Episode 17 Homes Under the Hammer

In difficult market conditions,

it's harder to make short-term profit out of property.

But if you buy at the right price and in the right location, it is still possible to make some money.

But you really must do your homework, so let us be your guide on Homes Under The Hammer.

No matter how experienced you are, you can still come a cropper buying property at auction.

Make sure you do your research and can afford to make a few mistakes.

So were today's buyers well-prepared or did the auction properties spring a few surprises?

'Will this house in Stoke-on-Trent tick all the boxes?'

Tick!

VG.

'There's a flat in Morden that needs somebody who can climb these stairs and cross the road.'

Whoever buys this place is going to be a risk-taker.

'And this place in Kent was up for sale, but there was a catch.'

You can't buy this one, but you can buy this one.

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

-'when they went under the hammer.'

-Your lot, sir.

This is Bentilee in Stoke.

Primarily, it's a large housing estate. Very large, in fact.

4,500 properties approximately and all very similar to the one I'm here to see.

This is it, two-bedroom, semi-detached at a guide price of 49,000 quid. Let's look inside.

You do get a worrying sense of deja vu around every corner

with 4,500 identikit houses.

# If everybody looked the same... #

But the properties themselves are solid-looking and the area has had much-needed investment.

That makes the guide price of £49,000 even more appealing.

OK, not an ideal entrance layout -

through the front door and straight into a big wall, but you've got stairs up to the bedrooms,

then through into the front living room, not in bad condition.

It needs a bit of modernisation in terms of the paintwork and fireplace,

but it doesn't smell damp, it looks reasonably well looked after.

Double glazing, which is always a bonus. Yeah, not bad.

It's not bad at all.

Just off the living room, you'll find a utility area

with plenty of storage and space for a washing machine.

Through into the kitchen and a lovely surprise.

A nice-sized space, recently refurbished, so you've got pleasant work surfaces,

modern units, white and clean.

And as with many houses of this age, very practical things like the pantry there,

so all in all, we are loving this property.

In fact, I'd go so far as to say... Tick! VG.

# Very good, very good, very good Very, very, very, very good... #

Very good indeed. In fact, this doesn't feel like an auction property at all.

The garden is beautifully tended and there's the fruit of the person who really took care of their home.

Top marks all round! I wonder if a trip upstairs will prove as fruitful?

So, upstairs, an eminently sensible layout.

You've got a bathroom and a separate loo. I like that.

Rear bedroom there and through to the front of the property where you have a ginormous front bedroom.

Other properties on this estate have converted this into two rooms.

That is a very sensible idea. You've got two windows.

All you need to do is put a stud partition wall in here

and then, going back out here, there is this thing here, which is the hot water tank in there.

Get rid of this, bring the entrance door into the bedroom there, put a combination boiler in its place

and you've got a very simple solution - three bedrooms,

which, I've found out from a local estate agent, would add £50 a month to the rent or 600 quid a year.

It won't cost you more than 600 quid to do that, so it's repaid for in one year. That is a good investment.

Phew, and breathe, but seriously, I can relax now that I've found an easy way

to add value to this place because that's what developing is all about.

Put that third bedroom in and you've made it worth more and broadened your market,

but being a developer also means doing your research

and you never know what secrets you might unearth

with a bit of digging!

OK, time for your Open University home study course in Property Renovation,

Module 4 - Red Ash.

This is particularly important if you're thinking of buying a property built in the 1940s or 1950s

in industrial areas like Stoke-on-Trent

because red ash was the remains when they burnt coal

in power stations, factories and coal mines.

It was used as an infill underneath concrete in times when building materials were quite scarce.

Fine in theory, apart from the fact that red ash, when it gets wet,

has a chemical reaction which causes the concrete to bubble.

That can be very expensive to replace - £8,000 to £10,000 for a house like this,

so you've got to check the floor.

That looks like new concrete and it's been replaced, so that is great news.

It's saved you all that money, so it's a big tick in the box for this house. Here endeth the lesson.

So, with room to increase the value and improve,

and with no nasty mining deposits lurking,

it's a promising house in my opinion

and well worth taking on.

I asked a local estate agent for his thoughts.

In this particular area, you can get a lot for your money

because the prices of semi-detached properties are similar

to the prices of small terraced properties in other areas.

This property is in reasonable condition already.

There isn't a great deal that needs to be done before somebody could move in or let the property.

I think the best way to increase the value of the property

would be to split the largest bedroom into two.

And more bedrooms means more money.

I would estimate the property today to be worth in the region of £65,000.

After gas central heating is installed in the property, also the additional third bedroom,

we would be closer to £70,000.

How much could it rent for if it had three bedrooms?

I would estimate the rental income to be in the region of £450 per month.

So, all in all, a good, little house and it's great that a lot of the structural work's been done for you.

