?

-Yeah, yeah.

-So, what is your background?

Well, I was a student myself, graduated in 2004,

went back home to Torquay for a year.

My parents helped me out with buying a place that I renovated and sold, which all worked quite well,

then I moved back to Portsmouth and started buying student properties.

-How many properties have you got now, James?

-This will be the seventh.

-Seven properties! How old are you?

-25.

-So you're 25 years old, and you've really cracked on with this.

-Yeah.

Is this something you see yourself doing for the foreseeable future?

For the next ten years at least.

If I stop now, it would be a bit silly, now that I've sort of learned how to do it.

So, James has latched onto a market that he knows really well.

As he went to university in Portsmouth himself, he knows

this part of Southsea will be very attractive to students looking to rent.

He knows how much they'll pay and what they'll expect.

When I first came round, I thought you could probably get four students in here.

-Four students?

-Yeah, four.

-Now, how are you going to get four students in here?

-Two upstairs and two downstairs.

I tried it down the road with a house with the same layout as this -

by putting the bathroom upstairs and having two bedrooms upstairs and two downstairs,

and then having this area here as the kitchen/lounge,

it worked pretty well.

The kitchen's not the biggest in the world and the lounge isn't the biggest in the world...

-You can say that again!

-You can fit a couple of sofas in.

But it's going to be such a squeeze, isn't it?

Yeah, it is tight, but we can stick a plasma on the wall,

two small sofas and keep it all looking, you know, neat and modern.

Ah-ha! That ought to do it!

You see, it's all about knowing your market.

It's going to be a squeeze, that's for sure,

but by moving the bathroom upstairs and shifting the kitchen into the space left behind,

James is convinced he can make it a four-bed rental.

So, are you against the clock with this house?

You've got to get it ready for the new term.

-Yeah, it's going to be tight, but it's already rented now.

-Really?

-Yeah.

-You've got your tenants?

-Yeah, they signed the contract yesterday.

-No?!

-So...

-Like this?

Yeah - we've got a house round the corner that's exactly the same,

they looked round that. We do the same thing in each house anyway.

So, yes, you know, we've got a few months to fix it up.

-So how much are you going to spend on this?

-Around 15,000.

-You've got a lot of damp out there, as well.

-Yeah.

The damp's the main issue with this house. But once you get in,

hack all the render off, inject it and then re render it it's not...

it's not a massive, massive problem.

But the student lets, it is hassle because it is such a high turnover

of different tenants, but it's working for you, isn't it?

Well, with the student lets you you get a lot more than you would

with anyone else who'd rent the property, although wear and tear does increase.

But I've always got people that can come in and paint the walls anyway,

-so it's not drastic if you get marks on the walls or a cupboard breaks.

-You can't sniff at 13% yield.

-Yeah.

-No, it's not bad!

-James, good luck with this.

-Thank you.

-It'll be exciting to see what you do with this place.

-Thanks.

-Well done.

-Cheers.

James has bought in an area that he knows well and in a good location for his target market.

Basically, boy done good!

And only 25 years old! But the pressure's on.

He's only got a couple of months to get this place sorted before his new students move in.

Will he get it done in time and will his new tenants find it a bit of a squeeze?

You can find out later on in the show.

Still to come, a terrace property near Durham with a low guide price.

And what's better, unusually for this kind of property, it's got an upstairs loo.

Can James really squeeze four bedrooms into this Southsea student let?

We didn't want to have to compromise with smaller or larger units that we didn't want.

But, first, it's back to Preston and the Rural Beat House to tot up the old bill!

Earlier in the show, I met Jeff and Sally who just bought this three bedroom detached house

near Preston in Lancashire for £198,500. What did they plan to do with it?

Why, turn it into an office, of course!

Obvious when you come to think of it, especially given its location on the busy A6.

The couple were hoping to attract passing trade by transforming this old police house into

premises that would show off their sustainable wooden doors and windows,

so the UPVC definitely had to go, but would they get planning permission

for their bold plan and would they find that elusive water supply?

Well, six months on, and it's obvious there have been some big changes here.

With that new full height bay window at the front, you'd hardly think that

it was the same house, but it looks as though work is still going on.

Originally, Jeff and Sally had hoped to be in

within three to four months,

though it turns out that connecting the water

was the least of their problems.

I don't know where to start!

As always, I think everybody does more than you think,

so you start off with one plan and then before you realise it

the end product is slightly left of

what you thought you were going to do.

