Episode 17 Homes Under the Hammer


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Episode 17

Martin Roberts and Lucy Alexander visit a house in Stoke-on-Trent, a flat in Morden with a steep staircase and a house in Kent with a catch.


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In difficult market conditions,

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

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

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

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

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

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

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

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Tick!

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VG.

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

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

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

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

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

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-'when they went under the hammer.'

-Your lot, sir.

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This is Bentilee in Stoke.

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

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

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

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

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with 4,500 identikit houses.

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# If everybody looked the same... #

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

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

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OK, not an ideal entrance layout -

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

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

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

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

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

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It's not bad at all.

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

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with plenty of storage and space for a washing machine.

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Through into the kitchen and a lovely surprise.

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

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modern units, white and clean.

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

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so all in all, we are loving this property.

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

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

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

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

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

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So, upstairs, an eminently sensible layout.

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

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

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

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

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

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

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

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

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

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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.

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

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

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

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but being a developer also means doing your research

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and you never know what secrets you might unearth

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with a bit of digging!

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

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Module 4 - Red Ash.

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

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in industrial areas like Stoke-on-Trent

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because red ash was the remains when they burnt coal

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in power stations, factories and coal mines.

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

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

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has a chemical reaction which causes the concrete to bubble.

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

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so you've got to check the floor.

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

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

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So, with room to increase the value and improve,

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and with no nasty mining deposits lurking,

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it's a promising house in my opinion

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and well worth taking on.

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I asked a local estate agent for his thoughts.

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

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because the prices of semi-detached properties are similar

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to the prices of small terraced properties in other areas.

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This property is in reasonable condition already.

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

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

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would be to split the largest bedroom into two.

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And more bedrooms means more money.

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

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

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we would be closer to £70,000.

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

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

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

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

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

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

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

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

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

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

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41. 42.

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43. 44.

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New bidder, £45,000.

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46, is it? 46. 47.

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48. 49. 50, is it?

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At 49,000. Seated left at £49,000.

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Are we all done at...?

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New bidder, £50,000. 51.

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52, sir? 52. 53.

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At 53,000. Another one, is it?

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54. 55.

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Another one, sir?

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

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At £55,000 then. Are we all done?

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At 55 then for the first time.

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At 55 for the second time.

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

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57, sir?

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56 and a half.

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57, sir...? No?

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

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At 56-5 second time.

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Third and final time at 56-5...

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

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

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'He came to meet me along with his girlfriend Dot

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

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

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

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-Mark, very good to meet you.

-And you.

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

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

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-What do you do at the moment?

-I've had 12 months off from work.

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

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

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-Number plates?

-Private plates, car plates.

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

-None yet.

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-Right, a really bad business!

-Really bad business, yes! Terrible.

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

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

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"JAMES BOND" THEME MUSIC

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

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

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

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

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So what are you going to do to it?

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

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maybe do something with the fireplace.

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

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

-The big bedroom at the front?

-Yeah.

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

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-Also have some new interior doors.

-What budget have you got for doing the work?

-Round about five.

-OK.

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

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

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

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

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

-Yes.

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-It didn't go very well.

-No, I've still got them all.

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-Sold none.

-Not one.

-And how many did you buy?

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Approximately 24. Yes.

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What did you learn from that?

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

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

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

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

-Hopefully not!

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

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

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Find out how he gets on later.

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

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

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

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

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# Set my sights on London town... #

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

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

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

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

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

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

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

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

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

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This access will not appeal to everyone.

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# I come closer to reaching the top

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

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

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

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

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

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

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

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

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

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"FORMULA ONE" THEME MUSIC

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

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

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

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

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

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

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

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

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

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

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You could be laughing all the way to the bank.

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

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It's got a very, very good location

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right in the centre of town.

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

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but there will be a certain negativity from some buyers

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in relation to the access.

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

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

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

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

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

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

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If the lease was renewed and the renovation was completed,

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

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

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

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

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

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with public transport for central London right on your doorstep.

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

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Lot 46 is...

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

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

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35. 40.

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45. 50.

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55. 60.

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65. 66.

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67?

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-66,500.

-66,500, why not?

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67.

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67 and a half? Yeah?

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

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69.

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69 and a half. 70?

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

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70, yeah? 70.

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70,000 first time,

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

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

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

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

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

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

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Guys, congratulations.

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-Now, Bob, you were at the auction.

-Yeah.

-Chris, you weren't at the auction.

-No.

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Who saw the flat and got the ball rolling?

