Episode 21 Homes Under the Hammer

Auctions used to be the territory of just builders and developers

but anyone can go along and find a bargain.

Even in these tougher times, they're still finding some real deals under the hammer.

Even for experienced buyers, auctions can be nerve-racking and exciting.

-Just don't get carried away.

-So did today's buyers keep their cool and get a good deal?

Here's what they bought.

I'm at a nearly perfect property in Derby.

For a fantastic family house, the kitchen is a little bit pokey.

'And there are more space issues at this flat in London.'

This is the only bathroom. It's tiny, long and narrow and you've just got a shower.

'But I'm having a bit more luck at this two-bed terraced house in Barnsley.'

All in all, there's nothing wrong with this house.

All these properties have been sold at auction. We find out who bought them and for how much

when they went under the hammer.

I'm in Allestree, one of the most sought after areas of Derby.

It's just two miles from the city centre, home to Derby University and surrounded by countryside.

So it ticks quite a few boxes for a residential area. Allestree was a quiet village until 40 years ago

when it became a boom town for housebuilders and it grew and grew.

There's a real mix of housing here nowadays. This property was built around the 1960s.

Three-bed, semi-detached. It had a guide price of 150,000 quid.

And from the outside... it doesn't look at all bad.

Although it's on quite a busy road, there's a decent-sized front garden.

But is it as well-kept inside?

OK, so nice little entrance foyer. Somewhere to put your hats and coats and bags of shopping and stuff.

Through to your main living area. Good-sized space, nice views out to the rear there.

Very 1960s, '70s kind of touch - the brick fire surround place thing.

Well, if you like it, great. Probably best to take it out.

But here's an interesting feature. Through to what is the dining area and look at these curtains!

That's a bit odd. And then through to the kitchen,

but straight away I'm thinking why not take out this wall here?

It's not a stud wall, so it probably needs some sort of support,

but that would really open this whole thing up. At the moment, the kitchen is a little bit pokey.

Yes, it needs a bit of care and attention, but before you do that, take that wall out

and create a fantastic kitchen/dining area.

Another way of creating more space

would be to extend to the back, depending on the size of the garden.

So what's round the back? Well, I have a lovely surprise.

It's a great garden.

You've even got an apple tree.

# Sitting eating an apple one day

# Under the apple tree... #

This lovely garden was clearly the apple of someone's eye,

but would you want to eat into it to create a single or double-storey extension?

You'd need to balance the costs and the potential hassle of planning permission

against whether it would add value to the property.

Another bonus is that as well as off-street parking at the front,

there's a spacious garage.

Back inside, what else does it have to offer?

Upstairs, you probably don't expect too many surprises. Three bedrooms.

Single there, medium-sized double and then the bathroom. It's the only one

and for a family home, a bit like the kitchen, it is far too small.

I'd look at changing these internal walls.

But good news - the master bedroom is a good size. In-built cupboard with a window is a pleasant touch.

Not in bad condition at all. You've got central heating and views out over the garden. Lovely.

All in all, the house... You expect it to be bigger when you approach it from outside.

But with a bit of playing around it could be a really great property.

So remembering that the guide price was £150,000,

I invited the auctioneer who sold it to give his opinion.

The interesting thing is

I think this house was built around 1960, thereabouts,

and it's had the same owner,

which is quite unusual as it's 50 years now.

Anyway, as you would expect from the same occupation, it's slightly dated,

although it has been kept up to date in terms of structural repair,

but everything is ready for bringing into the 21st century.

Whilst it's being updated, would it be worth adding on an extension?

The majority of houses in this stretch of road

are all three bedrooms. There is space to make this four bedrooms,

but only probably and sensibly by a sideways extension.

You're then talking serious money and I'd have thought it's not cost-effective.

So extending at the side or back would only be worth it to gain living space

as you couldn't count on it making you much extra profit.

What return could you see, once renovated, without an extension?

If you update what's here without extending it at all,

it's value would be something of the order of about £190,000.

In terms of rental value, again assuming it's refurbished, it'd be at least £600 per calendar month

and probably towards £650.

Well, what is there not to like about this property?

Yes, it needs updating, but spend a little bit of money on it and you'd have a lovely family home.

Let's see who bought it.

It's a three-bedroomed, detached house. 145? Where do you want to be?

145 down the centre, thank you.

At £145,000, opening bid.

145. 146.

146. 147.

147. 148. 149. 150.

151. 152.

153.

153. 54.

155. 155.

156. 157.

158. 159.

160?

£159,000 against you.

I'll take 500. 159 and a half. I'll treat you the same. 160.

500 again? 160,000 against you. Shakes his head.

At 160...500. You've been thwarted by a new bidder, but it's not me.

160,500. No? Sure?

At £160,500, then. Going once.

Going twice. Third time. All done?

Sold at 160 and a half. Thank you.

Nipping in at the last moment with her bid of £160,500

was Vicky, who's bought the property with her fiance James.

Vicky owns a recruitment company and James is a painter and decorator. They live in Derby

and are delighted to have got their hands on such a well-tended house and garden.

-Lovely to meet you both. Congratulations.

-Thank you.

-A great house. Tell me why you wanted to buy it.

