Episode 72 Homes Under the Hammer

Over the years, we've seen the ups and downs of the property market.

Whether it's an investment or a home you're looking for, you want the value to go up.

Make sure you buy at the right price and one way is to buy your next home under the hammer.

-We've all heard about the ever-changing property market.

-But buying at auction is simple.

Your hand goes up, the hammer comes down, you've bought it!

And that's what happened when today's properties were sold.

There are great views from this South Wales property, but...

I'm getting increasingly worried about this house.

This Southampton semi has a large living room, but is a tight squeeze.

I'm a bit disappointed with the size. It feels a bit cramped.

And in Telford there's a one-bed flat that doesn't make the best first impression.

Oh. Very dark and dingy.

All of these properties went to auction and we'll find out who bought them and what they paid

when they went under the hammer.

For the first property that went to auction, I've come to spectacular South Wales.

This is the former mining village of Blaengwynfi, located in the Upper Afan Valleys.

Port Talbot is just 10 miles away.

The property I'm here to see is right up in the hills, so incredible views.

The drive here was spectacular.

Two-bedroomed mid-terrace, built in the early 20th century to house local miners.

It had a guide price of £21,000.

Let's take a look.

The front steps are pretty steep and this along with the road access

might put off some buyers, but for others that extra height could mean even better views across the valley.

The outside of the house isn't in great condition.

What's it like inside?

There's that little porch to keep the rain and the cold out.

Then straight into your front sitting room. Not a bad size.

Hmm.

That's not good, is it?

Look at the way the ceiling is kind of bowed.

We'll investigate more in a minute. One thing I'm concerned about is this.

Signs of damp all the way over this front wall. That's either penetrating or rising damp.

Usual thing - not too much of an issue to sort that out, but what damage has it created?

An open-plan area. I like that. You come through into the kitchen.

It's a nice-sized space. The units are fairly tired and dated,

but it's not a bad-sized room, but again look at the angles on some of these doors. And cracking.

Loo at the back and then out the back it gets really bad,

but I'm really concerned about these structural issues. Not good.

# I smell real trouble

# Lord, I smell trouble ahead of me... #

Next to the downstairs loo there's a junk-filled room that screams, "Wasted space!"

You could knock it through and have a lovely open dining/living area at the back here.

Outside, like many terraces here, the garden rises very steeply and could do with a good tidy,

but coming out here gives me a chance to inspect the back of it.

Well, out the rear of the property you can see why we've got so many problems in the house.

Flat roof here, the guttering, as you can see, is completely shot, across most of the building.

All the water pours down here, going into the house.

It just reeks of a property that hasn't had any maintenance.

It's relatively easy to fix the actual source of the problem.

Resolving the problems it's created is going to be a much bigger and more expensive thing.

It's easy to forget that the priority for a property should always be the state of the exterior,

rather than the interior design. You can choose the loveliest flooring and furnishings,

but if the rain gets in, you could kiss it all goodbye. The front is crumbling, the back's in a bad way.

And the ground floor needs some serious TLC.

So up a quite steep and dangerous staircase. There should be another banister there.

Two bedrooms and a bit of a surprise - an upstairs bathroom. That's nice to see.

But come up here and the problems with the structure of this building become absolutely pronounced.

This ceiling is all over the place. There's damp.

I'm getting increasingly worried about this house!

I think I'll make a sharp exit.

# Well, worry, worry, worry

# Worry is all I can do... #

A good deal of work is needed on this house that went to auction guided at £21,000.

I don't think it's great to have a boiler in the bedroom, so move that.

But if the buyer got this for anywhere near the guide price, there's quite a lot of scope here.

To find out how the house compares to others in the area,

I asked a local property expert to come and take a look around.

-The main selling point could well be the beautiful setting.

-Fabulous,

in summer when the weather isn't so severe, but in winter when it snows,

this hill will be quite an obstacle. If there's ice down, it goes right to the bottom.

That's worth remembering. Always try to see what you're buying in good and bad weather conditions.

Apart from the wonderful views, what's the potential here?

Well, the property is in need of quite a lot of work.

The kitchen could be salvaged. The bathroom, you could make use of that.

There's potential to extend, but spending quite a lot of money on that wouldn't reflect in the value.

That guide price of £21,000 was attractive, but a lot of work is required here.

But then how much could it be worth?

If this property was renovated to a high standard, then I believe as a two-bedroom property

it could be marketed and maybe achieve between £58,000 and £62,000.

What about renting? How much income could this generate?

As a rental property with two bedrooms, there is a local demand.

I would estimate the rental value to be £360-£370 per calendar month.

Well, you can't deny this is a beautiful location.

Unfortunately, the ceilings and the floors of this house are as undulating as the countryside,

which could be a very expensive problem. So who took this on when it went under the hammer?

Right, we're going to lot 6.

We're down in Blaengwynfi, near Port Talbot.

Some lovely views from that village. What shall we say? 28 for it?

