0:00:02 > 0:00:06You may be tempted to shy away from the property market.
0:00:06 > 0:00:09People still take a risk in the auction room.
0:00:09 > 0:00:13There are bargains - if you are careful.
0:00:13 > 0:00:18Join us on a Homes Under The Hammer roller coaster of highs and lows.
0:00:43 > 0:00:47The atmosphere in the auction room can be electric
0:00:47 > 0:00:49and very infectious.
0:00:49 > 0:00:53You might grab a bargain by raising your arm, nodding your head
0:00:53 > 0:00:56or winking at the auctioneer.
0:00:56 > 0:01:00Let's see what inspired the purchasers on today's programme.
0:01:01 > 0:01:06'In Blackburn, this house might be cheap, but there are reasons.'
0:01:06 > 0:01:10- LAUGHING:- Right! Needs a bit of work.
0:01:10 > 0:01:14'When I visited this house in 2007,
0:01:14 > 0:01:16'I had grave concerns about its future.'
0:01:16 > 0:01:20I've just found one whopping crack.
0:01:21 > 0:01:25'In Derby, I find that it's easy to get caught up in details,
0:01:25 > 0:01:27'whereas...'
0:01:27 > 0:01:31..you've got to think about the bigger picture.
0:01:32 > 0:01:36'These properties have been sold at auction.
0:01:36 > 0:01:40'We'll find out who bought them when they went under the hammer.'
0:01:42 > 0:01:45'I'm in Blackburn in Lancashire,
0:01:45 > 0:01:50'famous for its history of textile production and its football club.
0:01:50 > 0:01:55'It's an hour's drive from Manchester, Leeds or Liverpool,
0:01:55 > 0:01:58'so it's perfect for commuters.'
0:01:58 > 0:02:02You can't complain about transport links!
0:02:02 > 0:02:09Blackburn's got a refurbished train station, a bus station close by, the M65 motorway.
0:02:09 > 0:02:15However, the property I'm here to see, the auction catalogue did say was in need of refurbishment.
0:02:18 > 0:02:23'I get the impression from outside that might be an understatement.
0:02:23 > 0:02:27'It's a long way from being the cat's whiskers.
0:02:30 > 0:02:33'I dread to imagine what's inside.'
0:02:35 > 0:02:39What I haven't mentioned is the guide price -
0:02:39 > 0:02:42£40,000 to £45,000.
0:02:42 > 0:02:47Even for around here, that seems extraordinarily cheap. Huh.
0:02:47 > 0:02:53A-herm! That might be the reason why. Look at the slope!
0:02:53 > 0:02:55That's not boding well.
0:02:55 > 0:02:59Apart from that, it's a nice size room.
0:02:59 > 0:03:03You've got an open fire, high ceilings, a few original features.
0:03:03 > 0:03:07I don't suppose many of those would stay.
0:03:08 > 0:03:10Here's another thing to be sorted.
0:03:10 > 0:03:17Those wonderfully old light switches indicate the electrics are probably well shot.
0:03:17 > 0:03:19And the kitchen...
0:03:21 > 0:03:25- LAUGHING:- Right. Needs a bit of work(!)
0:03:25 > 0:03:28But it's a good size space. It's got a fire.
0:03:28 > 0:03:31That might be nice tidied up. It's big.
0:03:31 > 0:03:35Hm, not a weekend's work, though, is it?
0:03:35 > 0:03:38'This isn't one for the faint hearted.
0:03:38 > 0:03:41'It needs to be completely gutted,
0:03:41 > 0:03:46'with new windows, heating, ceilings - the lot.'
0:03:47 > 0:03:50Upstairs, two bedrooms and a bathroom.
0:03:50 > 0:03:53Look at the size of this bedroom!
0:03:53 > 0:03:58Super-high ceilings. No wonder they've got a glitter ball.
0:03:58 > 0:04:00It could almost be a dance hall.
0:04:00 > 0:04:04Not what you expect in a terrace this size.
0:04:04 > 0:04:07I don't think we're making the most of the space.
0:04:07 > 0:04:11I noticed, on the other side, an airing cupboard.
0:04:11 > 0:04:15I'd think about opening that up, taking a passageway through here,
0:04:15 > 0:04:18maybe even a third bedroom.
0:04:18 > 0:04:22But, much more serious than that, look at that window!
0:04:22 > 0:04:26It is all over the place.
0:04:26 > 0:04:28And the floor is sloping.
0:04:28 > 0:04:34There is something seriously wrong with that front wall. I need to investigate.
0:04:34 > 0:04:39'My worries aren't about the bathroom or the other bedroom.
0:04:39 > 0:04:43'They're much more fundamental than that.
0:04:43 > 0:04:46'The fabric of the house is cause for concern.
0:04:46 > 0:04:49'I need to take a closer look outside.'
0:04:49 > 0:04:53I've got to try to get a better handle on this.
0:04:53 > 0:04:57I didn't notice these problems when I walked in.
0:04:57 > 0:05:00If you take a step back... Look at that!
0:05:00 > 0:05:03The window frames, the door frames.
0:05:03 > 0:05:07They're all over the place. And... Ha!
0:05:07 > 0:05:11Look at that crack. That's very serious.
0:05:11 > 0:05:14It's unusual for a mid-terrace.
0:05:14 > 0:05:20Here's some more clues. Next door, this is not the original brick.
0:05:20 > 0:05:24I guess this had the same issues - subsidence at the front.
0:05:24 > 0:05:28They've taken off the entire front wall and replaced it.
0:05:28 > 0:05:34That is what you have to do with this property, which is going to cost you a pretty penny.
0:05:35 > 0:05:37# All in all you're just a...
0:05:37 > 0:05:40# 'Nother brick in the wall. #
0:05:43 > 0:05:47'This is going to take more than a few bricks.
0:05:47 > 0:05:52'A new roof looks like a must, along with windows and doors.
0:05:52 > 0:05:56'The subsidence appears to be historic, with no new cracks
0:05:56 > 0:05:59'on the repaired house next door.
0:05:59 > 0:06:03'This was guided at 40,000 to 45,000, to reflect its condition.
0:06:03 > 0:06:06'What does a local estate agent make
0:06:06 > 0:06:08'of this "cracking" property?'
0:06:10 > 0:06:12I think, primarily,
0:06:12 > 0:06:16the property will be of interest to tenants.
0:06:16 > 0:06:19The housing market in this area is quite subdued.
0:06:19 > 0:06:26The chances of that changing in the near future are fairly remote.
0:06:26 > 0:06:31'Sounds like this is best seen as a long-term investment,
0:06:31 > 0:06:33'suitable for the rental market.
0:06:33 > 0:06:37'How could its potential be maximised?'
0:06:37 > 0:06:40The property has limited potential.
0:06:40 > 0:06:44If a kitchen extension was added to create two reception rooms,
0:06:44 > 0:06:49both marketability and let-ability would be significantly increased.
0:06:49 > 0:06:52'So, what could the numbers be?'
0:06:52 > 0:06:56'After refurbishment works have been carried out,
0:06:56 > 0:06:59'I would estimate the property would sell
0:06:59 > 0:07:03'for £70,000 to £75,000.'
0:07:03 > 0:07:09I would anticipate a monthly rental of between £375 and £395.
0:07:09 > 0:07:15'A rent of nearly £5,000 a year on a property guided at 40,000 to 45,000
0:07:15 > 0:07:20'is a pretty decent return, as long as you keep renovation costs down.'
0:07:23 > 0:07:27I'm a bit concerned about this property.
0:07:27 > 0:07:29That subsidence, the state inside.