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I saw the flat initially and said to my dad

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that it seemed a good property to purchase.

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And he took my word for it.

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

-He did.

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

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

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-What was your top limit on this flat?

-60,000.

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So you went ten grand over the price you agreed?

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-Yeah.

-Why was that?

-I was determined to buy it.

-Just because you wanted to buy something?

-Yeah.

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

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This is going to be our career going forward,

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

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

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but if I go home with something...

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

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

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

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

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

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

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

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

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

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

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

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

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'Bob currently works as a pensions manager.

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

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

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I've had a few moments.

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I specialise in roofing.

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

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

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

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

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

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it's just got a romantic edge to it.

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

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

0:21:550:21:59

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

0:21:590:22:03

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

0:22:050:22:11

What sort of budget are you looking to spend here?

0:22:110:22:15

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

0:22:150:22:22

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

0:22:220:22:27

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

0:22:270:22:32

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

-About six to eight weeks.

0:22:320:22:37

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

0:22:370:22:42

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

0:22:420:22:48

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

0:22:480:22:53

Do you think you'll have fun working together?

0:22:530:22:57

-Hopefully, hopefully.

-Yeah, I think it'll be fun.

-We'll give it a go.

0:22:570:23:01

-There'll be ups and downs.

-We're used to that.

-Yeah, we're used to that.

0:23:010:23:06

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

0:23:070:23:11

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

0:23:110:23:15

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

0:23:150:23:19

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

0:23:190:23:23

Find out what they do later in the programme.

0:23:230:23:26

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

0:23:280:23:34

The kitchen, frankly, is rubbish.

0:23:340:23:38

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

0:23:380:23:43

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

0:23:430:23:48

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

0:23:500:23:54

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

0:23:540:23:57

'This is Bentilee in Stoke,

0:24:020:24:05

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

0:24:050:24:10

'making it one of the largest in Europe.

0:24:100:24:12

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

0:24:120:24:17

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

0:24:170:24:21

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

0:24:220:24:29

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

0:24:290:24:34

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

-None yet.

0:24:340:24:39

-A really bad business.

-Really bad business, yes.

0:24:390:24:42

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

0:24:440:24:50

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

0:24:500:24:56

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

0:24:560:25:03

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

0:25:030:25:08

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

0:25:080:25:14

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

0:25:150:25:20

'The small bedroom is much the same.

0:25:230:25:27

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

0:25:270:25:31

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

0:25:310:25:35

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

0:25:350:25:39

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

0:25:390:25:43

We decided to convert it into two bedrooms.

0:25:430:25:47

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

0:25:470:25:51

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

0:25:510:25:56

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

0:25:560:26:03

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

0:26:030:26:07

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

0:26:070:26:10

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

0:26:100:26:17

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

0:26:170:26:21

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

0:26:210:26:27

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

0:26:270:26:32

'There wasn't a lot to do here.

0:26:320:26:34

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

0:26:340:26:39

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

0:26:430:26:48

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

0:26:480:26:54

'Were there any hiccups?'

0:26:540:26:56

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

0:26:560:27:00

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

0:27:000:27:02

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

0:27:020:27:07

which you can't see.

0:27:070:27:09

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

0:27:090:27:16

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

0:27:160:27:22

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

0:27:220:27:27

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

0:27:270:27:32

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

0:27:340:27:39

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

0:27:390:27:46

'The garden has also been tidied up.'

0:27:460:27:48

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

0:27:520:27:58

'so how did that go?'

0:27:580:28:00

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

0:28:000:28:03

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

0:28:030:28:10

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

0:28:100:28:15

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

0:28:150:28:19

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

0:28:190:28:23

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

0:28:230:28:27

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

0:28:270:28:32

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

0:28:320:28:37

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

0:28:390:28:46

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

0:28:480:28:53

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

0:28:530:28:57

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

0:28:570:29:05

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

0:29:050:29:09

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

0:29:090:29:14

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

0:29:170:29:22

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

0:29:220:29:29

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

0:29:290:29:33

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

0:29:330:29:38

And it's done to a decent standard.

0:29:380:29:40

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

0:29:400:29:46

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

0:29:460:29:53

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

0:29:530:29:58

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

0:30:000:30:04

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

0:30:050:30:11

'Let's check the figures.'

0:30:110:30:14

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

0:30:140:30:19

-That's good.

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

0:30:190:30:25

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

0:30:250:30:29

'minus tax and expenses, of course.

0:30:290:30:32

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

0:30:320:30:38

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

0:30:380:30:43

-That's OK as well.