You won't make tens of thousands of quid in terms of re-sale value,

but, especially if you convert that upstairs bedroom into two, this could be a great rental property.

Let's see who agreed when it went under the hammer.

Start me at 35. Let's get it going. 35 I'm bid.

Thank you. At £35,000. 40 can I say now?

40 I'm bid. Thank you. At £40,000. 45, is it?

At £40,000. I'll take 1 if it helps? At 40...

41. 42.

43. 44.

New bidder, £45,000.

46, is it? 46. 47.

48. 49. 50, is it?

At 49,000. Seated left at £49,000.

Are we all done at...?

New bidder, £50,000. 51.

52, sir? 52. 53.

At 53,000. Another one, is it?

54. 55.

Another one, sir?

At 55,000. Shaking his head. At 55, the bid's there.

At £55,000 then. Are we all done?

At 55 then for the first time.

At 55 for the second time.

Third and final time... He's back in, 56.

57, sir?

56 and a half.

57, sir...? No?

56 and a half, still with you in the third row. At £56,500 then first time...

At 56-5 second time.

Third and final time at 56-5...

BANGS GAVEL It's your lot, sir. Well done.

'That successful bid of £56,500 came from Mark.

'He came to meet me along with his girlfriend Dot

'who's now officially in charge of decor and tea-making.'

# I've a smile on my face... #

'This is Mark's first development and it's a good one to cut his teeth on.'

-Mark, very good to meet you.

-And you.

Congratulations. Nice little house. Why did you want to buy it?

It's my first venture into it, so I thought I'd buy something that was quite straightforward to do.

-What do you do at the moment?

-I've had 12 months off from work.

I've been in double glazing all my life and I fancied a change,

so I've been buying and trying to sell number plates. I haven't been very successful.

-Number plates?

-Private plates, car plates.

-What's the most expensive number plate you managed to sell?

-None yet.

-Right, a really bad business!

-Really bad business, yes! Terrible.

So I've gone into this to see if I can make a few pounds.

Let's hope property developing is more of a licence to print money.

"JAMES BOND" THEME MUSIC

'If he's going to have a licence to make a killing in this business,

'then Mark needs to drive this development harder or soon he'll hit the skids.

'It seems this year has been more of a licence to chill,

'but now it's time he started to make some money.'

So what are you going to do to it?

Right, in the lounge first of all, I'm going to re-decorate, take the carpets up,

maybe do something with the fireplace.

The kitchen's fine, the bathroom's fine.

-It's two bedrooms, so I'm going to convert that into three bedrooms.

-The big bedroom at the front?

-Yeah.

Take the boiler out upstairs, put full central heating in, tidy the outside up.

-Also have some new interior doors.

-What budget have you got for doing the work?

-Round about five.

-OK.

'Assuming Mark means 5,000 and not a fiver, then that should cover it

'as there's not a huge amount to be done here.

'He has the advantage of an NVQ in painting and decorating, which he got five years ago

'and will finally be putting to good use. He hopes to do it all in six weeks.'

-A year ago, you went into business buying number plates and trying to re-sell them.

-Yes.

-It didn't go very well.

-No, I've still got them all.

-Sold none.

-Not one.

-And how many did you buy?

Approximately 24. Yes.

What did you learn from that?

I rushed into that. I just went and bought them. This one, I have done my homework.

I know the roof's sound. I know the floors and the damp-proof's been done.

It's a very sound house and there's no mineshafts around the area.

-You won't end up with 24 properties in a few years' time that you haven't sold?

-Hopefully not!

Well, let's hope that this venture is more successful for Mark than his last.

It will be difficult for him to make too many mistakes here, but you never know.

Find out how he gets on later.

I'm in Morden today which is another of those places outside London which is said to be between addresses.

It's postcode is Surrey, yet it's considered to be part of Greater London.

Either way, you're within 20 minutes of the M25 and ten miles away from central London.

Sounds like a great place to commute, but it's far enough out to hopefully bag a property bargain.

# Set my sights on London town... #

It's also on the Northern Line of the London Underground with Morden Station only a short walk away.

The property I'm here to see today is purpose-built.

It's a 1930s first-floor flat on this shopping parade in Morden.

It looks pretty small from the outside. It had a guide price of £40,000-plus.

That sounds on the low side for London, doesn't it? There must be more to this story.

But to find out, I'll have to get round the back of these terraces to the flat's entrance.

Before I even enter the flat, there are some issues that worry me.

To get to the back of the building, you have to go down a dark alley,

then the entrance is up a metal staircase which is also a fire escape.

This access will not appeal to everyone.

# I come closer to reaching the top

# Every step must be placed so that I don't fall off... #

Well, I have to admit it's quite an effort getting into the flat.