0:07:29 > 0:07:34It's going to cost a lot to sort out so it's not one for the unwary.
0:07:34 > 0:07:38Let's find out what happened when it went to auction.
0:07:38 > 0:07:42'Near the end of the auction day, it was judgment time.'
0:07:42 > 0:07:45Lot 128, 93 Burnley Road, Blackburn.
0:07:45 > 0:07:50A vacant mid-terrace house, in need of refurbishment.
0:07:50 > 0:07:5320,000? 20,000 anywhere?
0:07:53 > 0:07:5520, I've got. 22, then?
0:07:57 > 0:08:0022,000? 22. 24, then?
0:08:00 > 0:08:0324. 26? 28?
0:08:04 > 0:08:0630?
0:08:06 > 0:08:0832? 34?
0:08:08 > 0:08:1136? 38?
0:08:11 > 0:08:1340? 40.
0:08:13 > 0:08:1642?
0:08:16 > 0:08:21No? It's with you at £40,000.
0:08:21 > 0:08:23I'll take 1, if it helps you.
0:08:23 > 0:08:25No. A half, then.
0:08:25 > 0:08:29OK, £40,500. 41?
0:08:29 > 0:08:3241, we've got. 41 and a half?
0:08:32 > 0:08:35Shake of the head. It's with you at £41,000.
0:08:35 > 0:08:40Are we all done at 41,000? I'll sell at 41,000 for the first time.
0:08:40 > 0:08:45To you on my left. Second time. Third and final time. Sold to you.
0:08:45 > 0:08:49Well done. Paddle number 643.
0:08:49 > 0:08:51'For £41,000,
0:08:51 > 0:08:56'the new owner of the rather dilapidated semi in Burnley Road
0:08:56 > 0:08:59'is 29-year-old local man Ismail.
0:08:59 > 0:09:03'He joined me at the property with his builder, John.'
0:09:03 > 0:09:08Good to meet you both. Ismail, why did you want to buy this place?
0:09:08 > 0:09:14It was a last-minute kind of thing on the auction, the final lot in Blackburn.
0:09:14 > 0:09:18- Had you seen it beforehand?- No. - No?!- No.
0:09:18 > 0:09:24- What did you think when you walked through the door?- It needs a full gut-out. I was expecting it.
0:09:24 > 0:09:29I didn't think there'd be no mains, electric and gas.
0:09:29 > 0:09:31But I'm sure we can complete it soon.
0:09:31 > 0:09:36- John, your involvement is...? - I'll be doing most of the work.
0:09:36 > 0:09:39- You're Ismail's builder?- Yes.
0:09:39 > 0:09:44How does this rate, compared to the ones...?
0:09:44 > 0:09:49It's not a bad one. Normally, we've got a lot to rip out beforehand.
0:09:49 > 0:09:54This is "not bad"? What is your definition of "bad"?
0:09:54 > 0:09:59- Er...- No roof. No floor. No staircase.- Yeah.
0:09:59 > 0:10:03- The floor is a big plus?- You can get upstairs without a ladder.
0:10:03 > 0:10:09You're lucky to have a builder like this as opposed to one that goes, "Ooh, no. Expensive job."
0:10:09 > 0:10:14# E-easy ye-ah
0:10:14 > 0:10:20# I'm easy like Sunday mo-orning... #
0:10:20 > 0:10:24'So, Ismail and John think this is easy.
0:10:24 > 0:10:28'With help from other people they work with regularly,
0:10:28 > 0:10:33'they hope to turn it round for rental in to Ismail's portfolio.'
0:10:33 > 0:10:36- Tell me more about you.- Well...
0:10:36 > 0:10:41I've been in the telecommunications industry since 1996.
0:10:41 > 0:10:47I do properties as an investment and rather do it in the UK than abroad.
0:10:47 > 0:10:51- When did you buy your first property?- When I was 18.
0:10:51 > 0:10:55- 18?!- 18 with a lot of family support. Yeah.
0:10:55 > 0:10:57It's been rolling from then.
0:10:57 > 0:11:01- Now you've got a reasonable sized portfolio?- It's OK.
0:11:01 > 0:11:06'Ismail's dad has been a big influence on his sideline.
0:11:06 > 0:11:13'His dad has bought and sold properties for 20 years, so for Ismail it was a natural progression.
0:11:13 > 0:11:17'He's been in partnership with John for a number of years.'
0:11:17 > 0:11:20Talk me through what you're going to do.
0:11:20 > 0:11:22Rip all the electrics out.
0:11:22 > 0:11:25Rip all the plumbing out, the bathroom and kitchen.
0:11:25 > 0:11:30- All new ceilings. All new windows. - And what about the front wall?
0:11:30 > 0:11:32Not much can be done.
0:11:32 > 0:11:37It's finished moving so it may be a case of re-pointing it up.
0:11:37 > 0:11:41Any plans to alter the internals at all?
0:11:41 > 0:11:44Yeah. We've been having a look.
0:11:44 > 0:11:47- But we just walked into the property...?- Yesterday.
0:11:47 > 0:11:53And saw the backyard, garden, as such, for the first time today.
0:11:53 > 0:11:56- You're making it up as you go along? - Yeah.
0:11:56 > 0:12:00How much have you set aside for the work? What's the budget?
0:12:00 > 0:12:05I reckon we could get it done for about £10,000 to £12,000.
0:12:05 > 0:12:10'Ten to 12 grand seems remarkably little to turn this place around.
0:12:10 > 0:12:14'The boys will do a lot of the work themselves, which keeps costs down.'
0:12:16 > 0:12:19Another property joins Ismail's portfolio
0:12:19 > 0:12:22and he doesn't seem fazed about the state it's in.
0:12:22 > 0:12:26Most people would have gone, "Oh, my goodness!"
0:12:26 > 0:12:30But neither he nor John thinks it's too much of a problem.
0:12:30 > 0:12:37Even with a team of builders, is it really going to be possible for those sort of budgets?
0:12:37 > 0:12:41You can find out later in the show.
0:12:44 > 0:12:48# Floating down that old river, boy
0:12:48 > 0:12:52# Leaves me feelin' good inside... #
0:12:52 > 0:12:56'Back in 2007, the newly opened Sheppey crossing
0:12:56 > 0:13:00'had transformed accessibility to the Isle of Sheppey in Kent,
0:13:00 > 0:13:05'and provided a shot in the arm for its untapped property market.'
0:13:06 > 0:13:09I've come to see the Lodge House.
0:13:09 > 0:13:12Usually, lodge houses are in a park
0:13:12 > 0:13:16or at the entrance to a beautiful private estate.
0:13:16 > 0:13:18This one is different.
0:13:18 > 0:13:22This lodge house used to belong to the cemetery right next door.
0:13:25 > 0:13:29'Having a cemetery next door is not on everyone's wish list
0:13:29 > 0:13:34'but this property's prospects might not be as grave as first thought.
0:13:34 > 0:13:38'The house used to belong to the sexton
0:13:38 > 0:13:45'and went to auction with a guide price of between £280,000 and £290,000.'
0:13:45 > 0:13:48This house was constructed in the '60s.
0:13:48 > 0:13:51It really is typical of that era.
0:13:51 > 0:13:53There's no coving anywhere
0:13:53 > 0:13:59and you get these flat-fronted thin flimsy plywood doors.
0:13:59 > 0:14:02It's quite strange coming into a room like this.
0:14:02 > 0:14:06You don't get the features of a Georgian or Edwardian house.
0:14:06 > 0:14:08Look at this fireplace.