Who's got 26 to start?

Well, let's get on. 20, then. Thank you. 20 I'm bid.

At 20,000 I'm bid. And one I'm bid. Thank you. At 21,000.

At 21,000. 2 if you like. At £21,000.

2 at the back. Thank you. I saw it. 22. 23, seated.

You're out standing, sir. At 23 seated there. 4, can I? Thank you.

At 24 on the steps. At 24, you're out... 5 on my right. At 25.

Make it 6, will you? Thank you, madam. At 26. Don't do that, sir.

You have to do it that way. At 26 on the steps. I'll take a half if you like, then. No, he says.

Not even a half. At 26. I'm going to sell it.

The lady on the steps will get it.

At £26,000, are we all done? The hammer's up.

At £26,000. Yours, madam. Thank you very much.

That final bid of £26,000 was made by Nicky who was at the auction with her partner Paul.

Nicky is a former carer who used to work for a building society.

Paul does contract work as a manager for housing associations.

I met up with the couple to hear about their plans.

-Good to meet you both. Congratulations. What an amazing location!

-Absolutely fabulous!

-Wonderful.

-Can't beat the views.

-You don't sound Welsh. Not locals?

No, I'm based in Swindon now. Paul's Newbury.

-And I was 30 years in London.

-What brought you to buying a property in Wales?

-Pension fund!

I've not actually worked for three years. I've been looking after my parents.

And...got to do something.

And it is my pension. That's what I'm looking to do.

-So why here and why this house?

-We looked at plenty of places

and there were plenty of places that we would have liked. We liked this one best of all.

When Nicky saw this one, she set her heart on it.

-What experience have you got of this?

-None.

-I've worked in social housing for a long time.

I've worked on void properties, speccing the work out.

I'm au fait with the mechanics of houses and housebuilding and house repairs.

My middle son has a lot of experience of that kind of work.

So between us we've got the expertise that we need for the job.

That's really good to hear because this property needs that experience to turn it round.

-So, Nicky, tell me exactly what you'll do.

-Kitchen we plan to move out to the back.

This is going to be a family area. Upstairs, we've got all sorts of problems

with the floor joists, so we've got to re-lay those.

The bathroom we'll just switch around a bit and, basically, just make it as lovely as we can.

There are some structural concerns. Looking at the walls you think, "Goodness me!"

There's a lot of penetrative damp on that front wall for a long time.

It's done the damage. We've got bowing in the roof, we've got bowing in the ceiling above the bedroom

and in the living room. It all seems to track down to these joists. They are rotted off at the end.

Paul and Nicky hope to complete the work in six months and have a budget of £20,000.

As that's mostly being spent on materials rather than labour, that money will go further.

They've also got a 10% contingency in hand, just in case.

So then what's the plan for it?

Not too sure.

We've got all sorts of options, really.

I'd be quite happy to live in it while we do the next one.

Or it could just be that we say, "This isn't for us," and not bother again.

It's the next step in life. Ours is a fairly new relationship, anyway.

So this is something we're doing together for us.

It's the start of the rest of our life and you can't get more exciting than that.

I agree. There's nothing quite as exciting as square one when the possibilities are infinite

as on a project like this one.

Well, Nicky and Paul clearly delighted to have found this place,

but I am very concerned that even with their pretty substantial budget

it's not going to cover the work they need to do to sort it out.

Still, at the end of the day, what you can't take away is those views.

How are they going to get on? Find out later in the show.

For the next property that went under the hammer, I've come to Southampton

to a rather rural sounding housing development, near the university and 10 minutes' drive from the city.

I'm on the Flowers Estate, one of the more affordable areas of Southampton.

And who can argue with the guide of only £105,000-£110,000 for a three-bedroomed semi-detached?

Not me! I'm going to go inside.

# If you want to give them flowers

# Make them paper ones you send... #

From out here, the property looks a bit wilted. Let's hope it's in better shape inside.

It'll be quite interesting to find out what you do get for your money in this place.

OK, let's start. Woodchip wallpaper everywhere in here.

Bit of a springy floor as well, but somebody has installed some new central heating,

so that's a plus point.

An old electric fire, that's got to go.

Not a bad space in here, but when you take into account out here is a very small kitchen

and you wouldn't get a table and chairs in there and you've got to sit in there to eat,

I'm a bit disappointed with the size. It feels a bit boxy and a bit cramped.

And just over there is the only bathroom in the house. There's not one upstairs.

So my first impressions? A little bit disappointing.

A shame as the house isn't in terrible condition.

It just needs a bit of a rethink on the layout to make it more homely and practical.

Let's head upstairs to see if the key to success for this place lies there.

Upstairs, it's a real straightforward layout - one, two, three bedrooms. That's it.

This is the master and not a bad size, but what I'm quite excited about is this, look.

Lovely storage space, so you could use it for storage or perhaps think about installing a shower room.