But once inside, it's in quite good condition.

A shower room here with nice tiles on the walls. Interesting floor covering. I'll come back to that.

And a fairly decent-sized kitchen. I wouldn't exactly call it fitted.

I'd probably change a few bits and pieces around here -

install a new cooker and maybe a new sink, but it's a really good size.

All I can say is, the floor here, same as the bathroom, a little bit racy perhaps?

Let's hope this flat is on the road to success! I'm going to have a look around.

"FORMULA ONE" THEME MUSIC

But you're on the road to nowhere if you're after a bath.

There's only a shower room, although there are three bedrooms.

So it's all looking rosy, but there is a very big problem with this flat.

Apparently, there's only 21 years left on the lease of this property,

which makes it pretty much un-mortgageable and therefore only suitable for a cash buyer.

Not so unusual for auction properties, but to work out how much it will cost to extend the lease

is dependent on a conversation between the new owner and the owner of the freehold.

Plus, that discussion can only take place after the property has been in possession for two years.

It's not impossible, but it's going to cost, so whoever buys this place is going to be a risk-taker.

On the face of it, this flat seems in presentable condition with only cosmetic work needed.

You could be laughing all the way to the bank.

To find out more, let's hear what an estate agent thinks of the place.

It's got a very, very good location

right in the centre of town.

I don't think I've ever seen one quite as close to everything,

but there will be a certain negativity from some buyers

in relation to the access.

It is a very good size and for a property that's gone into auction, the condition is pretty good.

It's a good rental prospect because of its location, but what sort of income could it achieve?

Once it's renovated and depending on the quality of the work that they do,

I would expect it would go something around 8 to 850 a calendar month.

With a guide price of £40,000, what about re-sale, bearing in mind that short lease?

If the lease wasn't addressed, but it was just renovated, the property would sell for around £85,000.

If the lease was renewed and the renovation was completed,

you could have a value of around £105,000 to £110,000.

Well, for a small property, it's not without its issues.

The access to the flat - it's not ideal, that metal staircase,

and the lease situation will be a bit of a tricky one.

On the plus side, it won't need too much work inside to get it up to a good rental property standard

with public transport for central London right on your doorstep.

Let's see who saw the potential of this property at the auction.

Lot 46 is...

It's a four-room, purpose-built flat.

Do I have 30,000 anywhere? 30 at the back.

35. 40.

45. 50.

55. 60.

65. 66.

67?

-66,500.

-66,500, why not?

67.

67 and a half? Yeah?

67 and a half. 68. 68 and a half.

69.

69 and a half. 70?

How could you value it at 500? 70,000, one more crack, yeah?

70, yeah? 70.

70,000 first time,

second time, third and last time. Are you all done?

Sold, 70, well bought. You just got there. It paid off.

'So, for £70,000, 30,000 over the guide price,

'father and son Bob and Chris have bought this as a project to work on together.'

# Come on, come on, let's work together... #

'I went to meet them to find out why they chose this flat and paid 30 grand above the guide price.'

Guys, congratulations.

-Now, Bob, you were at the auction.

-Yeah.

-Chris, you weren't at the auction.

-No.

Who saw the flat and got the ball rolling?

I saw the flat initially and said to my dad

that it seemed a good property to purchase.

And he took my word for it.

-He talked you into buying this flat or bidding for it?

-He did.

We'd agreed a price beforehand that was our maximum.

It sailed merrily past that and I just kept sticking my hand up, nodding my head, whatever I did.

-What was your top limit on this flat?

-60,000.

So you went ten grand over the price you agreed?

-Yeah.

-Why was that?

-I was determined to buy it.

-Just because you wanted to buy something?

-Yeah.

We're just starting this. It's a new career for us. I'm retiring in April.

This is going to be our career going forward,

so I've sort of promised my son that this is what we'd do.

I just thought if I go home with nothing, he'll think it's just pie-in-the-sky talk,

but if I go home with something...

I'm just glad the other person stopped when they did. I would have just carried on.

'Although Bob paid over the odds, it might not be a problem

'if they can make a good return on renting it out.

'What could be a problem is that issue with the lease.'

Something that worries me is you have a fairly low lease here - 20 to 21 years on this property?

It's just coming down to 20 years, yeah. Trying to do the maths, I think it works out OK.

If what we've been told we can rent it for, if we can get that,

even if we depreciated the property fully over the 20 years, we'd still get a decent return on our money,

especially compared to what you're getting in the high street just now, so I'm quite happy with that.

We're not really looking to sell this. It was what I would call an apprentice piece.

It's our first property and we're using this to learn what we can.

'They seem to be fitting into their new roles as property developers.

'Bob currently works as a pensions manager.

'As the money man on this project, he'll leave the manual work to his son who's in the building trade.'