The roof detail at the front of the property is probably the biggest change.

That slowed us right up, as well as taking the roof back,

building in a new pitch ready for the new bay.

So, pleased with it, but that took a lot of time.

We wanted a really good showroom, so we stripped out all the fireplaces

that were in here to make this room much bigger.

That meant that we had to do some structural work

which meant that we had to get a structural engineer

and we found that there were some problems with the roof in the garage

which we wanted to convert to an office,

so we had to take the roof off and put a new roof on.

And whilst we were there the ceiling was quite low,

so we built it up higher, so we had to go back to building control for that.

So, all-in-all, Jeff and Sally

have had a lot of problems to contend with.

They encountered cracking in the concrete that they had laid

and problems with the exterior render.

Then a lead pipe had to be removed from under the freshly laid tarmac

and, to top it all, they had to remove 160 tonnes

of soil to level the land at the back.

But with all those dramas behind them now,

the couple can finally look forward to moving into their new offices.

OK, so this is going to be my office

and the reason why I love it is it's at the back,

no road noise, looking out on to the fields.

They have ponies out there, so it reminds me a bit of home,

and it's just lovely and quiet and peaceful

and I'm delighted with it.

When we first planned the project,

I'm not sure which office we were going to work in,

but I got the chance of this room and we put the special feature

on the front and so it's a really nice looking office.

We've put special lighting on so we can cope with computers

and we've put this special glazing in here for road traffic noise,

so it reduces the amount of noise on this very busy road.

Compared to the office that I've been working in on the farm,

which was small and dingy, this is my new paradise!

With the garage, third bedroom and bathroom

all now converted into offices,

the couple should have enough space, but only just.

At one stage, Jeff and Sally had considered

building a second storey over the old garage

to add extra space upstairs, but that would have meant

yet more expense and delays for planning.

With everyone crammed into makeshift offices in their home,

it seems that their employees are also itching to move in.

They're really excited about it.

I think they were pleased that we were

committing to taking the business forward

and the fact that we'd bought a building

that we'd actually move everybody into,

that's been a really good boost for them.

It gets a bit too squashed in our offices

and it's all just... It would be very,

really nice to get our privacy back

and while we've got a great team it...

It would be the end of an era and hopefully

the start of a good new one, so I'm delighted.

As a business that specialises in environmentally friendly products,

Jeff and Sally have taken care to make this old police house

as energy efficient as they possibly can.

They've added extra insulation and, of course, new doors and windows.

There are just a few bits and pieces to finish off here.

Carpets and tarmac will be laid and the inside and outside painted.

The couple also plan to put in a storage shed on a concrete base

that they've had put down, but they expect to be moving in very soon.

All these new facilities have come at a cost, though.

They estimate they've gone £10,000 to £15,000

over their original £40,000 budget.

That takes their total spend here up to around 255,000,

so have they been throwing their money down the drain?

We invited two local estate agents to brave the weather

and take a look at Jeff and Sally's new offices.

I think it's an excellent property.

I think the way they've transformed it into offices and showroom

from originally a very run down

police house is quite remarkable and it shows extremely well.

Absolutely fantastic. The changes are obviously very significant.

Everything looks of extremely good quality

and I think they've made an absolutely superb job.

As a commercial premises, I think the property has a lot going for it.

Obviously, in particular, the parking is extremely good.

That's essential in a commercial property.

The location is also extremely good,

it's very well placed between the market town of Garstang and Preston,

which is a city now, and also the motorway network is also very close by.

With work almost complete, Jeff and Sally

now have a well soundproofed property

in a great location, but it's cost them nearly

255,000 to get to this stage.

How much do the estate agents think it's now worth?

I would be looking to market the property at around about the £290,000 mark.

I believe I could sell this property as a commercial enterprise for £325,000.

I think they're great figures.

They're along probably what we thought.

-No huge surprise.

-No.

Those figures could give the couple £40,000 to £70,000 pre tax profit

if they decided to sell, but having come this far

the main priority is obviously to get the business

moved in and their own home back.

It'll be a great move for the business

and I think it'll be great for the team to have office premises.

They've been really tolerant and patient,

but this will be ten times better for them.

I'm in Stanley in County Durham which,

as everybody knows, is where the Pink Panther came from.

All together now... HUMS PINK PANTHER THEME

Strictly speaking though, of course, that's not true.

But there are some lovely old buildings and traditional terraces.