I think that would really add to this property,

but just remember, this is a great rental area,

so whoever takes this on doesn't want to go overboard and spend too much money.

So, three bedrooms, near to the university could be the first bonus here.

And from the research I've done, the rental income could be tempting.

Outside, there's a super garden which broadens its appeal to families as well.

This house seems solid and I think the issues are mainly cosmetic,

so there's not a fortune to spend here and it's a fantastic rental area

which is where your opportunity lies.

Now, buy for around the guide, renovate for £10,000 tops

and you're looking at over a 6% yield.

That beats the bank, so therefore, I think it's a good bet.

Let's see what an estate agent makes of the property

and get his expert opinion on the potential here.

As it's so near to the university,

could it appeal to a learned developer, well-read in the buy-to-let market?

I think this could be a student let.

It's not declared as a prime student area.

It's at the bottom end of the scale, even though it is within close proximity.

There's a slim chance of it. You'll get higher values if you go along that route,

but it's more along the family route, I personally believe.

How much could the house hope to generate, whether let out to students or a family?

If the property was in good condition, letting to students,

I'd say about 800 per calendar month.

However, to a small family,

you're probably looking more along the lines of 600 to 650 per calendar month.

Remember, the house was guided at between £105,000 and £110,000.

What is its possible market value as it is and how much could it be worth once renovated?

As I see it, the property today, I personally believe it's worth around 125,000.

Once it's actually refurbished, I think you're looking at a ceiling value of around 145,000.

If this house was picked up for around the guide price of £105,000 to £110,000,

this wilting property could look blooming marvellous.

Names can be misleading, but appearances can also be deceptive.

This house is a decent little home.

More than that, it's a pretty good investment. Let's see who spotted it at the auction.

Lot 33. A three-bed, semi-detached house, requiring some refurbishment.

Very attractive figure. Somebody make me a bid of just 90,000?

90. Thank you, sir. 90 we've got. Looking for 91 elsewhere.

91, we do. Thank you.

91. I've got my two bidders. 92?

92. 3? 3 we have.

And 4. 5? 5 we have.

6? Nice and quick, 6.

7? 97.

98 against. 99? 99 is with you now.

100? 100 we have.

Fresh bid, 101. 102?

102. You're close to each other. Yours, sir, at 103, raising... 104.

105? 105, yes, thank you.

106? 106 we have.

107 is now bid. 108.

108,000.

109? 109, last ditch there.

Fresh bid. 110,000 is yours, sir.

Are you coming back in, either of you two? No?

Coming in at 111 here. 112 we have. 113?

113. Looking for 114... 114. 115?

114 and a half. 114 and a half. 115?

115. Half? 115 and a half.

116?

Fresh bid here, 116.

Did catch your attention. 116 and a half, sir?

New bidder at 116 and a half. Two new bidders here. 117.

117 and a half? Bid, sir. Thank you. 118 we have.

18 and a half. 19? 119.

119 and a half. 120. Think where this is going.

We've had a few examples. 120 is there. 120 and a half.

121. 121 and a half. 122? I'm doing the maths.

122. 122 and a half.

123.

23 and a half...? 124.

125 here.

125 and a half. No, shake of the head.

Looking for 126 anywhere else... 125,500 then once.

125,500 twice.

125,500 third and final time...

'That successful bid of £125,500 was made by Phil.

'He went 500 quid over the stamp duty threshold which means he has to pay an extra 1%.

'Phil's got a lot of experience with property.

'I met up with him to find out what his plans are for this, his latest purchase.'

-Phil, congratulations.

-Thank you.

-It's really good news that you got this. Tell me more about yourself.

-Well, I've been doing property since 1997.

-Are you a developer?

I'm a developer, landlord, investor, a bit of each of those, really.

There wasn't a plan at the time to go into property.

I was working as a housing officer, so that was my starter pack of experience and insight into things.

I bought my first property, then I went away for a couple of years.

I lived in Egypt where I was doing some community development work,

then I came back and did some more work in housing.

I bought two further properties, then I went away and did some further studies in Norwich.

When I came back, I thought I could make a bit of a business out of this,

so I went out and bought four or five all at once,

kept up with the work abroad occasionally,

and then concentrated a lot of my resources in property.

What sort of work abroad is it that you do?

When I worked in Cairo, I was working mainly with Horn of Africa refugees.

Many Sudanese came to Cairo because it was a safe haven for them.

I headed up an Adult English Programme. I've done some food security work

with Tearfund in Burundi.

I've worked in Afghanistan and Kyrgyzstan

and I've worked in Kenya as well,

so it's been fairly varied in both the countries and the type of work.

It's important to have that sort of work/life balance. I'm involved in my local church.

I think people are important, so that's what I try to reflect in my life too.

'Phil's quite right, of course.

'People are more important and often it's not money that makes you happy.

'It's the freedom it gives you to make the choices you want to make.

'Phil seems to have the balance just about right.'

What are you going to do to this place to bring it to life because it's a bit tatty on the inside?