-That's fine.

0:30:430:30:45

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

0:30:470:30:52

'So, decision time - rent or sell?'

0:30:520:30:57

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

-Yeah.

0:30:570:31:02

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

0:31:020:31:06

'Renting does sound like a great option here.

0:31:060:31:10

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

0:31:100:31:16

'exactly what was estimated.

0:31:160:31:18

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

0:31:180:31:22

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

0:31:220:31:27

-It was a special day. We got engaged.

-Yeah, we did.

0:31:270:31:31

-We got engaged.

-Yeah, we did.

-So that was a really special day for us.

0:31:310:31:36

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

0:31:380:31:44

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

0:31:480:31:52

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

0:31:520:31:56

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

0:31:590:32:04

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

0:32:040:32:09

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

0:32:090:32:15

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

0:32:150:32:21

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

0:32:210:32:26

And from the outside it looks rather lovely.

0:32:260:32:29

Maybe these bay windows have got something to reveal inside.

0:32:290:32:33

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

0:32:330:32:37

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

0:32:370:32:43

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

0:32:430:32:49

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

0:32:490:32:54

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

0:32:540:32:59

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

0:32:590:33:05

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

0:33:050:33:10

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

0:33:100:33:15

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

0:33:150:33:20

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

0:33:200:33:26

But it seems like the problems are at the back.

0:33:260:33:28

Cos the kitchen, frankly, is rubbish.

0:33:290:33:34

It needs total reworking. New units required.

0:33:340:33:38

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

0:33:380:33:42

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

0:33:420:33:47

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

0:33:470:33:53

This whole area is far too small for the flat.

0:33:530:33:57

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

0:33:570:34:01

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

0:34:010:34:07

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

0:34:080:34:13

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

0:34:130:34:18

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

0:34:200:34:25

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

0:34:250:34:31

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

0:34:310:34:37

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

0:34:370:34:42

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

0:34:420:34:49

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

0:34:490:34:56

Well, a real surprise.

0:34:560:34:58

The flat comes with a really huge amount of land.

0:34:580:35:03

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

0:35:030:35:07

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

0:35:070:35:12

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

0:35:120:35:18

Or it's a fantastic parking space.

0:35:180:35:21

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

0:35:210:35:26

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

0:35:260:35:31

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

0:35:310:35:36

'Will a local estate agent agree?

0:35:390:35:42

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

0:35:420:35:46

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

0:35:460:35:52

but I think once completed

0:35:520:35:54

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

0:35:540:35:59

and retired couples.

0:35:590:36:01

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

0:36:010:36:05

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

0:36:050:36:12

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

0:36:120:36:17

'And if resale was on the cards?'

0:36:170:36:19

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

0:36:190:36:25

So there you go. An interesting one.

0:36:250:36:28

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

0:36:280:36:32

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

0:36:320:36:38

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

0:36:380:36:42

Let's see it go under the hammer.

0:36:420:36:45

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

0:36:490:36:56

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

0:36:560:37:01

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

0:37:010:37:04

At 85. And at 90.

0:37:040:37:07

And 5. 95.

0:37:070:37:09

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

0:37:090:37:13

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

0:37:130:37:17

98. 99?

0:37:170:37:19

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

0:37:190:37:23

101, I'm obliged.

0:37:230:37:25

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

0:37:250:37:29

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

0:37:290:37:33

110. And 11. And 12?

0:37:330:37:36

112? One more.

0:37:360:37:39

112?

0:37:390:37:41

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

0:37:410:37:44

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

0:37:440:37:49

£111,000 for the second...

0:37:490:37:52

112. A fresh face. 13.

0:37:520:37:54

And 14. And 15.

0:37:540:37:58

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

0:37:580:38:02

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

0:38:020:38:08

And 17. And 18?

0:38:080:38:10

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

0:38:100:38:13

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

0:38:130:38:18

Third and final time at £117,000.

0:38:180:38:20

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

0:38:200:38:25

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

0:38:250:38:30

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

0:38:300:38:35

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

0:38:350:38:41

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

0:38:410:38:46

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

0:38:460:38:51

-Tell me why you wanted to buy it.

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

0:38:530:38:59

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

0:38:590:39:03

which went for £128,000,

0:39:030:39:06

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

0:39:060:39:10

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

0:39:100:39:16

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

0:39:170:39:22

where you're never quite sure about maintenance charges

0:39:220:39:26

and insurance and things like that.

0:39:260:39:30

So having a freehold does make it a lot easier.