How good are you at building? Have you had any experience in doing this before? Why are you laughing?

I've had a few moments.

I specialise in roofing.

But in the internal side, no, I haven't. I've only got my own property to go by.

As my dad's laughing, it's not the best. There's jobs started, but not finished.

Forgive me for being silly, so why have you decided to team up then, you two?

It's like that cottage on the front of the box of chocolates that looks so nice.

To sort of go into your old age as father and son in business,

it's just got a romantic edge to it.

But we play... On the Saturday, we play football. Chris is the captain and I'm the manager.

And we row like cat and dog there, so there'll be no difference.

It will be nice just to see him do some work.

'Although it's only cosmetic, there's quite a bit to do before this place starts earning money.'

What sort of budget are you looking to spend here?

Bearing in mind that I've already gone £10,000 above our budget, we're looking to claw some back.

Our total outlay, we really don't want to go above 75,000,

so that would leave us just over 4,000 to spend on the refurb.

-How long will it take you to get this place up to scratch?

-About six to eight weeks.

'Sounds reasonable, so why does Chris look so uncomfortable?'

I'm slightly worried because before you asked the question, we were talking about four to six weeks.

All of a sudden, he's told you six to eight, so we seem to have an extension already.

Do you think you'll have fun working together?

-Hopefully, hopefully.

-Yeah, I think it'll be fun.

-We'll give it a go.

-There'll be ups and downs.

-We're used to that.

-Yeah, we're used to that.

Bob, in his own words, has taken this on as an apprentice project.

He's admitted paying too much at the auction for this flat,

which means poor Chris has less to spend on the renovations.

Will they extend the lease and whose timescale is more realistic?

Find out what they do later in the programme.

'Coming up, this place in Kent impressed me from the outside, but inside...'

The kitchen, frankly, is rubbish.

'Bob, the cashpoint king, learns the downside of property development.'

Put in the number, get out cash, hand it to Chris. That's my role.

'But first, it doesn't just rain, it pours at this house in Stoke.'

When the walls have come down, a lot of the plaster's dropped off.

'This is Bentilee in Stoke,

'a 1950s housing estate with 4,500 properties,

'making it one of the largest in Europe.

'This property was bought at auction for £56,500 by Mark

'and his girlfriend Dot who planned to do it up.'

'Mark has an NVQ in painting and decorating and used to work for a double glazing firm,

'but he took a year out and started a business trying to sell car number plates.'

-What was the most expensive number plate you managed to sell?

-None yet.

-A really bad business.

-Really bad business, yes.

'Those figures don't add up particularly well. Let's hope he has better luck with this house.

'It didn't need much work, just a bit of tidying, and it looks like he's done a really good job.

'One major job was the central heating system and judging by those radiators, that's been done.

'It appears the property development is going OK, but what about the number plate business?'

I've sold three now, which still isn't a great amount, but it's better than nothing.

'So things are looking up. Talking of which, let's go to the second floor.'

'The small bedroom is much the same.

'It's been re-decorated in neutral colours like most of the house.

'The second bedroom, well, that's now two bedrooms.

'Hang on. Has he been dabbling with numbers again?'

Originally, this was one big bedroom, approximately 17 foot by 9 foot.

We decided to convert it into two bedrooms.

What was here on the left was a hot-water tank and a header tank,

so we've removed those and made a hallway into the third bedroom.

We've put a partition studded wall in here, so you've got a bedroom this side and a bedroom that side.

The reason we've done that is if we do decide to sell it,

it's added perhaps £4,000 to £5,000 on the value of selling it,

if it's rented, approximately £50 to £60 a week on the rental value,

so, all in all, we thought it was a very good idea to do it.

'Turning this two-bedroom into a three-bedroom house not only means he can get more for it,

'it will also appeal to a wider market, including families.

'There wasn't a lot to do here.

'The bathroom only needed a coat of paint, which certainly improves it.'

'Downstairs, the kitchen had already been replaced before Mark bought it,

'so all he did was give it a coat of paint and install a boiler for the new central heating system.

'Were there any hiccups?'

When the walls have come down, a lot of the plaster's dropped off,

so a lot of it's needed re-plastering upstairs.

It's had a partial re-wire as well,

which you can't see.

Some floorboards - when the central heating was done - were damaged, so a lot of them had to be replaced.

I've been in the building trade most of my life and in double glazing, so I've found it quite easy

because I'm a decorator by trade and I'm fairly well organised.

It's gone like a dream, not many problems at all. I've been very lucky.

'You can't blame him for lighting that fire. It's a bit parky outside!

'Meanwhile, all the guttering has been replaced, which is pretty vital in this weather especially.

'The garden has also been tidied up.'

'Mark's girlfriend Dot planned to help Mark out with the decorating and refreshments,

'so how did that go?'