It is. There's not a tremendous amount that needs doing, but I'll replace the kitchen.

I'll do some work on the bathroom. There is some lovely wallpaper here which will see the end of its life.

Whoopee! The woodchip's going!

Absolutely. Skimmed and painted a fairly neutral colour for the letting, then outside,

I'll make that into a maintenance-free garden,

thinking about the letting, but making it look nice for the sale.

-So, the budget, come on. You've got a bit of work to do.

-That's right.

The bathroom, the kitchen, getting rid of the wallpaper. What's your budget?

-I'm happy to spend £5,000 or £7,000 on it.

-That's quite a low budget.

Are you going to be doing quite a lot of the work yourself?

My general approach to these things is to do as much as I can myself, putting in my own elbow grease,

except where I'm limited by time, tools, law and expertise.

'Getting the experts in when required makes perfect sense

'and you can't fiddle with gas or electricity as that's illegal.

'Sometimes it's worth paying for a good decorator

'to add that final, sparkling, professional touch.'

-How long is this going to take you?

-I'm hoping three or four months.

I've given myself quite a lot of time. I'm not overly desperate.

-Phil, good luck with this. It's been lovely meeting you. Well done.

-Thank you.

-Lovely.

# Give me a country

# Where I can be free... #

So, property developing gives Phil flexibility and freedom. How fantastic!

And the more money he can make, the more aid work he can do,

so, fingers crossed, this house will make him some decent cash. Find out what happens later on in the show.

'Coming up, this Telford flat has only got one bedroom, but you can fit in a lot.'

You've got a reasonable cupboard there and a massive cupboard here.

'We return to Southampton where there's been a match made in heaven.'

They were looking to move near to the university, so it's ideal for them and for me too.

'But first, it's back to South Wales.'

My middle son Ferrell has done an amazing amount of work on the place.

'When we were last in the beautiful Welsh village of Blaengwynfi,

'Nicky and Paul had just bought this semi-detached property for 26,000.

'The couple had bought it to supplement their long-term pension provisions,

'but once they had renovated the house, they were still undecided what to do with it.'

-So once you've done it up, what's the plan for it?

-Not too sure.

We've got all sorts of options, really.

I'd be quite happy to live in it while we do the next one

-or it could just be that we'll say, "No, this isn't for us," and not bother again.

-Hmm.

Well, a whole year had passed when we met up again with Nicky and Paul

and Paul's son Ferrell back at the property to check on the progress.

Work is still ongoing, but the couple have had a family bereavement,

so they've not been able to give the project their full attention.

The delay meant their schedule for the refurbishment was affected by the weather

and the property turned out to be in a bad way.

The whole place was soaked through.

The roof had failed.

A lot of the timber work was rotted away and it was irretrievable,

so we took the decision that we would remove everything and start again.

So, apart from new doors, windows and rendering on the outside,

both the roof and roof timbers have been replaced.

What are the plans for upstairs?

What's happening up here, basically, is we're going to be using the same layout as before.

We're keeping it as two bedrooms,

a smaller one at the back, a nice, big one at the front.

And we're redoing the bathroom in the same place.

Slightly different layout as far as the bathroom goes.

Considering what we had to do with the roof and all the other work that's going on, it's doing fine.

The couple have now decided to keep the house and move in when it's completed.

While the original upstairs bathroom remains,

the loo and former downstairs bathroom at the back have been demolished.

Now that we've taken the bathroom out and the wall, this will be the kitchen.

It's going to be a U-shaped kitchen.

We've got the possibility of making a recess in one corner for some extra storage space.

The most important thing we did was to make this hole for a window, so we've got natural light coming in.

Over here will be the gas boiler and the sink under the window with the washing machine next to it,

so that's nearest to the outside.

You'll remember Nicky and Paul are not from Wales, so they've had to travel from Swindon and Newbury

to work on the house.

The difficulty for us has been that it is a long way.

We do have to virtually camp out here when we come down.

Nice to have been a bit nearer to it. You can't just pop in and do a couple of hours when you've got time.

As well as Nicky and Paul's efforts, they've also had help from Paul's three sons.

My middle son Ferrell has done an amazing amount of work on the place.

Both my other sons have been down and done a little bit with us too,

but chiefly, it's been Nicky and I and Ferrell that have been here.

Ferrell's got experience in bathroom and kitchen fitting and general building, but this was a first.

I've got a bit of knowledge behind me, but nothing to the extent of a complete rebuild of a house.

It's a challenge for me as well. The reconstructing was the major part.

All the woodwork had to be replaced and all the floor joists.

The roof was a big one, obviously, to get it watertight.

How much have they had to spend on the project so far?

Remember, they had allowed £20,000 for the whole refurbishment.

So far, we have spent around about £12,000.

We've still got the internal fitting to do,

so I'm confident that we'll use the rest of that budget, but that we won't go over budget.

Time to get some property advice and valuations

from two local estate agents.