0:14:08 > 0:14:14But what you do get is lovely big square rooms and a sense of space.
0:14:19 > 0:14:22'This property's showing its age.
0:14:22 > 0:14:26'In the hallway, there's a ranch style staircase
0:14:26 > 0:14:30'and a kitchen which can't be described as sleek or modern.
0:14:30 > 0:14:34'There's even a fluorescent tube to keep it in period.
0:14:35 > 0:14:42'The utilitarian downstairs toilet is in sympathy with the '60s vibe.
0:14:42 > 0:14:47'There are pluses. A fair sized garden for one - with a palm tree!'
0:14:48 > 0:14:53Upstairs, we've got three bedrooms and a bathroom.
0:14:53 > 0:14:55Here's the bathroom suite.
0:14:55 > 0:14:58The door only opens to there.
0:14:58 > 0:15:00I think it needs a layout change.
0:15:00 > 0:15:05Bedroom through here - but look at that!
0:15:05 > 0:15:09It goes right through to the other side of the wall
0:15:09 > 0:15:12and across the bedroom ceiling.
0:15:12 > 0:15:17I'm wondering if there's any more structural damage in here.
0:15:17 > 0:15:21'It's worth pointing out that three bedrooms are well proportioned.
0:15:21 > 0:15:26'The house is double glazed and, if I was an estate agent,
0:15:26 > 0:15:29'I might be tempted to say
0:15:29 > 0:15:33'the windows look out on open green areas with trees.
0:15:33 > 0:15:37'They do, but there are a few head stones as well.'
0:15:37 > 0:15:41Look what I've just found - one whopping crack!
0:15:41 > 0:15:44I think a surveyor has been here.
0:15:44 > 0:15:49You can tell by these two studs. They've measured the movement.
0:15:49 > 0:15:53I would want to track down that report
0:15:53 > 0:15:56before I bid for this at auction.
0:15:56 > 0:15:59'Even though this might have subsidence,
0:15:59 > 0:16:04'there's one reason why it still might be a cracking investment.
0:16:04 > 0:16:10'But to find out what it is, we'll have to spend a penny.'
0:16:10 > 0:16:14Next door to the property are these two outside toilets,
0:16:14 > 0:16:16which were used by the cemetery.
0:16:16 > 0:16:22This will come down, because the owner has outline planning permission
0:16:22 > 0:16:25to build two semi-detached houses here.
0:16:25 > 0:16:30'That doesn't mean that all the hard work will have been done for you.
0:16:30 > 0:16:35'The new owner owner will have to submit plans to the Local Authority.
0:16:35 > 0:16:40'The area of land where the toilets are is quite substantial.
0:16:40 > 0:16:45'As the original house has cracks, maybe that should be knocked down.
0:16:45 > 0:16:50'Before anyone takes a hammer to it, we need the auctioneer's hammer.
0:16:50 > 0:16:54'Let's see what happened at the auction.'
0:16:54 > 0:16:58Guide price is 280, 290. £250,000 start me?
0:16:58 > 0:17:02£250,000 I'm bid, and I should think so, too.
0:17:02 > 0:17:08At £250,000 I'm bid. 250. Five, do I see?
0:17:08 > 0:17:14At £250,000... I'm amazed! I thought it would make a lot more than this.
0:17:14 > 0:17:18I am selling, then, to the maiden bid at £250,000.
0:17:18 > 0:17:21255, for anyone else?
0:17:21 > 0:17:24At £250,000, then. The maiden bid.
0:17:24 > 0:17:26For the first time at 250.
0:17:26 > 0:17:30For the second time at 250.
0:17:30 > 0:17:35For the third and final time at £250,000. Are you all done...?
0:17:35 > 0:17:38Sold at 250,000. Your bidder's number, sir?
0:17:41 > 0:17:44Thank you very much. 1-8-6-6.
0:17:44 > 0:17:48'Sold to the distinguished looking gentleman in the front!
0:17:48 > 0:17:53'Michael has picked up the house and valuable building land
0:17:53 > 0:17:56'for the knock-down price of 250,000.
0:17:56 > 0:18:01'Michael's a property developer with over 40 years' experience.
0:18:01 > 0:18:06'He works with his son Matthew, and they specialise in new-builds.
0:18:06 > 0:18:11'Matthew has been in partnership with his dad for seven years
0:18:11 > 0:18:15'and it looks like he's a chip off the old block.'
0:18:15 > 0:18:18# Son of my father
0:18:18 > 0:18:22# I'm changing, rearranging into someone new
0:18:22 > 0:18:25# Son of my father
0:18:26 > 0:18:29# Collecting and selecting independent views... #
0:18:29 > 0:18:32'The priority was checking the cracks.'
0:18:34 > 0:18:36No. It's got to be 5mm.
0:18:36 > 0:18:40- That's a lot of underpinning. - It wouldn't be underpinned.
0:18:40 > 0:18:44All the brickwork has to come out and be repinned,
0:18:44 > 0:18:46or the house comes down.
0:18:46 > 0:18:51'It's looking like subsidence, which is expensive to repair.
0:18:51 > 0:18:55'Let's find out what they think of their purchase.'
0:18:55 > 0:18:57Guys, congratulations!
0:18:57 > 0:19:04- Michael, that was one of the quickest auctions I've seen. - Absolutely.- What happened?
0:19:04 > 0:19:07Well, I sat there and nobody made a bid.
0:19:07 > 0:19:10He said, "Start me at 250,000."
0:19:10 > 0:19:13Nobody said anything, so I said, "Yes!"
0:19:13 > 0:19:15I'm waiting. I'm so surprised.
0:19:15 > 0:19:19The guy said, "I've never had a maiden bid before."
0:19:19 > 0:19:25It went on and on and he suddenly went "bang" and it was mine!
0:19:25 > 0:19:30I was so startled, I couldn't even think to put my number up.
0:19:30 > 0:19:34'Michael's cool might have left him for once,
0:19:34 > 0:19:38'but he is an experienced developer who has built 300 houses.'
0:19:38 > 0:19:42Because the cross wall makes it easy for us...
0:19:42 > 0:19:46'Michael has started to take a more hands-off approach
0:19:46 > 0:19:51'and his 40-year-old son Matthew now supervises their building sites.'
0:19:51 > 0:19:54Why have you followed in your father's footsteps?
0:19:54 > 0:19:59I was going to do party organising. That was when I was about 17.
0:19:59 > 0:20:03I was dashing around and he said, "No, don't do that.
0:20:03 > 0:20:08"Come into building. It's much better being a developer."
0:20:08 > 0:20:13- I don't think I really looked back. - What happens on a day-to-day basis?
0:20:13 > 0:20:16We have our own building company.
0:20:16 > 0:20:21Matthew has a great depth of technical knowledge,
0:20:21 > 0:20:25which I don't lay claim to.
0:20:25 > 0:20:30So Matthew gets the sub-contractors on, agrees the prices with them,
0:20:30 > 0:20:34he tells me how much it's going to cost, then I budget it.
0:20:34 > 0:20:37Then he tells me what I CAN do it for!
0:20:37 > 0:20:43He says, "No! I don't like that. We'll cut this out and do that."
0:20:43 > 0:20:47Then we finish the development and put it on the market.
0:20:47 > 0:20:51- And they lock me up because I upset everybody.- That's true.
0:20:51 > 0:20:54Often, do you have to march him off?
0:20:54 > 0:20:57- Yes.- Yes. Especially with purchasers.
0:20:57 > 0:21:01He just says, "Do you like the house or not?"
0:21:01 > 0:21:04You have to be rather nice to people.