Dot's a full-time carer, caring for the elderly.

But she's been here on her days and evenings off, helping me strip the paper, do the painting,

making cups of tea for the tradesmen and myself, and tidying the garden.

'All jobs, including refreshments, were done in eight weeks.

'There wasn't even time to take a holiday.'

I've been here every day including Christmas Day, Boxing Day,

New Year's Eve and New Year's Day, so I've been here most of the time.

'I wonder if Father Christmas found him and gave him any presents!'

'Mark originally bought the property for £56,500 - £7,500 above the guide price.'

'He did no major work, so did he keep to his budget?'

My budget was £5,000 with £500 contingency.

The budget's just actually gone to about £20 over. It's gone to £5,520.

The reason it's gone over is I had to have a new fireplace in

and the building work cost slightly extra, but we did save on carpets.

'Phew! £20 over. He's certainly getting better with those numbers.

'We asked a local estate agent whether it was worth Mark going that £20 over budget.'

The buyers have done everything that's needed. It's clean, fresh.

The kitchen and bathroom are fine. Central heating has improved it.

And it's done to a decent standard.

Splitting one bedroom into two has been a success. We now have three usable bedrooms,

which adds to the appeal of the property. They haven't gone over the top with expensive fittings,

but it fulfils the role as a possible rental or resale property.

'Mark spent around £62,000 in total on this property.'

'The house is looking great, but is he planning to sell it or rent it out?

'Let's check the figures.'

I would put this on the open market in the region of £75,000.

-That's good.

-To be honest, that's what we thought it would be valued at, around that.

'That's a potential profit of around about £13,000,

'minus tax and expenses, of course.

'But how much could they expect if they rented it out?'

I would expect the property to achieve £425 per calendar month.

-That's OK as well.

-That's fine.

'£425 a month would see a healthy yield of over 8%.

'So, decision time - rent or sell?'

-We think, at this stage, which we planned from day one, is renting it.

-Yeah.

So that's the line we're going to go down, yeah. Renting it.

'Renting does sound like a great option here.

'Since filming, Mark has lined up tenants who will pay £425 a month -

'exactly what was estimated.

'But before we leave this happy tale, a little birdie tells me that renovating the house

'wasn't the only thing Mark did on Christmas Day.'

-It was a special day. We got engaged.

-Yeah, we did.

-We got engaged.

-Yeah, we did.

-So that was a really special day for us.

'Aww! One plus one equals two. At last he gets his numbers right.'

'If the buyer of our next property was after bags of potential,

'I reckon they were bang on track with this one.'

Well, just half an hour outside London and yet with a Kent address,

Bexleyheath is a thriving town. Close to the M25, the A2.

It's also well known as a very safe place to live so, not surprisingly, it's very popular.

The property I'm here to see sounds like a perfect investment opportunity. It's an end of terrace

divided into two flats. It had a guide price of 95,000 quid.

And from the outside it looks rather lovely.

Maybe these bay windows have got something to reveal inside.

'Ta-da! OK, so no great surprises,

'but for around £95,000 in a sought-after area, it doesn't look too bad.

'It even has the ever-desirable period features, thought they could do with some love and attention.'

Well, it looks pretty clean and tidy to start off with. That's good news.

Very simple layout. A long, straight corridor and the bedrooms basically off it.

Front bedroom, nice bay window. Open fire, that's good to see.

Again, good size is that. Second bedroom towards the rear. Another fireplace.

Understairs cupboard. That's useful. Storage space is at a premium.

Back into this rear living room area. Icky tiles on the ceiling.

Polystyrene tiles are a fire hazard and have got to come off.

But it seems like the problems are at the back.

Cos the kitchen, frankly, is rubbish.

It needs total reworking. New units required.

And it's a tiny space. Not a lot of room.

And it gets worse because this is the only bathroom and loo in the property.

It's actually a shower room. It's off the kitchen, it's not ideal.

This whole area is far too small for the flat.

'That's not the only problem. There's no central heating,

'the whole place needs rewired and the plumbing looks more than a little archaic.'

'On top of that, I've uncovered evidence of dry rot. Nasty!

'This will cost time and money to sort. Onwards and upwards.'

That's the ground floor flat. Let's take a look at upstairs.

Well, unfortunately, we can't because it's already occupied and not just by a tenant.

It's owned by somebody else. The lot that was up for auction was the ground floor flat

and the freehold of the whole building. That is owned on a leasehold by somebody else.

The good news is they have to pay you ground rent. However... it's only 50 quid a year.

'So the new owner won't be able to retire any time soon on that, but speaking of grounds...'

Well, a real surprise.

The flat comes with a really huge amount of land.

It stretches all the way down the side of the building, back here.

Now maybe this gives us the solution to the problems with the kitchen and bathroom.