I think the work that's been done so far, it obviously was necessary.

Quite a lot of effort has gone into it,

but it should be plain sailing now.

The layout, I think, is great.

The two bedrooms is fine.

It'll have a decent-sized lounge, dining room,

which a lot of people like, and a reasonable-sized kitchen.

I think the layout is just about right.

It frees up what was a bathroom to create more space downstairs.

And the kitchen plan is just about right for the size of property.

Once the house is finished, Nicky and Paul plan to move in,

but if they decide some time later perhaps to rent it out, how much income could it generate?

The rental value for this property, in pretty good condition,

would be about £350 to £360 per calendar month.

I would suggest rental value on this property is 350, 360 per calendar month.

It doesn't surprise us really that that's what they're talking about

because that's what we'd expect it to go on the market for rental-wise,

but we're not tempted in the slightest.

What about resale value of the property once the work is complete?

Bearing in mind that they paid £26,000 at the auction

and hope their budget will stay at around 20,000, making a total outlay of £46,000,

how much could the house be worth?

As long as the work was finished and to a decent standard,

I would suggest the property would be valued at £55,000.

However, with the market as it is at the moment,

they would do exceptionally well to get offers over £52,000.

If the property was finished to a fairly high standard,

in today's market, I'd expect this to achieve between £52,000 and £55,000.

That valuation range of 52,000 and 55,000 would generate between £6,000 and £9,000 pre-tax profit

before the usual selling expenses.

It doesn't seem unreasonable, considering the state of the housing market,

but we always looked on it as how much we were getting a house for that we could make a home in.

After hearing those valuations, are they still pleased they bought it?

-Yeah.

-Absolutely.

-Absolutely.

-It's such a lovely place to be.

It's quiet, it's peaceful, it's a gorgeous place.

If I was only able to spend two weeks in a year in the house, I would consider it worth it.

It's really lovely.

This is Ironbridge in Shropshire, known as the birthplace of the Industrial Revolution

because of this bridge behind me, built by Abraham Darby in 1779.

It was the first bridge ever to be constructed out of cast iron

and people travelled from far and wide to marvel at its ingenuity.

And they still do.

Today, Ironbridge is the jewel in Telford's industrial crown

and its multiple museums, shops, tea rooms, not to mention history, make it a lovely place to visit.

Let's hope our next property is as good as the view.

Well, travel around ten minutes away from Ironbridge and fast-forward a couple of hundred years or so

and you find yourself in Brookside, a purpose-built estate largely of flats.

Not particularly pretty from the outside, but what about the inside?

I'm here to see a one-bedroom flat. It had a guide price of 30,000 quid. Let's take a look.

OK, this 1970s development isn't everyone's dream location, but it is well maintained.

Inside, it's up to the first floor and along the corridor to the flat itself.

Oh, straight away, very dark and dingy.

Maybe it's the colour of the walls, but I'd want to get some light into the flat here.

Bathroom and loo there, a reasonable size, in reasonable nick.

Bedroom there. That's not bad, a good-sized double.

Your main living room area there and then through to the kitchen.

Maybe it's because all the windows seem relatively small.

That, I think, is giving this a fairly sort of oppressive feel to the flat.

But lots of storage. You've got a reasonable cupboard there and an absolutely massive cupboard here,

so you could think about opening this up somehow and just a careful choice of colours.

Stick with your browns, your lights, a light-coloured carpet.

Do whatever you can to increase the feeling of space because for a one-bedroom flat, it's not bad.

And don't forget that guide price.

At the guide price of £30,000, this is just the sort of property

that could appeal to a developer on the lookout for a bargain.

# Tangled up in blue... #

It's a straightforward property in acceptable condition.

Cracked sockets and peeling paper aren't hard to rectify.

This one-bedroom flat would be ideal for a first-time buyer.

Outside, the exterior structure of the block looks sound.

A further bonus is that the lease has been extended to 99 years.

The service charge of £28 a calendar month isn't excessive

and neither is the ground rent, just £10 a year.

We invited a local property expert to look at this flat

which went to auction guided at 30,000.

I've had a good look around and can't see any major problems.

Dare I say it, at that price, this is a no-brainer.

The area we're situated in at the moment

is a very affordable area and is very popular for investment buyers,

as well as first-time buyers.

I'd spend as little as possible, either put it back on the market...

There is a ceiling level for these properties. And for the rental market as well.

What's a realistic valuation of the flat as it is now and once it's been spruced up a bit?

I would say the value of this property in its current condition is somewhere in the region of £37,500.

Once the property has been completed and done up, I would say a maximum of around £45,000.

That's interesting. It sounds like you could increase the value by around 50%.

And would it be better to sell this or let it out?

I would say this property would be better suited to the rental market.

You would achieve around about £375 per calendar month.

So whoever bought this flat at auction will do better if they find a tenant for it.

Well, this flat may not be a marvel of engineering,

but it could make you a considerable wodge of cash.