0:21:04 > 0:21:09I don't allow him often on site cos he does stomp around and...
0:21:09 > 0:21:14He likes things done his way and that's not to everybody's taste.
0:21:14 > 0:21:18'Michael might be the Victor Meldrew of the building trade,
0:21:18 > 0:21:21'but he has a good nose for property investment.
0:21:21 > 0:21:24'What are they going to do?
0:21:24 > 0:21:29'Does the subsidence mean a death warrant for the house?
0:21:29 > 0:21:32'Time for the boys to lay their cards on the table.'
0:21:32 > 0:21:36What I want to know is what are you going to do with it?
0:21:36 > 0:21:40- Knock it down.- Are you? - We're going to try to.
0:21:40 > 0:21:43Because it has serious structural damage.
0:21:43 > 0:21:48And apply to replace that one house with an identical pair
0:21:48 > 0:21:51as in plots one and two.
0:21:51 > 0:21:56- You're looking at four properties? Four dwellings?- That's the idea.
0:21:56 > 0:22:01- Who came up with that idea?- Me. While he was on holiday.- It's true.
0:22:01 > 0:22:03- Are you happy about that? - I am, actually.
0:22:03 > 0:22:06He's always happy with a little bit more money.
0:22:06 > 0:22:12'They have used clever designs to get one more house on the site -
0:22:12 > 0:22:15'all three-bedroom properties with garages.
0:22:15 > 0:22:19'They have to get their plans approved but, potentially,
0:22:19 > 0:22:24'it could give them a good return on their investment.'
0:22:24 > 0:22:29Michael, what are the figures? How much is it going to cost you?
0:22:29 > 0:22:33As you know, we bought the site at a very advantageous figure,
0:22:33 > 0:22:35a quarter of a million,
0:22:35 > 0:22:40and our build costs are in the order of 300,000.
0:22:40 > 0:22:43'That was back in February 2007.
0:22:43 > 0:22:47'Though the returns looked mouthwatering,
0:22:47 > 0:22:49'there was a long way to go.
0:22:49 > 0:22:53'Six months later, when we first returned,
0:22:53 > 0:22:55'not much had happened.
0:22:55 > 0:22:59'That saying about "time being money" was about to come true.
0:22:59 > 0:23:02'Find out how the story ends later in the show.'
0:23:03 > 0:23:09'Coming up, in Derby, it's a case of "know your local market".'
0:23:09 > 0:23:14Popular with students, so potential for buy-to-let is very strong.
0:23:15 > 0:23:17'Three years after my first visit,
0:23:17 > 0:23:22'we see if Michael and Matthew have maintained their 100% record.'
0:23:22 > 0:23:25We've always come away with a profit.
0:23:27 > 0:23:32'First, in Blackburn, has Ismail and John's improvised approach worked?'
0:23:32 > 0:23:34- You're making it up.- Yeah.
0:23:36 > 0:23:41'Blackburn may have a Premiership football team,
0:23:41 > 0:23:46'but this two-bed semi wasn't exactly in the top flight.
0:23:46 > 0:23:51'It had been relegated to a dilapidated, run-down property.
0:23:51 > 0:23:55'Besides some subsidence, it had wonky windows and doors,
0:23:55 > 0:23:58'and was in need of support.
0:23:58 > 0:24:02'For local lads Ismail and John, this was just another project.
0:24:02 > 0:24:05'At £41,000, it seemed a good buy to them.'
0:24:05 > 0:24:10- How does this rate, compared to the ones...?- It's not a bad one.
0:24:10 > 0:24:14Normally, we've got a lot to rip out beforehand.
0:24:14 > 0:24:16This is "not bad"?
0:24:16 > 0:24:19What is your definition of "bad"?
0:24:19 > 0:24:23- Er...- No roof.- Yeah. - No floor. No staircase.
0:24:23 > 0:24:27- So the floor is a big plus?- You can get upstairs without a ladder!
0:24:27 > 0:24:32'Three months on, have they been able to knock the house into shape?
0:24:36 > 0:24:40'It certainly has better symmetry from outside.'
0:24:41 > 0:24:44# It's hip to be square...! #
0:24:45 > 0:24:49'The old front wall has a fresh fascia of new bricks.'
0:24:56 > 0:25:01We kind of started just taking everything down first
0:25:01 > 0:25:04and seeing how far the problem was.
0:25:06 > 0:25:11We began by ripping the plaster off to get back to brick
0:25:11 > 0:25:13and see what the structure was like.
0:25:17 > 0:25:23We thought, "Oh, this is too much" when it came to the staircase.
0:25:23 > 0:25:29We had a new staircase and it was three inches bigger than the gap.
0:25:33 > 0:25:38'Given the original state of the house, the results are amazing.
0:25:45 > 0:25:50'Perhaps the kitchen is the most impressive of all.'
0:25:50 > 0:25:56We refitted the whole kitchen. We've gone for the black-and-white look.
0:25:56 > 0:25:58Replastered everything and tiled it.
0:25:58 > 0:26:02Last time we came here, there was no kitchen at all,
0:26:02 > 0:26:04so I think it's a step forward!
0:26:04 > 0:26:10'With the new kitchen completed, just upstairs needed sorting out.
0:26:10 > 0:26:14'The back bedroom was brought back to life.
0:26:14 > 0:26:19'The master bedroom needed more straightening out.'
0:26:20 > 0:26:24In this room, the floor was really low down.
0:26:24 > 0:26:27We've had to jack it up about seven inches,
0:26:27 > 0:26:30so you didn't fall to the corners!
0:26:30 > 0:26:32Still slightly down.
0:26:32 > 0:26:36Also, the window dropped down about four inches.
0:26:36 > 0:26:41So we've had to rebox all those just to straighten everything up.
0:26:41 > 0:26:45'So, with a level playing field, they tackled the old bathroom
0:26:45 > 0:26:50'by installing a rather striking and, er, vibrant new one.
0:26:50 > 0:26:54'What roles did Ismail and John take here?'
0:26:54 > 0:26:56From A to Z, really!
0:26:56 > 0:27:00We've both been working pretty hard on it.
0:27:00 > 0:27:04From plumbing to building - everything, really.
0:27:04 > 0:27:08Everything we couldn't do, we sub-contracted out.
0:27:08 > 0:27:12This isn't my full-time job. I do this for fun.
0:27:12 > 0:27:16We enjoy doing it. My full-time job's working in an office.
0:27:16 > 0:27:20I do a few hours a week. This is all for enjoyment.
0:27:20 > 0:27:23'This might not be everyone's idea of fun,
0:27:23 > 0:27:28'but they both found that it was a good break from their day jobs.'
0:27:28 > 0:27:33We've been working a while now together on many different projects.
0:27:33 > 0:27:38We kind of get along, you know? Just get on with it.
0:27:38 > 0:27:40We work really well together.
0:27:40 > 0:27:46Some things we don't agree on, but it's a laugh, a fun partnership, if you will.
0:27:46 > 0:27:52We both boss each other around but I get bossed around more often. We just get on with it.
0:27:54 > 0:27:58'Most of the hard graft was done by Ismail and John
0:27:58 > 0:28:01'but, for Ismail, this is a family project.'
0:28:01 > 0:28:06Yeah, my mum, I took her on a day out to the auction.
0:28:06 > 0:28:10She helped out with the decorating in the house.
0:28:10 > 0:28:14She's quite good with colour, so she chose all the colours.
0:28:14 > 0:28:19'That's led to a property with different shades from magnolia.
0:28:19 > 0:28:22'The approach seems to have worked.'