0:39:310:39:34

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

0:39:340:39:38

-What are you going to do, if anything?

-Create a bathroom.

0:39:380:39:42

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

0:39:420:39:48

Some people might put up with that,

0:39:480:39:50

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

0:39:500:39:56

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

0:39:560:40:02

-and turn that into a bathroom.

-Oh, really?

0:40:020:40:05

Then keep the kitchen as it is.

0:40:050:40:07

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

0:40:070:40:13

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

-Right.

0:40:130:40:20

-How much are you going to spend?

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

0:40:200:40:25

that'll leave me with a good profit.

0:40:250:40:28

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

0:40:280:40:34

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

0:40:340:40:38

'which he has just given up.'

0:40:380:40:40

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

0:40:400:40:46

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

0:40:460:40:53

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

-I can finish this quicker.

0:40:530:40:58

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

0:40:580:41:03

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

0:41:030:41:07

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

0:41:070:41:13

-Then hopefully, three the year after that.

-Right.

0:41:130:41:17

It's quite good, quite exciting.

0:41:170:41:19

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

0:41:190:41:23

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

0:41:230:41:27

# Let's get it started... #

0:41:270:41:30

-This afternoon, really.

-Really?

-I shall start ripping things out.

0:41:300:41:35

-That's the fun bit.

-It is.

0:41:350:41:37

And the tiles on the ceiling...

0:41:370:41:39

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

-I think you should.

0:41:390:41:44

# Let's get it started

0:41:440:41:47

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

0:41:470:41:50

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

0:41:500:41:54

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

0:41:540:42:01

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

0:42:010:42:08

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

0:42:110:42:16

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

-Let's find out.

0:42:160:42:23

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

0:42:240:42:30

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

0:42:300:42:38

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

0:42:380:42:42

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

0:42:420:42:46

'are used to doing things together.'

0:42:460:42:49

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

0:42:510:42:57

There'll be no difference.

0:42:570:42:59

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

0:42:590:43:05

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

0:43:050:43:11

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

0:43:110:43:16

'So do they think they worked well together?'

0:43:160:43:19

-We do make a good team, I think.

-I think we do.

0:43:210:43:25

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

0:43:250:43:29

I have no strengths in the building line at all.

0:43:290:43:33

My background is financial.

0:43:330:43:36

That's what I bring to the party.

0:43:360:43:39

-And Chris brings building expertise.

-More hands on.

-Yeah.

0:43:390:43:43

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

0:43:430:43:48

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

0:43:480:43:52

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

0:43:520:43:56

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

0:43:560:44:02

'like all good partygoers, and find out.'

0:44:020:44:06

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

0:44:080:44:12

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

0:44:120:44:17

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

0:44:170:44:23

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

0:44:230:44:27

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

0:44:300:44:36

'1-0 to Bob and Chris.'

0:44:370:44:40

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

0:44:420:44:48

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

0:44:480:44:55

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

0:44:550:45:01

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

0:45:010:45:07

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

0:45:070:45:12

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

0:45:120:45:16

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

0:45:160:45:21

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

0:45:210:45:25

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

0:45:250:45:29

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

0:45:290:45:36

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

-It's taken up to seven weeks,

0:45:360:45:42

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

0:45:420:45:49

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

0:45:490:45:55

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

0:45:550:46:01

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

0:46:010:46:06

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

0:46:060:46:14

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

0:46:140:46:21

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

0:46:210:46:25

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

0:46:250:46:29

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

0:46:290:46:33

and it's located conveniently for the Tube.

0:46:330:46:37

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

0:46:370:46:41

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

0:46:410:46:45

They've done exactly the right thing.

0:46:450:46:48

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

0:46:480:46:52

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

0:46:520:46:58

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

0:46:580:47:02

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

0:47:020:47:05

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

0:47:050:47:10

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

0:47:100:47:15

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

0:47:150:47:19

It's no problem if they rent.

0:47:190:47:22

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

0:47:220:47:27

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

0:47:270:47:32

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

0:47:320:47:38

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

0:47:380:47:44

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

0:47:440:47:49

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

0:47:490:47:54

If the lease was renewed to an acceptable level,

0:47:540:47:56

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

0:47:560:48:02

I think that's very good!

0:48:020:48:04

Em, I'd be ecstatic.

0:48:040:48:07

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

0:48:070:48:12

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

0:48:130:48:19

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

0:48:190:48:23

'But don't get too excited.

0:48:230:48:25

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

0:48:250:48:32

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

0:48:320:48:38

'Is that about the right amount?'