Let's hope that the property I'm here to see

left both the person who bought it tickled and in the pink.

OK, so, the Pink Panther wasn't actually from Durham,

but just like Inspector Clouseau I'm hunting for elusive treasure

and the property I'm here to see could well be it.

So here it is, this little two-bedroom mid-terrace gem.

£40,000 to £45,000 was the guide price, that's a great start.

And what's better,

unusually for this kind of property, it's got an upstairs loo.

Happy days!

So, no need to worry about expensive extensions

or plumbing costs to adjust the layout, but does this place

tick all the right boxes as far as investment potential is concerned?

So, probably not too many surprises in store.

Oh, I don't know, the first one is

it's actually in pretty good condition.

One big living room area here that you come straight into.

Disproportionately large fireplace,

but the room has a really nice open feel to it.

Good use of space here.

This is the area underneath the stairs,

again, it just really opens the room up.

Then through into the kitchen, a little rear porch area there.

The kitchen itself, well, it's a bit tired.

There's knobs missing, a few doors here and there need sorting out,

but overall very serviceable.

What are you going to use this property for?

If you're going to rent it, then you want to get away without

spending too much doing this up

cos any money you can save has to be good news.

So far so good, then.

The property has been looked after,

it's clean and just needs a coat of paint here and there,

so you could turn it around as an investment quite quickly.

So, upstairs, two bedrooms, great-sized one of at front there,

smaller one towards the back, and then that upstairs bathroom.

It's not just an average bathroom, a really nice bathroom.

You've got a corner bath, you've got this nice shower enclosure, here.

It just tops off what is a really good, solid little property.

There are a few things to sort out here and there,

but it's mostly straightforward DIY stuff.

The only negative that I can see is the lack of parking,

but even that could turn out to be a positive in the long run.

At the front you've got something quite interesting

and I imagine this was a road, once.

As it is now, it's an unadopted road and it has got grass all over it,

but what people have done is that they've claimed the area

directly outside their property as their own.

It's never completely theirs because there will always be a right of way along here,

but you could lineate off,

maybe put a fence around the area in front of your property,

with a gateway of course,

and after ten to 12 years you could then say you have

the right to own this bit of land.

Well, you know, it's a nice additional thing to have.

So, the property's a good one,

but what about that guide price of 40,000 to 45,000?

How does that compare to other local properties

and what scope would it give an investor?

A local estate agent should be able to provide the answers.

What does he think of the place?

It's a good property, situated in a decent area of Stanley.

The property is in reasonably good condition.

I believe it would represent a good opportunity for investment.

There will be a decent demand for local people to rent the property

and there's also the possibility of people renting from

outside the area with a view to commuting to Newcastle

and to Durham for work purposes.

I would expect the rental potential to be in the region

of £350 to £375 per calendar month.

If a buyer got it for around the £40,000 to £45,000 guide price

they could be looking at a potential yield

of around 10%, but what about resale?

Would it be possible to add value by putting in a new kitchen?

Once renovated I would expect it to achieve

somewhere in the region of £60,000 if put back on to the market for resale.

As far as my hunt for property treasure goes then,

you could say that I'm well and truly on the right track.

Well, if you can't see that this is a potentially fantastic little

investment property then I ain't taught you nuthin'!

Great one to go for, and for that guide price

of £40,000 to £45,000 you really can't go wrong.

Let's see who spotted it at the auction.

Lot number two is the terraced house,

22 Bell Street in Stanley, Durham.

Guide price £40,000 to £45,000.

Start me off in the room if you like, or on the phone.

30,000. Beg your pardon? 30,000. 25?

25 taken in the room. 25.

26. 27. 28. 29 if you want it, sir.

I got 28 here. 29? £29,000. What about the phone, coming in?

30,000 here. 31.

Coming in again, sir? I've got 31. £31,000. 32. 33 I've taken.

Any advance on 33?

You're all right at 34 if you want it. I've got 33 here.

You're back in at 34. At 34,000.

£35,000. Looking for 36.

I got 36. I've got 37 against you.

£38,000. 39. I've got £39,000.

Looking for 40.

£40,000. Any advance on 40?

What about you, Richard, going another one? You're not.

Yours at 40 then, Alan.

Anybody else coming in at £40,000?

Sold to Alan's telephone bid at £40,000.

That two-bed terrace sold for £40,000 to first time property developer

and local lad Mark, who was the phantom phone bidder!

At least that's what I thought

until I caught up with him back at the house.