0:28:22 > 0:28:24We have tenants on a waiting list.
0:28:24 > 0:28:27It's a matter of showing them round.
0:28:27 > 0:28:32When they saw this, the first person said, "Yeah, we want that one."
0:28:34 > 0:28:37'That's fantastic, but have they got a good deal?
0:28:37 > 0:28:43'Ismail bought the house for £41,000 and has laid out £12,000 on it.
0:28:43 > 0:28:47'With costs, he should have spent around 55,000 tops.
0:28:47 > 0:28:53'Is this a solid investment? What do two local estate agents think?'
0:28:53 > 0:28:55First impressions are
0:28:55 > 0:29:00it's been refurbished, new windows, building works undertaken.
0:29:00 > 0:29:06The front wall's been rebuilt, new kitchen, bathroom. Really nice.
0:29:06 > 0:29:10It's been done to a good standard. It appears to be fully refurbished.
0:29:10 > 0:29:13That included rebuilding the wall.
0:29:13 > 0:29:18The people who bought it have done a very nice job.
0:29:18 > 0:29:21It's bright, finished to a very good standard.
0:29:21 > 0:29:23Kitchen's contemporary. It's light.
0:29:23 > 0:29:26It'll appeal to tenants and other occupiers.
0:29:26 > 0:29:30'Ultimately, rental is the name of the game,
0:29:30 > 0:29:33'but how would it fare if put up for sale?'
0:29:33 > 0:29:39Today, I'd expect to be asking in the mid 70s, maybe high £70,000.
0:29:39 > 0:29:43I'd be looking to put it on the market in the region of £75,000
0:29:43 > 0:29:46to achieve about £70,000.
0:29:46 > 0:29:51'As well as being Ismail's builder, John manages his properties.
0:29:51 > 0:29:54'What does he think about those resale values?'
0:29:54 > 0:30:00- That's good. Sounds like a profit. - Yeah.- If we chose to sell.- Yeah.
0:30:00 > 0:30:03'That could be a £15,000 to £20,000 profit.
0:30:03 > 0:30:05'Not bad in the current market.
0:30:05 > 0:30:09'Have they got the best rental returns, though?'
0:30:09 > 0:30:16Because it's been refurbished to a high standard, rent would be £375 to £395 per calendar month.
0:30:16 > 0:30:22If the property was to be put up for rent, it would achieve £375 to £395 per calendar month.
0:30:22 > 0:30:27Well, we just got a little bit more than that per calendar month.
0:30:27 > 0:30:29£400. Yeah, they were about right.
0:30:30 > 0:30:34'£400 a month or £4,800 a year
0:30:34 > 0:30:36'is a whopping 9% yield.
0:30:36 > 0:30:41'What would they consider to be the secret of their partnership?'
0:30:41 > 0:30:47- We've got boxing gloves. We have it out at the end of the night!- Yeah.
0:30:47 > 0:30:51'When it comes to putting on the pounds and punching above its weight
0:30:51 > 0:30:55'this house has turned into a knockout.'
0:31:03 > 0:31:06'I'm in Derby in the east Midlands,
0:31:06 > 0:31:10'less than half a mile north of the city centre.'
0:31:10 > 0:31:14This is Five Lamps, a residential area of Derby
0:31:14 > 0:31:16just outside the city centre.
0:31:16 > 0:31:21Popular with students, so potential for buy-to-let is very strong.
0:31:21 > 0:31:25The property I'm here to see could be perfect.
0:31:25 > 0:31:27I fancy a drink.
0:31:29 > 0:31:32HUM OF LIVELY CONVERSATION
0:31:39 > 0:31:42Service is a bit slow in here!
0:31:44 > 0:31:46CONVERSATION STOPS
0:31:46 > 0:31:48OK, enough of the joke!
0:31:48 > 0:31:52It's actually the pub here that was up for auction.
0:31:52 > 0:31:56It's disused now and there's a covenant in the sale documents
0:31:56 > 0:32:00that says it can't be a pub ever again.
0:32:00 > 0:32:04What have we got? Three storeys, six bedrooms and this big area.
0:32:04 > 0:32:08Given that it can't be a pub, what could it be?
0:32:08 > 0:32:11Let's look around and find out.
0:32:12 > 0:32:19'This grand building went to auction at a guide price of just £95,000.
0:32:19 > 0:32:25'They may never pull another pint in here but it's not short of space.
0:32:25 > 0:32:29'There's a saloon and lounge bar, a decent sized cellar.
0:32:29 > 0:32:32'What you'd do with it I'm not sure.
0:32:32 > 0:32:37'There's the obligatory toilet block. Very convenient.
0:32:37 > 0:32:41'Then there's the accommodation area upstairs.'
0:32:41 > 0:32:46Up here, you start to think of the options for converting this place.
0:32:46 > 0:32:49The first floor is where the landlord lived.
0:32:49 > 0:32:52Two bedrooms, living room there,
0:32:52 > 0:32:54you've got a loo and a kitchen.
0:32:54 > 0:32:58First option is converting this place into flats.
0:32:58 > 0:33:02Not sure how many you would get out of the property.
0:33:02 > 0:33:06An added complication is that this is a conservation zone.
0:33:06 > 0:33:12The general state, as you can see, it's...not too structurally bad,
0:33:12 > 0:33:14but in need of, definitely, some TLC.
0:33:14 > 0:33:21But you've got to think about the bigger picture of what you're going to do.
0:33:21 > 0:33:24Maybe that will become clear upstairs.
0:33:26 > 0:33:29'You can see the potential here.
0:33:29 > 0:33:33'There are lots of rooms, with plumbing in place.
0:33:33 > 0:33:38'It's too big to be a single house, it can't be a pub,
0:33:38 > 0:33:44'so I reckon it's fairly obvious what to do with this property.'
0:33:44 > 0:33:48Up here, we've got four bedrooms. A decent size one there.
0:33:48 > 0:33:52Very large landing, which is a waste of space.
0:33:52 > 0:33:56That you couldn't call a bedroom. More like a cupboard.
0:33:56 > 0:34:00It's a stud partition wall so you could get rid of that.
0:34:00 > 0:34:02This part, reasonable size.
0:34:02 > 0:34:05Low ceilings, but great potential.
0:34:05 > 0:34:08Up here, it's starting to become clear.
0:34:08 > 0:34:14The way to make most money is as an HMO, a house of multiple occupation.
0:34:14 > 0:34:17Two bedrooms downstairs, four bedrooms here.
0:34:17 > 0:34:22On the ground floor, potential for two bedrooms. Six, seven, eight?
0:34:22 > 0:34:29That size of property is going to generate a humungous potential rental income.
0:34:30 > 0:34:34'If you do rent to multiple occupants,
0:34:34 > 0:34:38'there are regulations on everything from fire safety
0:34:38 > 0:34:41'to the number of bathrooms and kitchens.
0:34:41 > 0:34:44'This will add to the cost of conversion.
0:34:46 > 0:34:48'What does the auctioneer who sold it
0:34:48 > 0:34:52'think is the best option for this old pub?'
0:34:54 > 0:34:56The obvious use is residential.
0:34:56 > 0:34:59It's too large for a single residence.
0:34:59 > 0:35:02It wouldn't fit that requirement.
0:35:02 > 0:35:04There's no garden.
0:35:04 > 0:35:09I think its obvious use, assuming planning, is as a shared house.
0:35:10 > 0:35:14'As a shared house, what could the rental income be?'
0:35:14 > 0:35:19If you let it out as rooms, assuming fully furnished and serviced,
0:35:19 > 0:35:23you'd be charging in the order of £55 to £65 per room per week.