You could build some extension. It would have to be single storey.

Or it's a fantastic parking space.

When it's residents only parking, that's a real bonus.

'For a guide price of £95,000 this may not have been a bad investment,

'as long as there's enough money in the kitty for those renovations.'

'Will a local estate agent agree?

'I invited one along to get a second opinion.'

The property has a lot of potential. Obviously, it does need a fair amount of money spent on it,

but I think once completed

it will be an attractive option for young professionals, families,

and retired couples.

'Sounds good, so hopefully a healthy return here.'

This property, on completion of its improvements, will be very competitive and attractive for rent.

It will rent for in the region of £825-£850 per calendar month.

'And if resale was on the cards?'

The property would sell for in the region of £135,000-£145,000.

So there you go. An interesting one.

You can't buy this one, but you can buy this one.

It's a good flat, it needs some work doing to it and bear in mind that £95,000 guide price

and the fact it's a lovely area. It's a great investment opportunity.

Let's see it go under the hammer.

Where are you going to start me on that one? We've got 95 plus. It's got to be worth more.

Start me where you will. Can I see 95,000? 80? £80,000 bid.

80,000 I've got. 85,000 do I say?

At 85. And at 90.

And 5. 95.

With you at 95. Seven I'll take, if it will help. 97 at the back.

Fill it up to 100? 100,000? 98.

98. 99?

99,000 is against you. 99 I have. Bid 100. 100,000 if you like.

101, I'm obliged.

I've got 102 at the back. 103 now. 104?

104. A fresh face in the door. 105 sitting down, if you like.

110. And 11. And 12?

112? One more.

112?

At 111. You've stuck with it, sir. £111,000 I've got.

12 anywhere else? If not, at £111,000 I will sell for the first time.

£111,000 for the second...

112. A fresh face. 13.

And 14. And 15.

And 16? At 15, you're still with it. 116 anywhere else?

At £115,000 for the first time. A hundred... 16.

And 17. And 18?

At 18? At 18? 117 I'm bid.

117, then, bid for the first time. 117 for the second time.

Third and final time at £117,000.

You've got it, sir. You were tenacious and it's yours.

'So for £117,000 the new owner of this property is Lawrence.

'He and his wife already own two other investment properties which they rent out

'and they're keen to expand their portfolio. In fact, Lawrence is so serious about this,

'he's given up his job at the council for property developing,

'but was it really a shrewd move to pay £22,000 over the guide price?'

-Tell me why you wanted to buy it.

-Well, it's five minutes up the road from me for a start.

And it's... I nearly bought one along the road here,

which went for £128,000,

so getting this for 117 I felt was quite a bargain, really.

'And not only that. Don't forget the bonus of the freehold of the entire building.'

I've always had a slight concern about buying leasehold property,

where you're never quite sure about maintenance charges

and insurance and things like that.

So having a freehold does make it a lot easier.

It's a lot more plain sailing as far as I'm concerned.

-What are you going to do, if anything?

-Create a bathroom.

The little bathroom that's out there at the moment is hopeless.

Some people might put up with that,

but the sort of people I'm looking for wouldn't. They'd want better.

So my plan is to take a section from the bigger of the two bedrooms

-and turn that into a bathroom.

-Oh, really?

Then keep the kitchen as it is.

I might even, because that bathroom is such an awkward space, I might just leave it as it is.

-Do it up and leave it as a second toilet and shower, which would be a bonus.

-Right.

-How much are you going to spend?

-If I can spend £15,000 on the renovation,

that'll leave me with a good profit.

'Lawrence is no novice at renovations. He used to own a DIY and building merchants.

'More recently, he worked for the council doing nightshifts,

'which he has just given up.'

# Give it up Baby, give it up... #

'Lawrence plans to project manage this full-time and do much of the work himself.'

-What will that enable you to do, giving up your job?

-I can finish this quicker.

I'm not very quick at doing this and I intend to do most of it myself.

Whereas it would have taken me 4 or 5 months, I hope to do it in 3.

And that means I can buy something else before the end of the year. So I'll get two in this year.

-Then hopefully, three the year after that.

-Right.

It's quite good, quite exciting.

'Lawrence isn't going to waste any time cracking on.'

# Let's get it started Let's get it started in here

# Let's get it started... #

-This afternoon, really.

-Really?

-I shall start ripping things out.

-That's the fun bit.

-It is.

And the tiles on the ceiling...

-Lovely touch(!) Should I get rid of those?

-I think you should.

# Let's get it started

# Let's get it started in here Let's get it started... #

All credit to Lawrence. It's never easy to give up a job,

no matter how excited you are about a new direction in life, but he's picked a great project.

I am a bit concerned about that kitchen and bathroom. I don't know what he'll do. Find out later.