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

Lot 29, back to Telford.

It's a one-bedroomed, first floor apartment.

Requires modernising. Shall we start at 25?

20 then? Let's get it going at 20.

20 I'm bid. Thank you. At £20,000. I'll go in twos.

22 can I say? At 20... 22.

24. 26.

26,000.

28? £28,000.

I'll take one if it helps. 29. At 29,000.

30 now? At £29,000 then, are we all done?

Just in time. £30,000.

Another one? At £30,000 seated left against you standing.

The bid's at 30. I'm selling it then. At 30,000 then for the first time.

At 30,000 for the second time.

Third and final time...

Your lot, sir. Well done.

'The successful bidder with his bid of £30,000 was Steve.

'He bought the flat with his business partner Chris.

'I met up with Steve to find out exactly why they wanted this little place.'

-Steve, lovely to meet you. Congratulations.

-Thank you.

-Why did you want to buy the flat?

-We didn't.

-Huh?

-We just sort of like... It was a price sort of decision.

-At what point was the decision made?

When he started about £15,000, we thought, "Too good to turn down."

So you made the decision as the lot was announced?

Yes, as the auction was in progress.

-Right. Had you looked at it before?

-Nope.

-Were you aware of it?

-We'd seen the picture in the brochure.

-Right.

Of a flat of similar description.

-That was it?

-That was it.

-You hadn't visited?

-No.

-You hadn't done any research?

-No.

-You hadn't checked it out?

-No.

-Nothing to do with the legals?

-No! Spur of the moment.

-Do you do this kind of thing very often?

-Not on a weekly basis.

-Have you done anything like this before?

-No, first purchase at auction.

-And it's the first one?

-Yes.

-Do you know you broke every single rule in the book?

-Absolutely. Throw caution to the wind!

'What a rebel! His first property auction and he's already broken all the rules.

'Forget throwing caution to the wind. Let's hope this flat doesn't blow up into a storm for them.'

-What do you do when you're not randomly buying properties?

-Refuse collection. I'm the bin man.

-Really?

-A bin man, yes.

-That's your full-time job?

-Yeah.

-What took you into the world of property?

A friend of mine has got a few houses. The market's a bit down, got a couple of quid hanging about,

so one thing led to another.

-I'm interested in the practicalities. The auctioneer says, "Lot number blah-blah-blah."

-Yeah.

You haven't got much chance to chat with your friend about what you're going to do.

He gave me a bit of a nudge and said, "What do you reckon?"

The price was so keen and we joined the bidding at 15 and it worked its way up to the price we paid.

-So it was "make it up as you go along"?

-Absolutely.

We were a bit worried at one point. "Are we doing the right thing here?"

But adrenaline kicks in, you get a bit excited and the next thing you know, the hammer's down

and you've got yourself a flat you've not even seen.

# My old man's a dustman, he wears a dustman's hat... #

'Steve and Chris work very closely together.

'Steve drives the waste disposal truck while Chris is the loader.

'They work as a team every day and trust each other's judgment,

'but bidding blind at auction is still a very risky business.

'Was Steve pleased when he walked through the door?'

It was a pleasant surprise because some of them suffer from damp and are a bit knocked about.

This one wasn't too bad. We were really pleased.

What are you going to do with it?

Basically, as you can see, it obviously needs a bit of decoration doing.

Floor, carpets, tiling in the kitchen and bathroom, new bathroom and kitchen, new doors.

That's basically it. The council do look after these places quite well.

The electrics are top quality, the central heating is pretty new, so it's not too bad at all.

-What budget have you got?

-We're looking at a maximum of £3,000.

My partner will be doing the majority of the work, so we'll be saving a lot of costs on that front.

-Including a kitchen and bathroom?

-Yeah.

-Are you recycling materials people have thrown out?

I found a lovely mustard-coloured bath the other week. Beautiful. But I was holding out for chocolate.

'I look forward to hearing if he finds an avocado basin to complete the set.

'Steve's allowed four weeks to get this place scrubbed up which should be plenty of time,

'so after his hair-raising auction escapade, what does the future hold for the flat?'

-We're going to let this one out.

-The returns on what you paid are amazing.

-Yeah, good return on it.

-What's the plan for the future?

-The plan is to mortgage this one,

then with the money from that to move to the next one.

-And build a portfolio?

-The next one we're looking at to buy, do up, turn it round and re-sell.

Will you follow the same strategy in terms of the properties you buy in the future?

You have so many properties to look at in such a short period of time that you can't see 'em all,

so we'll see what we can and what we can't see, we'll see what the price is.

-And if it sounds like a good deal, you'll go for it?

-Why not? Why not?

The list of "why nots" would take me about half an hour, but you seem to have got away with it.

-Throw caution to the wind. You make your own luck.

-It's an alternative strategy.

-Congratulations.

-Thank you very much.

-Lovely to meet you.

-Nice to meet you.