0:35:23 > 0:35:28'If the let is to students, there's only a nine-month occupancy.
0:35:28 > 0:35:33'If you had up to eight rooms, that could net £17,000 a year,
0:35:33 > 0:35:38'a fantastic yield if you got it for around that £95,000 guide price
0:35:38 > 0:35:41'and kept your costs down.'
0:35:41 > 0:35:45Its value will depend on how much it can earn for you.
0:35:45 > 0:35:49Assuming that you got full rental yield from this,
0:35:49 > 0:35:53I can foresee that, ultimately, its value will be towards £250,000.
0:35:53 > 0:35:58'If you could achieve those returns, it might mean drinks all round.'
0:35:58 > 0:36:02It looks like last orders at the Masons' Arms.
0:36:02 > 0:36:06I reckon this has potential as a great investment.
0:36:06 > 0:36:11Convert those rooms, rent out to students, could make a lot of money.
0:36:11 > 0:36:16Before that, a lot of work and that all important planning permission.
0:36:16 > 0:36:18For now...
0:36:18 > 0:36:21it's time, gentlemen, please, for the auction.
0:36:21 > 0:36:24Cheers.
0:36:27 > 0:36:30Round the corner on Edward Street
0:36:30 > 0:36:34you'll find the Masons' Arms, lot 17 today.
0:36:34 > 0:36:39Very imposing and spacious three-storey former pub.
0:36:39 > 0:36:41£100,000? 100?
0:36:41 > 0:36:45100 I have, thank you. At 102, somewhere else?
0:36:45 > 0:36:49102 is bid. 104.
0:36:49 > 0:36:50106?
0:36:50 > 0:36:53108. 108. 110?
0:36:53 > 0:36:56Ten. 110 is bid.
0:36:56 > 0:36:58At 110. 12, quickly?
0:36:58 > 0:37:02At 112. 112. 114.
0:37:02 > 0:37:05116. 118.
0:37:05 > 0:37:09120. 122.
0:37:09 > 0:37:11124. 124.
0:37:12 > 0:37:15Five. Six.
0:37:15 > 0:37:18126. 127?
0:37:18 > 0:37:20£126,000 is bid.
0:37:20 > 0:37:25Seven, quickly? At 126,000, then. Going once.
0:37:25 > 0:37:31Going twice. Third opportunity. Any higher bid? £126,000...
0:37:31 > 0:37:33It's yours, sir. Sold at 126.
0:37:43 > 0:37:48'And, for what seems to me to be a pretty reasonable price of 126,000,
0:37:48 > 0:37:54'the Masons' Arms is in the hands of father and son Danny and George,
0:37:54 > 0:37:56'who immediately saw its potential.'
0:37:56 > 0:38:02Danny, George, nice to meet you. Are you going to get the drink in?
0:38:02 > 0:38:07- It's a while since it's been used as a pub.- Yeah.
0:38:07 > 0:38:13- Tell me about what's happening. - This, if all goes according to plan, will be student accommodation.
0:38:13 > 0:38:18OK. Well, they'll love THAT! You're keeping the bar, I hope.
0:38:18 > 0:38:22We did think about it but I think we'll have to lose it.
0:38:22 > 0:38:26'With or without a bar, this is the best approach
0:38:26 > 0:38:28'to maximise returns here.
0:38:28 > 0:38:35'Moving into the student let market and converting a building into an HMO is complicated.
0:38:35 > 0:38:40'Alarm bells are ringing. I was keen to know what experience they had.'
0:38:40 > 0:38:44We owned a business, which we sold in October.
0:38:44 > 0:38:47- What kind of business? - Tour operator.- Holidays?
0:38:47 > 0:38:52We specialised in sports tours. We were bought out by a large operator.
0:38:52 > 0:38:56As part of that, it allowed us to generate some capital,
0:38:56 > 0:39:00which gave us investment funds to move forward with.
0:39:00 > 0:39:06What better way than a large project that needs everything doing to it
0:39:06 > 0:39:09- in a short time scale? - In at the deep end!
0:39:09 > 0:39:15- We don't live a conventional life. - No.- We like a challenge on the go.
0:39:15 > 0:39:17What have you taken on in the past?
0:39:17 > 0:39:22Well! Prior to the tour operator, running a hotel in the West Country.
0:39:22 > 0:39:28Prior to that, running the business we set up in Derby converting...
0:39:28 > 0:39:32an old building we converted into a hotel.
0:39:32 > 0:39:37What did you say the first time Danny said, "Dad, I've got an idea"?
0:39:37 > 0:39:40I think you know I'm made now!
0:39:40 > 0:39:43It was just, "Here we go again."
0:39:43 > 0:39:46'Dad George has a quarter of the investment.
0:39:46 > 0:39:50'His role will be clearance and making tea.
0:39:50 > 0:39:54'Danny plans to get his hands dirty and will also project manage.
0:39:54 > 0:39:59'I was intrigued to know what he felt was the biggest challenge.'
0:39:59 > 0:40:06Hitting the completion time. If we don't, we'll have a year of not generating rental income.
0:40:06 > 0:40:09- The clock is ticking.- Yeah.
0:40:09 > 0:40:12The sooner we get started, we turn this around.
0:40:12 > 0:40:17Chris our architect has drawn some plans for us fairly quickly.
0:40:17 > 0:40:22As soon as we've got the green light we'll get in here and get started.
0:40:22 > 0:40:26'It sounds like I need to speak to the architect
0:40:26 > 0:40:30'to find out exactly what the plans are.'
0:40:30 > 0:40:34Chris, you've got the job of turning this place around.
0:40:34 > 0:40:37Where do you start? What are your plans?
0:40:37 > 0:40:41The plans are to keep the ground floor as it is,
0:40:41 > 0:40:44but restoring the hall to its previous form.
0:40:44 > 0:40:47We'll keep the lounge.
0:40:47 > 0:40:52We're converting the main bar into a kitchen and dining room.
0:40:52 > 0:40:55We've got a utility room so they can do their washing.
0:40:55 > 0:41:00Outside, we hope they'll recycle, and we've got a herb garden.
0:41:00 > 0:41:04- A herb garden?! - That's right. A herb garden.
0:41:04 > 0:41:07- What kind of herbs?- We don't say!
0:41:07 > 0:41:11Upstairs, we're more or less keeping the layout as is.
0:41:11 > 0:41:14We've got to put extra bathrooms in,
0:41:14 > 0:41:17it's a house of multiple occupation,
0:41:17 > 0:41:19so we're using the landing.
0:41:19 > 0:41:23- In terms of major building works? - There's not a lot.
0:41:23 > 0:41:27'Chris thinks the work can be done for around £50,000.
0:41:27 > 0:41:29'It looks straightforward,
0:41:29 > 0:41:35'but they need to get change of use planning permission and building regulations sorted.
0:41:35 > 0:41:38'I think this could be tight.'
0:41:38 > 0:41:42You've got seven months until the new university term.
0:41:42 > 0:41:46- What happens if you miss the deadline?- Then it's Plan B.
0:41:46 > 0:41:49- Plan B is what?- Is in development.
0:41:49 > 0:41:54No, Plan B would be we'd have to continue to market the property.
0:41:54 > 0:41:59It doesn't mean students aren't going to be looking for property.
0:41:59 > 0:42:03'Danny's right. They may have a second chance.
0:42:03 > 0:42:10'But it's the first round of student intake that would be most lucrative for them.'
0:42:11 > 0:42:16Danny and George, doing exactly the right thing
0:42:16 > 0:42:18converting this into a student let.