-Good to meet you.

-Hi, there.

-Congratulations. Well done.

-You've got yourself a nice little house.

-Yes.

The auction then, you weren't there, you were on the phone.

I wasn't on the phone. I couldn't handle the pressure.

My brother-in-law did the bidding. I was sat next to him.

-Good grief.

-We'd set the figure, we'd sat waiting and we'd had a good...

We'd come and had a look at the house with the estate agent

and we knew next door had sold for about the 60 mark, so that was,

you know, that was the guide.

You know, I think we were prepared to bid up to 52, 53

and just absolutely blown away we got it for 40.

We were skipping round the front room, dancing and doing jigs!

I'm not surprised! Mark has done really well to pick this up

at the guide price and as he lives locally he knows all about the area.

My best friend used to go out with a girl that lived across the street.

-No way!

-His first girlfriend lived across the street

and I had a friend lived in that street,

and an aunt and uncle that lived in the street across.

That's 20 odd years ago, so I came back and once my

brother-in-law mentioned it I came up a few times in the evening.

It seemed quiet, it's a pleasant little spot and I'd live here.

That's my criteria, if I'd live somewhere then I'll have a go at buying it.

What do you do when you're not doing this?

I do a kind of health check, like a health MoT looking at your pH

and your electrolytes in your blood, see how healthy you are.

I got interested in health about seven or eight years ago

and started going on courses and reading

and a hobby changed to into my job.

I got sick of the rat race and more interested in my hobby and...

Well done, you, following your heart, that's brilliant.

But the finances and that sort of feet on the ground stuff.

I banked money ready cos I knew I was going to make this leap.

So, I never touched that money.

The business has done well enough, my wife works,

so I've never have to touch the savings

and the savings aren't doing well in the building society,

so that was another impetus to do something better with that money

for the future and pension funds and things like that.

A shrewd move, I'd say.

If Mark spends wisely on this project he could get a much better return

on his investment than he would by putting his money in the bank.

So, how much have you set aside to titivate?

We we're talking £20, £40 for a couple of doors.

I'm not sure how much the kitchen...

I mean, whether we spend and put a new kitchen in,

I mean, a new kitchen might cost us two or three grand.

Whether we just get some new cupboard doors for a few hundred,

I think the carpets just need cleaning.

There's 50, 60 quid.

£100 worth of paint.

-500 quid, all done.

-I don't know what the boiler's going to be like.

That could be biggie. It could be £1,000,

£800, £1,000 for a boiler.

Mark is planning to rent the property out.

He will need to get a certified expert in to assess

the boiler, but he and his wife are planning

to do as much as possible of the basic renovations.

He's set aside a one month timescale to turn it around

and meantime he'll start advertising for tenants.

£60, get on the internet and see how that goes,

and maybe give that two or three weeks and during that time

-we can get it decorated and the doors on and boiler serviced and.

-People in it.

-The job's a black pudding.

-Yahoo!

-Champo!

-Well, congratulations. Good luck with it.

-Thank you.

-And here's to many more.

-Come back when it's ready.

-Good to meet you.

-Next week!

Well, a great little property for Mark

to take on as his first investment project.

He can't go wrong. The only thing I'm concerned about

is whether or not he'll be tempted to redo that kitchen

and it is going to take a long time to repay that

in terms of the amount of extra rent he can get if he did it.

You can find out what he decides to do later in the show.

Well, you know what they say, time is money.

So, have our brave buyers run out of both or are they bang on schedule?

Let's go back and find out.

Southsea in Portsmouth

is an area that's become very popular with students

at the nearby university who are looking to rent.

That's something that 25-year-old property developer James

knows only too well having studied here himself.

So much so that since he left,

he's bought no fewer than seven properties to rent out here.

The latest is this house on Sutherland Road

that he picked up at auction for 98,000.

James planned to spend a further 15,000 turning this

rundown two-bedroom mid-terrace house with signs of damp

into a modern and comfortable four bedroom student let.

With just a few months before the beginning of a new term

to get it all done, did he manage that?

And how just tight a squeeze is it?

Well, it's been 12 weeks since I visited,

so what's James achieved in that time?

Well, we've had a total refurb.

We had to sort the damp out, replaster all the walls,

rewire the place, new central heating,

did a bit of work on the garden.

So, pretty much a major, major overhaul.

We were trying to get away without doing the whole roof,

but it sort of worked out that when we took the chimneys down

it was better to replace the roof than try and patch it up

because we would have had problems in the future.