# Oh, my old man's a dustman, he wears a dustman's hat

# He wears cor-blimey trousers and he lives in a council flat... #

Oh, boy! Refuse collector Steve certainly hasn't picked up a rubbish investment on this occasion,

despite breaking all the rules and not even seeing the property beforehand.

When we return, will it be sorted out or will it still be a bit of a tip? Find out later in the show.

We always hope that our buyers have set themselves realistic timescales and budgets.

There's only one way to find out and that's to go back and see.

Back now to Southampton.

Earlier in the programme, Phil, a charity worker, property investor and landlord with over 12 properties

had paid £125,500 for this house to add to his portfolio.

It was in reasonable condition, although the layout downstairs wasn't great,

and Phil had already worked out his refurbishment strategy.

I'm going to replace the kitchen, do some work on the bathroom.

-Some lovely wallpaper here will soon see the end of its life.

-Whoopee! The woodchip's going!

-Absolutely.

Six months later, we met up again with Phil.

The property has been decorated throughout and tenants have already moved in.

Upstairs, the three bedrooms have been decorated.

The house has new carpets throughout

and the hallway has been completely re-plastered.

Although Phil has let out several of his properties, this was to be the first one aimed at students.

How did he go about finding them?

I'm fairly new to the student market, so I went to a couple of agents

who are fairly active in the area for students.

Because it was quite late on in the day for finding students, there wasn't a great response.

I was quite active in my own advertising and that's when these guys expressed an interest.

They are three guys from my church.

They were looking to move near to the university, so it's ideal for them and for me.

Phil had a lot of help from his friends and tradesmen, but also got stuck in himself.

So what exactly was his role?

It was mainly as project manager,

but also all those areas which don't require a lot of expertise, so all the wallpaper coming down,

clearing away of rubbish, doing the garden.

The garden has been transformed with a new back fence and side gate and the new lawn looks great,

but what has been the biggest change inside?

Basically, this has been the largest area of transformation. There was just really a hole here before,

so now it's a fully equipped kitchen.

There's a large area of work surface, there's a new one-and-a-half bowl sink,

so finally, it's gone from being fairly dull and drab

to something that is very functional and hopefully very attractive too.

The bathroom remains downstairs beside the kitchen.

Phil's added a new shower and some other bits and pieces,

but wasn't the original plan to add a shower room upstairs in the main bedroom?

There was a possibility of putting an en-suite in the master bedroom.

However, I decided fairly early on that wasn't necessary,

given where I was going to in my aim for the property.

Phil has several other properties let out to tenants.

He had allocated up to £7,000 for the work,

so did he stick to that figure?

The budget was £5,000 to £7,000.

I've spent more in the region of £9,000 because of miscellaneous items.

One was the plaster work. The kitchen was slightly more as well.

The house might not look massively different,

but re-plastering and installing a new kitchen and a shower in the bathroom,

plus all the turf in the garden, the fences and the gate all adds up.

Phil paid £125,500 at the auction and spent £9,000 on the work,

so his total outlay is £134,500.

Has the money been well spent here? Has he added value?

Time to get some expert property advice from two local estate agents.

I like the property. I think it presents well.

A basic refurb, but that's fine for the market that he's offering to.

The main thing I like is the kitchen which has just gone in,

the downstairs bathroom and also the garden which is a good length.

The kitchen is particularly nice.

The bathroom being on the lower level, it's personal preference. Some people may be put off by that.

I may have put the bathroom upstairs, but to lose a bedroom,

you'll lose the rental value, so I can understand why the current vendor hasn't changed it.

How much is the place now worth? Remember, Phil's total spend is about £134,500.

So is he looking at a profit?

I think this property would re-sell

for approximately £130,000 to £135,000 in the current market.

In the current market, the valuation for the property would be £135,000.

Well, that range of valuations from 130,000 to 135,000 would mean a loss

of between £4,500 or a profit of £500 before the usual selling expenses.

But Phil is not disappointed.

I'm happy with those values. Those were the values which I came up with when I did my due diligence on it.

I've got no intention of selling before ten years or so, so within reason, it doesn't really matter.

Over the years, this property will generate income for Phil.

He's already getting £780 a month from his current tenants.

How much could it generate if let to a family, rather than on a room-by-room basis?

The current rental valuation for the property is £625 per calendar month.

I think this property would rent for approximately 600 to 650 per calendar month if rented as a house,

maybe slightly more if rented room to room.

Those figures are quite applicable to perhaps a family wanting to rent a house like this.

For the student market, the normal rent is between 940 and 980.

I'm achieving 780 which is a bit of a concession because I know the tenants who are here,

but next year I will be looking to achieve more towards 950 per month.

So another property joins Phil's growing portfolio.

They all need managing, but Phil is very much his own boss.

That works well for him because he also does a lot of overseas charity work. So what next?

I've just bought a further property at auction on the other side of the city which I'm renovating just now.

I'm very much hoping that my work in managing a portfolio and property investment

will feed into my longer-term plans in community development abroad.