Whatever the economic climate, our buyers had budgets to stick to and work to do.

-So did they breeze through the renovations or have to weather a storm or two?

-Let's find out.

'This is Morden in Surrey, approximately 10 miles from central London.

'Close to the Tube station, this four-room flat, above a commercial unit, sold for £70,000.

'The entrance is round the back and there's only a 20-year lease.

'That didn't put Bob and Chris off and this father and son team

'are used to doing things together.'

On Saturday we play football. Chris is captain, I'm the manager. We row like cat and dog there.

There'll be no difference.

'Overall, the flat was in good condition and just needed some decoration.

'The team have painted it in crowd-pleasing neutral colours

'and there's that floor - more of a road to nowhere than the cup final!

'So do they think they worked well together?'

-We do make a good team, I think.

-I think we do.

Yeah... It's knowing... It's knowing what your strengths are.

I have no strengths in the building line at all.

My background is financial.

That's what I bring to the party.

-And Chris brings building expertise.

-More hands on.

-Yeah.

# I'll tell you what we're gonna do We'll have a party for two... #

'As with their roles on the football pitch, the lines are well drawn.

'Bob is not the builder in this case, but the manager,

'and his son, Chris, IS the builder. Have they scored a winner here? Let's go to the kitchen,

'like all good partygoers, and find out.'

In the kitchen, we've replaced the worktops, put all new cupboards in,

base units and wall units. We've put in an oven.

And here we've taken a wall down for the boiler. It really works well.

'Removing the cupboard walls has made it seem so much more spacious.

'And, thankfully, that road's been removed from the floor so it's no longer like a child's playroom.'

'1-0 to Bob and Chris.'

All the work was done by myself. For the electrics and gas, I got in qualified guys.

I also had some mates helping me out with the painting at mates' rates, so it kept the cost down.

My role during the renovation is that I take my plastic card to the cash point

and put in the number, get out cash, hand it to Chris and that's my role summed up.

'With Bob's background in finance, he's in charge of the cash card.

'The reins on the budget must have been pretty tight.'

Our original budget was just over £4,000. Not much thought went into it

but we've spent just approximately £5,000.

'That's an extra 25% on the original budget,

'but does include a fridge freezer and washing machine, which haven't yet been installed.

-'Was there a similar run on the timescale?'

-It's taken up to seven weeks,

but we both had swine flu so that laid us up for a week or we'd have had it done in six.

'Phew! They certainly stepped up to the mark, despite that swine flu.

'The flat came with a 20-year lease, which you can only extend at a price after owning it for two years.

'If you're renting it out, it may not be worth doing.'

I do think we will be renewing the lease in two years' time, but it will depend how much they ask for.

'Bob and Chris have already found a tenant to move in who will pay £850 per calendar month.

'But just to make sure they're shooting in the right direction

'we invited two local estate agents to take a look.'

My first impressions of the flat are that it's very spacious

and it's located conveniently for the Tube.

The standard of finish in the flat is good. It's not top end,

but it's good enough for what the property is.

They've done exactly the right thing.

They've kept everything they can keep in the bathroom, shower room area

and they've done most of their work in renovating the kitchen, which was neglected.

'It looks as though these beginners have done all the right things,

'but surely it won't all be easy?'

There is a short lease and that is a big problem when you come to re-sell.

It will only allow cash buyers really to be interested in it.

The lease of 20-odd years is a big problem if they were selling.

It's no problem if they rent.

'If they did sell it on in its current state, how much could they expect?'

I would market the property with its current short lease at £110,000.

A lot of buyers will be very wary of this type of lease age. You can't fix a price.

We always wanted it as a rental property, so that doesn't really interest us.

'Ah, they say that now, but what if the lease was longer?'

If the property had a long lease, I would market it for £160,000.

If the lease was renewed to an acceptable level,

you could have an asking price of £160,000-£165,000.

I think that's very good!

Em, I'd be ecstatic.

That actually would put... That might make us think about selling!

'They bought the flat for £70,000 and spent around £5,000 on the renovation,

'so those valuations are £85,000-£90,000 over their spend.

'But don't get too excited.

'It could cost around £50,000 or even more to extend that lease in two years' time.

'Bob and Chris have lined up a tenant who will be paying £850 a month.

'Is that about the right amount?'

This property would rent for £750 per calendar month.

If you put this on for renting on the basis of 2/3 bedrooms,

you would get a good level of interest around £900-£1,000 a month.

'The latter estimate would mean a handsome yield of 12%-16%.

'They must be pleased about that.'

-I think we'd go with the guy who said £1,000 per month.

-Yeah! Can you get him back?

No, we're very happy with the amount of money we're getting off the guy who's moving in.

Christopher knows the chap. There's got to be a value to that, knowing the person.

'The team have had quite a good result here, but how have they found working together?'