James is hoping that this place will be rented out to students

on regular ten or 11 month contracts,

so the last thing he would have needed

would have been to replace the roof in between tenancies.

Putting decking in the garden is also a wise idea

when you have tenants as it's lower maintenance.

Back inside and both front and back reception rooms have been

converted into bedrooms,

but how did James squeeze a kitchen and bathroom into the remaining space?

We brought the bathroom upstairs, partly because we wanted

to make four bedrooms so we had to move the bathroom from downstairs

to get the lounge/diner.

We took out the chimney breast from the back and front room

just to make more space, really.

And there was a wardrobe in both rooms.

We knocked it through and made it into just the one room in the back,

partly because this room was smaller, so we decided that we'd

give them a larger wardrobe so all their storage area was in one place.

Well, that back bedroom is a bit tight,

but you can just about get a double bed in.

And with four students all wanting to use the one bathroom,

I hope everyone will make it to their lectures on time!

But the layout does work, as James knows from trying it in his other properties.

What about the kitchen and living areas?

The first thing we had to do was we had to build a second skin

because this was all single skin in this room.

The bathroom was where I'm standing now.

We decided to make it into a large kitchen/diner,

so this is their sort of living and kitchen area all in one.

We've done it in a house previously and it worked well.

We went for the down lights because they don't cost too much

and it makes the place look modern.

We were going to get a second-hand kitchen,

but there was a good deal on a DIY shop

that they had a kitchen going cheap so we decided to buy it new.

And also because the space was tight, we didn't want to have to compromise

with smaller units or larger units that we didn't want.

We want it to be just the right size.

With a new kitchen and a new roof, too,

has James managed to stick to his £15,000 budget?

We went about 3,500 over,

but I think our original budget of 15,000 was always a little bit unrealistic,

so, yeah, about 18,5000 it turned out to be.

As well as that 18,500,

James also had to shell out a further £3,440

to cover the seller's fees at auction

and, of course, the 98 grand purchase price.

That takes his total up to 120,000 for this property,

but what's it worth as a four-bed rental?

We invited two local estate agents along

to find out how this place compares

to similar student properties in the area.

They are tried and tested.

Personally I look at it and think,

"Wow, that's tight, but they work, basically."

They are successful in what they do.

He's done a good job for student lets.

I like the bedrooms are all double bedrooms,

communal lounge could be a bit bigger,

obviously with four students in one house,

but he's got the space and that's all he can do with it.

And the garden, you want to keep low maintenance for students.

So, James has ticked all the right boxes with this house, but what sort

of rent should he get from students and how

does that compare to a family let?

I think you're probably looking at rental value

in that particular instance about 650, 700 maximum.

Renting it to students is a completely different proposition.

Rental value is probably 300 per month per student,

could take it up to sort of, like, 1, 200.

As a whole house you would get £650 per calendar month

and for students you're looking at between

£270 and £300 per person per calendar month.

Yeah, certainly students, I think, well, we're getting 310 a room.

About 300 is probably about right on average.

On the strength of his other student rentals,

James had let this property even before work began.

That £310 per person, based on an 11 month rental,

means that he will make a yield of just over 11%

on his £120,000 investment.

What would it be worth if he decided to sell?

It would probably be sold with a tenant in situ,

so you'd look at the rental figures that were coming in

and work out a yield, that sort of thing.

I think you'd be probably be looking at about £170,000

in this particular marketplace.

This property we'd market at £140,000

with achieve to get about 135,000 to 140,000.

140,000 to 170,000

would give James somewhere between £20,000 and £50,000 pre tax profit.

That's quite a wide range in valuation

and he's playing it cautiously.

I think 140 is pretty much the limit for these sort of houses.

Even though it is bringing in a good revenue,

I don't think anyone's going to pay an extra 30,000 on the asking price

just for a rental income of 1,200.

But, maybe! You know, it's good to know,

but I think I'll be holding on to it

and renting it for a few years anyway.

Earlier in the show, I visited this two-bedroom terrace in Stanley near Durham.

Freelance health consultant, Mark, bought it for £40,000 at auction.

Well, I say that, but actually

Mark wasn't even brave enough to bid on the phone for it!

He got his brother-in-law to do it for him,

and at £40,000, I reckon they bagged a bargain.

But would he get carried away

and spend too much on the few improvements that were needed?

One month on and it's time to find out.

Well, downstairs in the living room he's had very little to do.