I feel I have my work/life balance approximately right,

so I'm fairly happy and very thankful for that too.

Earlier, we were in Telford

where Steve and his business partner Chris had bought this first floor, one-bed flat for £30,000.

They work together on a waste disposal truck. Steve drives and Chris is the loader.

# Oh, my old man's a dustman, he wears a dustman's hat... #

It was their first joint purchase and they bought the flat as a long-term, buy-to-let investment.

Steve planned to leave most of the work to his business partner Chris,

but he had been on the lookout for some bargain recycling at the tip.

I found a lovely mustard-coloured bath the other week. Beautiful. But I was holding out for chocolate.

Just six weeks later and we met up again with Steve back at the flat

to see how the refurbishment had progressed.

Remember, the flat had the blues all right, but now you're welcomed with a more neutral colour scheme.

# How long

# Baby, how long... #

Well, it's so long to the blues and the bath in the bathroom.

A super finish - all tiled and a white suite.

Like Steve, I didn't really fancy a mustard bath and wasn't too struck on the chocolate one either.

Let's check out the rest of the flat where the layout has stayed pretty much the same.

One kitchen.

One bedroom.

And a living room.

But I'm not sure about those new carpets.

# It was acceptable in the '80s

# It was acceptable at the time... #

Well, as you can see, we've repainted,

floors, new carpets, lightened up the texture.

There wasn't a great deal of work involved, but it all takes time to do, so we're quite happy.

I hope Steve and Chris haven't put off any potential tenants by their choice of carpet.

It won't appeal to everybody.

You might say the carpet is very "old-age pensioner", but it went in purely down to price.

It was free, so that is why we've got the carpet.

Well, it made financial sense and you can't argue with that.

Remember, Steve and Chris bought the flat for £30,000 without seeing it first,

so did the pair discover any hidden problems when they've taken a good look around?

We've been really lucky because we haven't uncovered any major problems.

Just little cracks in the plaster. There was nothing wrong. It was structurally sound.

The major work is done. We're waiting for a few doors to arrive.

Chris did all the work as planned.

I just popped in to bring him some cake and some tea and cheer him up.

He's cracked on very well and we're pleased.

The popular theory about property is you should invest in the kitchen and bathroom.

And that's just what Steve and Chris did here.

It's a whole, brand-new kitchen, as you can see.

New work surfaces, total redecoration, new tiled floor.

We've been quite lucky with the boiler. It's been regularly serviced by the council.

We haven't got any expenditure on that front.

How much did they have to spend here on top of their £30,000 purchase price?

Well, we did have a budget of £3,000,

but with Chris doing all the work himself, we've managed to get the budget down to £2,200,

so we're happy with that, we're pleased.

The pair plan to rent it out. Do they have anyone lined up to take it?

At the moment, we don't have a tenant lined up, but we will be advertising within the next few days

and hopefully, someone will be along soon.

Two people are now heading to the flat -

local estate agents here to give their expert opinions.

I think the flat is a generous size.

It's in fairly good condition.

Nice sized rooms, decent kitchen as well. Yeah, it's good.

I'm a little disappointed with the finish

and also with the carpets.

They seem to be a throwback to the 1970s, 1980s.

They could have done with more neutral carpets in here.

I'd have extended the kitchen as well and taken out the storage cupboard.

What I do like about the property is the bathroom and the kitchen,

though perhaps I would have made the kitchen bigger if he decides to go down the selling option.

So could Steve now be tempted to sell? Does he think it's been a good purchase?

We are still pleased we bought the flat and we'll still go down the rental line.

OK, so how much rental income could Chris and Steve achieve here?

This would rent extremely easily and I would expect to get £375 per calendar month.

The rental market is stronger for a property like this at the moment

and you'd be looking at achieving about £375 per month.

£375 per calendar month, I'm quite happy with that. That's quite acceptable.

Has the flat increased in value?

They paid £30,000 at the auction and have pegged their budget at £2,200,

so a total outlay of £32,200.

But what is it worth now?

In current conditions,

we'll expect a price of round about £45,000.

There is a ceiling level for these types of properties in this area.

Put it on the market for no more than £45,000.

Those valuations of £45,000 would generate a gross profit of £12,800

before deducting the usual selling expenses.

I think £45,000 for sale is a fair price.

The flat cost us 30,000 at the auction.

We spent about 2,200 on it, then we've got solicitors' fees.

For it to be worth around 45, that's a nice return.

It sure is after just two months.

Let's not worry about those carpets. They cost nothing and didn't hold back the price.

Our bin men have cleaned up here.

They took a chance buying blind. Would Steve do it again?

Absolutely. I'd still buy another flat without looking at it. You only live once. Live dangerously!

Those stories have now been added to our archive.

-But there are always plenty more and to see those, join us on Homes Under The Hammer. Goodbye.

-Goodbye.

Subtitles by Subtext for Red Bee Media Ltd 2011

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