0:48:380:48:41

This property would rent for £750 per calendar month.

0:48:410:48:45

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

0:48:450:48:49

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

0:48:490:48:53

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

0:48:530:48:58

'They must be pleased about that.'

0:48:580:49:01

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

-Yeah! Can you get him back?

0:49:010:49:06

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

0:49:060:49:12

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

0:49:120:49:19

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

0:49:190:49:25

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

0:49:250:49:29

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

0:49:290:49:35

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

0:49:350:49:39

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

-Cheers, Dad.

0:49:390:49:46

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

0:49:560:50:03

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

0:50:030:50:07

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

0:50:070:50:12

'But Lawrence was pleased with his purchase.'

0:50:120:50:16

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

0:50:160:50:20

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

0:50:200:50:24

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

0:50:250:50:30

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

0:50:320:50:38

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

0:50:380:50:43

'He's not quite managed that.'

0:50:510:50:54

Originally, I was looking at three months.

0:50:570:51:01

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

0:51:010:51:06

but it's turned into a major rebuild.

0:51:060:51:08

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

0:51:100:51:15

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

0:51:150:51:20

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

0:51:200:51:22

The main problem, I think, was

0:51:250:51:27

that once I started to take the floorboards up -

0:51:270:51:30

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

0:51:300:51:33

I found all the woodworm.

0:51:330:51:35

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

0:51:350:51:39

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

0:51:390:51:44

the kitchen floor had to be dug up.

0:51:440:51:47

That's taken the extra time.

0:51:470:51:49

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

0:51:490:51:51

# I pick myself up

0:51:510:51:54

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

0:51:540:51:59

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

0:51:590:52:04

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

0:52:040:52:10

This is the old second bedroom.

0:52:100:52:13

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

0:52:130:52:19

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

0:52:190:52:25

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

0:52:250:52:30

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

0:52:300:52:35

with a hand basin, toilet here

0:52:350:52:38

and the bath which will have a shower above it.

0:52:380:52:42

Tiled floor, tiled walls.

0:52:420:52:44

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

0:52:440:52:48

-'And that's not all.'

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

0:52:480:52:54

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

0:52:540:52:59

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

0:52:590:53:04

That's made it a lot nicer in here.

0:53:040:53:07

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

0:53:070:53:11

We've got insulation under the floor.

0:53:110:53:14

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

0:53:140:53:18

drains, waste from the sink and the washing machine.

0:53:180:53:23

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

0:53:230:53:28

and put the units in.

0:53:280:53:30

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

0:53:300:53:35

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

0:53:350:53:40

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

0:53:400:53:45

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

0:53:450:53:51

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

0:53:510:53:57

'That's pretty good going.

0:53:570:53:59

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

0:53:590:54:05

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

0:54:050:54:11

'Was it money well spent?'

0:54:120:54:14

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

0:54:220:54:25

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

0:54:250:54:29

I think the room alterations are very beneficial.

0:54:290:54:33

He's moved the bathroom between the two bedrooms.

0:54:330:54:36

That's very convenient for the bedrooms.

0:54:360:54:40

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

0:54:400:54:44

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

0:54:440:54:51

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

0:54:510:54:57

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

0:54:570:55:04

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

0:55:040:55:09

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

0:55:090:55:15

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

0:55:150:55:20

because I could be tempted to sell!

0:55:200:55:23

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

0:55:230:55:28

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

0:55:280:55:35

Finished to a good standard,

0:55:350:55:38

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

0:55:380:55:44

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

0:55:440:55:49

if I got near the 180.

0:55:490:55:52

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

0:55:520:55:56

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

0:55:560:56:03

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

0:56:040:56:08

to get money to go back to auction.

0:56:080:56:11

And the mortgage market is very difficult at the moment,

0:56:110:56:14

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

0:56:140:56:20

'Well, that's a turnaround,

0:56:200:56:22

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

0:56:220:56:28

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

0:56:280:56:31

I know what to expect much more now.

0:56:310:56:35

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

0:56:350:56:39

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

0:56:390:56:46

-That's it for today.

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

0:56:480:56:55

-We'll see you then.

-Goodbye.

0:56:550:56:58

Subtitles by Red Bee Media Ltd

0:57:180:57:21

Martin Roberts and Lucy Alexander visit a house in Stoke-on-Trent, a flat in Morden with a steep staircase and a house in Kent with a catch. All of these properties have been sold at auction, and Martin and Lucy find out who bought them and what they paid when they went under the hammer.