0:42:18 > 0:42:21The potential returns are huge.
0:42:21 > 0:42:28But that depends on getting it finished in time for the start of the university term.
0:42:28 > 0:42:31Will they do it? Find out later in the show.
0:42:34 > 0:42:39Did our buyers have their eyes wide open when they made those bids?
0:42:39 > 0:42:41Or were they blind to the pitfalls?
0:42:41 > 0:42:44Let's see how clear their vision was.
0:42:45 > 0:42:49'In February 2007,
0:42:49 > 0:42:53'we first saw what looked like a straightforward property,
0:42:53 > 0:42:58'a lodge house built for the caretaker of the cemetery.
0:42:58 > 0:43:02'It needed renovation and came with a plot of land
0:43:02 > 0:43:08'and outline planning permission to build two semi-detached houses.
0:43:08 > 0:43:12'Experienced developers Michael and Matthew, father and son,
0:43:12 > 0:43:14'had more ambitious plans.'
0:43:17 > 0:43:21We will contemplate knocking the house down
0:43:21 > 0:43:24because it has serious structural damage,
0:43:24 > 0:43:30and apply to replace that one house with an identical pair
0:43:30 > 0:43:32as in plots one and two.
0:43:32 > 0:43:38- You're looking at four properties, four dwellings?- That's the idea.
0:43:38 > 0:43:41'So, it was four new-builds instead of two.
0:43:41 > 0:43:46'When we went back nine months later, it wasn't going to plan.'
0:43:46 > 0:43:49# What a good year for the roses
0:43:50 > 0:43:54# Many blooms still linger there... #
0:43:56 > 0:44:00'The only thing that had emerged from the ground was a rose bush.
0:44:00 > 0:44:04'There were no houses, garages or bedrooms.'
0:44:04 > 0:44:07What has happened happens all the time
0:44:07 > 0:44:12to all developers whenever you put in a planning application.
0:44:12 > 0:44:18We haven't lost time because we've been inefficient, it's the way the system works.
0:44:18 > 0:44:22'Now, nearly three years after they bought the house,
0:44:22 > 0:44:26'toilet block and land, are they flushed with success?
0:44:36 > 0:44:40'Yes! At last! The four properties are built
0:44:40 > 0:44:42'and are now being lived in.
0:44:49 > 0:44:54'To get to this stage, they had to compromise, as Matthew explains.'
0:44:56 > 0:44:59Well, er...a smallish kitchen.
0:44:59 > 0:45:02One I'd have liked to have made larger.
0:45:02 > 0:45:07Unfortunately, we wanted to give it another eight inches that way.
0:45:07 > 0:45:14The planners said, "No, you can't have it," because they want to make bigger garages.
0:45:14 > 0:45:20We had to bring this wall back in, I think seven or eight inches.
0:45:20 > 0:45:23It's made a smaller kitchen.
0:45:23 > 0:45:27Still a nice kitchen, but it's not what we wanted.
0:45:29 > 0:45:32'They didn't get the kitchen they wanted,
0:45:32 > 0:45:37'but did get three bedrooms, with the master being en suite.
0:45:39 > 0:45:43'What's their overall view of this project?'
0:45:43 > 0:45:45It's been difficult.
0:45:45 > 0:45:47But not too bad.
0:45:47 > 0:45:49We have sold them.
0:45:49 > 0:45:53It's been one of those things, the last year and a half.
0:45:53 > 0:45:59The lucky thing was we had four developments on prior to the crunch,
0:45:59 > 0:46:03and we saw it, it obviously was going to happen.
0:46:03 > 0:46:08So we sold everything. The only four we had were these four houses.
0:46:08 > 0:46:12We thought we were going to sell them on the market at 190,
0:46:12 > 0:46:14sell them for 185.
0:46:14 > 0:46:19Well, we sold one at 145 and two at 135.
0:46:19 > 0:46:22So we've made a loss.
0:46:22 > 0:46:27'They put the fourth house into an auction and sold it for 135,000.
0:46:27 > 0:46:32'The result has been a first for Michael, and not a good one,
0:46:32 > 0:46:35'after over 40 years in the industry.'
0:46:35 > 0:46:40# Well, I'm seeing things for the first time
0:46:41 > 0:46:43# In my life
0:46:44 > 0:46:46# In my life. #
0:46:49 > 0:46:55The first development, which is tiny, thank God, where we've lost money.
0:46:55 > 0:47:00We've always come away with a profit, until this time.
0:47:00 > 0:47:03£40,000 we've had to write off.
0:47:03 > 0:47:07'This wasn't the deal they initially hoped it would be,
0:47:07 > 0:47:11'but they'll recoup their losses on other projects.
0:47:11 > 0:47:17'With teamwork, they achieved their goal of building four properties.'
0:47:18 > 0:47:23Matthew is very deeply knowledgeable in construction.
0:47:23 > 0:47:28- Money's MY thing.- Dad stays in the office. I go out in the rain.
0:47:28 > 0:47:33- And do the hard work.- There is a bit of that!- I'm being cheeky.
0:47:33 > 0:47:35That's the way it works.
0:47:35 > 0:47:40'They may have complementary skills, but they're also father and son.
0:47:40 > 0:47:44'Surely, that causes friction at times.'
0:47:44 > 0:47:49MUSIC: "Son Of My Father" by Chicory Tip
0:47:49 > 0:47:53Sometimes, it all works fine and sometimes we argue.
0:47:53 > 0:47:56It works quite well. It's fun.
0:47:56 > 0:48:03- We have some hellish arguments but, on the other hand, it all turns out right in the end.- Yeah.
0:48:03 > 0:48:07'Perhaps Matthew should have said, "NORMALLY turns out OK in the end."
0:48:07 > 0:48:12'Did they cut their losses and run at the right time?
0:48:12 > 0:48:16'They sold two of the houses at 135,000.
0:48:16 > 0:48:19'Was that a rash decision?
0:48:19 > 0:48:25'Could they have held out for more? What do local estate agents think?'
0:48:25 > 0:48:27It's finished to a high standard.
0:48:27 > 0:48:32The kitchen could have been a bit bigger.
0:48:32 > 0:48:35A really nice property in a nice location.
0:48:35 > 0:48:38I wasn't too keen on the look of the outside.
0:48:38 > 0:48:44I'm pleasantly surprised at the internal side. Very nicely laid out.
0:48:44 > 0:48:46'Generally favourable comments,
0:48:46 > 0:48:52'but could they get more than the 135,000 they sold some of them for?'
0:48:53 > 0:48:59I'd put this property on the market for offers of £140,000 to £145,000.
0:48:59 > 0:49:05We could put this on for £140,000 to £145,000.
0:49:05 > 0:49:10So we appear to have done the right thing.
0:49:10 > 0:49:15I'm happy with what's happened. I agree that would be the right price.
0:49:15 > 0:49:20'They're probably right, but they might have got a little bit more.
0:49:20 > 0:49:24'Do they regret buying it in the first place?'
0:49:24 > 0:49:27If there hadn't been the banking collapse,
0:49:27 > 0:49:30this would have been a diamond development.
0:49:30 > 0:49:33And it still is.
0:49:33 > 0:49:38- It's a nice property.- Oh, yes. - And we got compliments.- Absolutely.
0:49:38 > 0:49:43You could still bring people here and say, "We did that."
0:49:43 > 0:49:47- And they'd say, "Gosh. Pretty good." - Be proud of it. I am.
0:49:48 > 0:49:53'Now there are four houses where there was once only one.
0:49:53 > 0:49:58'We hope, with an improving market, they'll have more luck next time.'