Two new doors at either end of the room mean that they now match

and a new coat of paint does freshen the place up a bit.

He was able to keep the existing carpet which was in pretty good shape.

It was the kitchen that worried me a little, though.

Would Mark go overboard with an expensive new one?

So, this is where most of the expenditure was.

Started off, I thought I'd just need to get a few doors

and paid way over the odds for the doors.

I started cleaning the kitchen,

the hob and realised there was a few broken buttons and damaged seals

so I started replacing that, and then it seemed like a good idea

if I was going to replace that, the worktop was tired.

Got a sink, didn't realise it was dented, but there you go,

you learn by your mistakes!

And the sort of prices started escalating from there,

and then getting it tiled and etc.

So, lost... Lost... Lost my way a little bit in the kitchen.

Mark admits that he spent a bit too much in here,

but at least he didn't go the whole hog and replace everything.

Although he reckons that for the price he paid for the new doors

he probably could have done!

And it might have been good, once he started,

to replace the cupboard doors under the sink, as well.

Originally, Mark planned to do as much as possible himself,

but he admits that when it comes to DIY

he's not the most practical person.

Luckily, though, people in the street came to his rescue.

One of the neighbour's son is a builder

and I started to get some prices of him and the prices were good

and started doing some work and the work,

you know, he's done's been really good,

and he knew a plumber and he knew an electrician

which allowed us to still have a few breaks away in the camper van,

just touching base with him when the job was getting done

and he's done a really good job and I'm very happy.

It wasn't just the fact that he was doing the work,

with his mother living so close and having the keys, you know,

I felt that the house wasn't just standing empty.

There was people that I knew now

that are keeping an eye on the house for me,

and it's very quiet here anyway,

but at least all that worry's been taken away,

so that's been an extra bonus and thank God the neighbours are really nice, as well.

Local boy Mark really seems to have fallen on his feet here.

Upstairs in the bedroom he, or rather Colin the builder,

has fitted a new door and redecorated.

And in the bathroom he's tied up a few loose ends.

So, the bathroom, pretty much as you saw it last time.

A little bit of plastic trim along the bottom

and patching above the shower.

Pretty much like the whole upstairs, not much to be done.

£100 in here all in.

So now the place is ready and Mark has put it on the rental market.

But with so much property available locally

he was slightly concerned about how quickly he could rent it out.

But, once again, folks in the street may come to the rescue

because the next door neighbour,

who was about to move into another rental property,

is having second thoughts.

She came in after we'd all finished and she was saying, "Wow," you know,

"Look at the transformation and, you know, this is going to be..."

It's less than what she's going to be paying,

she knows everyone in the street so she's thinking of moving in here.

With his purchase price of 40,000

and the few extra costs he's incurred,

Mark reckons he's ended up spending around £45,000 in total.

He hopes to rent this place out for about £350 per calendar month.

That would be around a 9% return on his investment,

but is it realistic?

To find out we invited a local estate agent back

to give this place the once over.

It has been quite a simple job for the owner.

I think he picked perhaps a bit of a bargain at the auction.

There wasn't a great deal required in the first place,

but he has just freshened it up with a bit of redecoration

and some improvements to the kitchen

and I think, in the current market, it's the right way to go.

It's quite a competitive rental market here in Stanley.

I think, realistically, we could look at letting the property

for £350 per calendar month.

I think there's a very good chance of finding a tenant

fairly quickly at that level.

Good news for Mark who seems to have got his target figure spot on.

I think there's a glut at the moment.

I think that's maybe where my brother-in-law was wrong.

I think he said maybe the 400,

but, I think, when I look at what's for rent in this area

there's an awful lot seems to have appeared in the last month or two.

Sensibly, Mark is looking at this as a long term investment,

but as he bought it for just £40,000 and spent only £5,000 more on it,

there could be profit to be made from selling it.

The current value would be in the region of 55,000 to 60,000.

My advice would be, if he were to sell the property,

to market it at 59,950.

If he decided to sell,

Mark could make a £10,000 to £15,000 pre tax profit.

Not bad, and definitely something he's keen to repeat.

It might even be enough to entice Mark himself into the auction room,

but would he ever be brave enough to bid?

Ummm... I'd think about it.

THEY LAUGH

I might use my brother-in-law's professional services again!

Well, we hope you've enjoyed today's trio of properties.

We'll see you again soon for more Homes Under The Hammer.

-Goodbye.

-Goodbye.

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