I can't say I've enjoyed working because I haven't done much work,

but I've enjoyed going to the cash machine and giving him money and watching the results.

Not enough - that's what you want to say! I've enjoyed the results.

-It's a good job and the values you've just given us make it even better.

-Cheers, Dad.

'This ground-floor flat in Bexleyheath came complete with the freehold for the entire building.

'Property developer Lawrence bought it at auction for £117,000,

'a whopping £22,000 over the guide price.

'But Lawrence was pleased with his purchase.'

I nearly bought one along the road which went for £128,000,

so getting this for 117 I felt was quite a bargain.

'Having bought and renovated two previous properties, Lawrence took the plunge.'

'He gave up his job with the local council to concentrate on renovating this flat full-time.

'He aimed to save money by doing the work and to rent out the property within three months.'

'He's not quite managed that.'

Originally, I was looking at three months.

It was just going to be extreme decorating rather than rebuilding,

but it's turned into a major rebuild.

'Lawrence once owned a builders merchants, so knew about renovation,

'but this turned out to be a bigger challenge than he expected.

'However, he was determined to sort it all out.'

The main problem, I think, was

that once I started to take the floorboards up -

cos there were obvious damp problems in the front of the house -

I found all the woodworm.

I put my foot through the floor in one place, it was so bad.

That on top of the damp meant I had to take all the floors up,

the kitchen floor had to be dug up.

That's taken the extra time.

'But you can't keep a good man down.'

# I pick myself up

# I dust myself off Start all over again... #

'Having sorted the extensive wood problems, Lawrence had the flat completely rewired,

'installed a central heating system and there are new drains for a new bathroom.'

This is the old second bedroom.

And we wanted to create a new bathroom because the old one was just a shower and a toilet,

hardly any room in it at all. So what we've done is put a stud wall in here,

taken four foot off this bedroom, but still leaving a nice size.

You could get a double bed in there. Then we created this new bathroom

with a hand basin, toilet here

and the bath which will have a shower above it.

Tiled floor, tiled walls.

It's going to be quite nice. Quite a big improvement.

-'And that's not all.'

-Originally, the kitchen floor was a foot down from where it is now.

And it was very, very damp so we had to dig it out anyway.

We decided to raise the floor up, level with the lounge and dining room.

That's made it a lot nicer in here.

We've brought the ceiling down a bit so that can be insulated as well.

We've got insulation under the floor.

And, being raised, we can take all the services underneath -

drains, waste from the sink and the washing machine.

We're about ready now. Just the finished plastering to be done, tile the floor,

and put the units in.

And this bit shouldn't take us much longer now at all.

'So Lawrence didn't hit his time deadlines, but is he within budget?'

The original budget was £15,000, but I've kept it down.

It's going to be about £18,000 in the end. So I think by doing a lot of the work myself,

with the damp and the woodworm, that's kept it right down.

'That's pretty good going.

'He paid £117,000 at auction then spent a further £18,000 on the renovations.

'So Lawrence's total outlay so far is £135,000.'

'Was it money well spent?'

It's a decent-sized property. A lot to be done.

The layout will work a lot better than the original layout.

I think the room alterations are very beneficial.

He's moved the bathroom between the two bedrooms.

That's very convenient for the bedrooms.

You have the utility room, a decent-sized kitchen.

It'll be an attractive bathroom and both bedrooms will be good, double-sized bedrooms.

'Lawrence bought the flat as an investment and he's keen to rent it out.'

If it's finished to a good standard, it'll rent out at approximately £825-£850 per calendar month.

The rental value would be around £800-£850 per calendar month.

It's about what I expected. I was hoping to put it on for £850 and possibly take £825.

'I'd be interested in the value of the property'

because I could be tempted to sell!

'Well, let's just dangle that carrot.'

If finished to a high standard, it'll sell in the region of £170,000-£180,000.

Finished to a good standard,

I think the resale value would be somewhere around the £175,000-£185,000 mark.

The resale value was more than I thought and I could possibly be tempted to sell it

if I got near the 180.

'If he did bite the bullet and put the flat on the market,

'Lawrence could be looking at a healthy profit of anything up to £50,000, minus tax and expenses.'

If I rent this property out, I've got to get a mortgage on it

to get money to go back to auction.

And the mortgage market is very difficult at the moment,

which is why I might consider re-selling it and using the money that way.

'Well, that's a turnaround,

'but the key to successful property developing is being open to change.'

I've certainly learnt a lot. It'll help with the next property.

I know what to expect much more now.

But I've quite enjoyed doing it. It's taken longer than I wanted,

but on the whole it's just nice to create something and see the results at the end.

-That's it for today.

-But we'll be back with more homes under the hammer from around the country.

-We'll see you then.

-Goodbye.

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