0:50:05 > 0:50:08'Back in Derby, with the last pint pulled
0:50:08 > 0:50:12'and a covenant in the deeds preventing its future use as a pub,
0:50:12 > 0:50:15'it was last orders at the Masons' Arms.
0:50:15 > 0:50:19'The building was too big for a single house.
0:50:19 > 0:50:26'Local father and son Danny and George set their sight on a different market.'
0:50:26 > 0:50:31# We are young, we run green Keep our teeth nice and clean
0:50:31 > 0:50:35# See our friends, see the sights Feel all right... #
0:50:35 > 0:50:40This, if all goes according to plan, will be student accommodation.
0:50:40 > 0:50:42- They'll love THAT.- Yeah.
0:50:42 > 0:50:47'The clock was ticking and they had six months to get it ready
0:50:47 > 0:50:49'for the first student arrivals.
0:50:49 > 0:50:52'11 months on, did they do it?
0:50:54 > 0:51:01'The outside is completely finished, with new windows, doors and roof.
0:51:01 > 0:51:07'Inside, there are great new living spaces in what was the bar area.
0:51:07 > 0:51:14'Danny managed to sell the bar to a friend, so it didn't go to waste.
0:51:14 > 0:51:17'This whole floor is a communal area
0:51:17 > 0:51:21'with living rooms, dining room and kitchen.'
0:51:26 > 0:51:29This is the back end of the bar area.
0:51:29 > 0:51:35Under the Housing for Multiple Occupation licence we've had to put two of all appliances in.
0:51:35 > 0:51:38Two ovens, two hoods, two burner rings.
0:51:38 > 0:51:42We've got the space to put two fridges in.
0:51:42 > 0:51:49In the utility room, we have plumbing for two washing machines and a tumble drier.
0:51:51 > 0:51:56- 'This is looking like better student accommodation than- I- remember.
0:51:56 > 0:52:00'With eight bedrooms and three bathrooms,
0:52:00 > 0:52:03'it meets current regulations for HMOs,
0:52:03 > 0:52:06'houses of multiple occupancy.
0:52:06 > 0:52:10'We seem to be lacking one small detail. Where are the students?
0:52:10 > 0:52:13'Did the boys meet their deadline?'
0:52:13 > 0:52:15No, we didn't.
0:52:15 > 0:52:17But it's not a problem.
0:52:17 > 0:52:21Derby University have 158 courses starting in January.
0:52:21 > 0:52:26We're now in the position where we can go for the November sign-ups
0:52:26 > 0:52:28to move in in January.
0:52:28 > 0:52:33'It's not too much of a disaster, and the refurbishment's gone well.
0:52:33 > 0:52:38'While Danny looked after things and did a lot of work himself,
0:52:38 > 0:52:42'his dad, who has a quarter share, was kept fairly busy, too.'
0:52:42 > 0:52:45My dad's played an important role.
0:52:45 > 0:52:49He's not been involved in building work but he's been key for support.
0:52:49 > 0:52:53He's helped with administration, the bill paying,
0:52:53 > 0:52:56clearing the rubbish and keeping us motivated.
0:52:56 > 0:53:00He's used his car to do about 150 tip runs!
0:53:00 > 0:53:03We now call his car the "skip with wheels".
0:53:03 > 0:53:07'With old carpet, furniture, fixture and fittings to remove,
0:53:07 > 0:53:11'George must have been a regular at the dump.
0:53:11 > 0:53:16'But it was just a start of bringing architect Chris's plans to life.
0:53:16 > 0:53:20- 'Is he happy with the result?' - Very pleased.
0:53:20 > 0:53:24The students are going to have a fantastic time.
0:53:24 > 0:53:27'I'm sure they will, even without the bar!
0:53:27 > 0:53:31'Student digs in a pub? How cool is that?'
0:53:31 > 0:53:34The challenge wasn't for me.
0:53:34 > 0:53:40It was for Danny to get it done to a very high standard and produce this fantastic building.
0:53:40 > 0:53:42'To get the high quality finish
0:53:42 > 0:53:48'with the fitted kitchen and three bathrooms wasn't going to be cheap.'
0:53:48 > 0:53:50Initial budget was about £50,000.
0:53:50 > 0:53:56Early on, we brought in extra finance to do everything we needed to.
0:53:56 > 0:54:00We raised the budget to 75,000 and pretty much came in on budget.
0:54:00 > 0:54:05'With that £75,000 spend on a building
0:54:05 > 0:54:07'they bought for 126,000,
0:54:07 > 0:54:11'Danny and George have committed just over £200,000.
0:54:11 > 0:54:15'So, has it been a worthwhile investment?
0:54:15 > 0:54:20'What do two local property experts think?'
0:54:20 > 0:54:24Transformed completely. I saw it as it was.
0:54:24 > 0:54:28You wouldn't recognise it as the same place. A fantastic job.
0:54:28 > 0:54:34This house is going to appeal to students in a very big way.
0:54:34 > 0:54:39They can walk into town, or walk the other way to the university.
0:54:39 > 0:54:41Almost equidistant. Perfect.
0:54:41 > 0:54:45They've organised it very well. A lot of rooms have been divided.
0:54:45 > 0:54:49Good living accommodation downstairs. Bedrooms are OK.
0:54:49 > 0:54:53Not over-sized, but adequate for the purpose.
0:54:53 > 0:54:56'It might fit the bill for students,
0:54:56 > 0:55:03'but will it pay the bills for Danny and George's £200,000 investment?'
0:55:03 > 0:55:09On fully serviced room accommodation like this the going rate is around £75 to £80 a week.
0:55:09 > 0:55:15That's achievable. Not over a full 52-week year. It's a bit truncated.
0:55:15 > 0:55:17I'm sure it's what they'll achieve.
0:55:17 > 0:55:21If the property were rented out, individual rooms,
0:55:21 > 0:55:26they would make around £80 a week, £640 a month, about £30,000 a year.
0:55:26 > 0:55:32That's pretty much what we budgeted. £80 inclusive of bills. Very happy with that.
0:55:32 > 0:55:35'£30,000 a year would be a fantastic return,
0:55:35 > 0:55:38'representing a massive 15% yield.
0:55:38 > 0:55:44'This high rental income should also mean a healthy resale value.'
0:55:44 > 0:55:48Based on a rental return between £30,000 and £32,000 a year,
0:55:48 > 0:55:52this will have a market value of between £300,000 and £320,000.
0:55:52 > 0:55:55Around the £300,000 mark.
0:55:55 > 0:56:00I think it's difficult to put a value on the commercial property.
0:56:00 > 0:56:03That sounds very interesting at this stage.
0:56:03 > 0:56:07'With a potential £100,000 profit, if sold,
0:56:07 > 0:56:13'and a tremendous rental return, it is time for drinks on the house.
0:56:13 > 0:56:17'How will Danny cope with his lovely property being occupied by students,
0:56:17 > 0:56:20'not always careful tenants?'
0:56:20 > 0:56:24As long as everything's in order with deposits, I don't mind.
0:56:24 > 0:56:28I was a student once. They've got to work hard and play hard.
0:56:28 > 0:56:32I should be a good landlord, fairly understanding.
0:56:33 > 0:56:37'And if student days are the best years of your life,
0:56:37 > 0:56:42'what better way to spend them than in accommodation to match?'
0:56:44 > 0:56:49Join us for lots more auction action on Homes Under The Hammer.
0:56:49 > 0:56:51See you then. Goodbye.
0:57:12 > 0:57:14Subtitles by Red Bee Media Ltd