-Well, we basically wanted something a little bigger.

We've just had a little boy. He's 12 weeks old. We just needed a bigger property

-with three bedrooms, something to make our family home.

-Oh, great. What's your little boy's name?

-Isaac.

-Fantastic. Where are you living at the moment?

-Sunnyhill.

-A smaller property.

-Yeah. Only two bedrooms, semi-detached,

so we just wanted something bigger that we could work on. James wanted a project, so this is ideal for us.

-But it'll be your family home.

-Yeah.

-That's great. This would make a lovely family home, big garden.

-What was it about the property for you?

-The area as much as anything.

We wanted to get over the nice end.

And, basically, it's detached. And the price of the house.

We'd looked for a while and couldn't find anything for this kind of money.

When it came on at 150, we thought we'd go for it.

These two are pleased as punch with their new purchase, but what do they plan to do with it?

We'll take the wall out and create a kitchen/diner. Hopefully, we'll extend on the ground floor

so we'll have a bigger living room and bigger kitchen/diner.

We'll put new windows in, decorate throughout, new boiler.

-It needs plenty of work doing.

-Right. It is a bit dated.

-A little bit.

-What about the bathroom? It's small for a family house.

-That's an issue.

We don't know what we'll do. We can't extend upwards.

We don't want to get rid of a bedroom, so we'll probably just put a new bathroom in and breathe in!

-That's the only compromise.

-Yeah.

-There's compromised with all properties. That's just one thing.

It's not a massive house, but what can you do?

The main focus will be downstairs. Get that extended and sorted out,

then later on if we do need to build up, maybe we can.

-But downstairs firstly will be the main focus.

-What kind of timescale have you got?

-Pretty quick.

-Yeah.

-You're thinking about three months

-to get the basics done.

-Well, I want to move in in about six weeks.

I'll hit it hard and spend a few hours on it.

And then as regards extending, just as and when, when we get the money together.

# Our house in the middle of our street... #

Six weeks is quite a tight turnaround for moving in,

but with a tenant lined up for their current property, they have a deadline.

It does sound as if they have sensible plans for the renovation.

They'll tackle the work in order of priority, on a budget of around £15,000,

not including an extension.

James' skills as a decorator will come in extremely handy.

How's it going to be doing your day job and then your own property on the evenings and weekends?

-I'm going to work on it full-time for at least a few weeks.

-Just a few.

-Just a few, yeah.

-You're cracking the whip and getting him back to work?

-I need to!

James has certainly got his work cut out, but the thought of moving in

will be the perfect motivation for them both.

What are you most excited about?

I think it's just moving in and just having a bit more space.

The lack of space, I can't bear it at the moment.

With all of Isaac's new toys, clothes, it would be so nice to have a bit more space to play with.

Great. I'm delighted for you both. Congratulations. And next time we'll meet little Isaac maybe.

-Yeah, we'll bring him.

-Thank you.

-Congratulations.

Well, this will make a fantastic family home.

You can just imagine Isaac playing here. Lots of work to do, though,

and over a fairly tight timescale. How will they get on? Find out later in the show.

I'm in the East End of London in Canning Town. It's suffered a bad reputation in the past,

but the area's future is bright now with regeneration schemes all across the east of the city

in preparation for the 2012 Olympics.

# I've been all the world around But I ain't seen none come anywhere near the girls from London town

# Give me a London girl every time

# I want a London girl... #

I'm here to see a flat that's guided at £120,000.

Here's the interesting bit. The catalogue says it's in Plaistow,

but this area is actually Canning Town. It won't affect the price much - I've chatted to some agents -

but it just goes to show it's really important to do your research. So here's the property.

Let's go inside and see if it's worth £120,000.

'The outside is rather unkempt and it's a bit of a climb to get up to the first floor flat.

'Good training for the Olympic Games!'

Well, I do not like all these stairs, but I do like the fact that you have your own front door.

When you get up here, it's light, it's bright, it feels really spacious.

I'm not keen on the woodchip wallpaper that is everywhere.

They've even wallpapered the ceilings in all the rooms! But three very good-sized bedrooms.

So far it ticks a lot of boxes.

It's quite exciting to find a maisonette like this in this dated decorative order. They can be gems.

Renovated, they can look fantastic.

You've got a really good-sized reception room, lovely ceiling height, the old gas fire here.

You've got to think about installing radiators and factor that into the budget.

But look at this kitchen. Now that is a tremendous size.

You could easily fit a big table and chairs in this corner. You do need to install new units,

so that could be quite costly, but it's really a good size.

'Which is more than can be said for this room.'

Oh, dear. I was getting a bit overexcited out there earlier.

This is not great. This is the only bathroom in the property

and it's tiny, long and narrow and you've just got a shower - no bath. Not good.

I would like to think there's some way of getting a bath in here, getting rid of this or this.

You've got a lot of wasted space. Perhaps go across the area of the stairwell,

but that'll be really costly.

To me, having just a shower room really limits your market.

The rest of the property has the potential to be a family home, but no bath is a real drawback.

The new owner would have to make some inventive changes to squeeze in a bathroom suitable for children.

But could the problem I noticed in another room need more urgent attention?

# You spend every waking moment staring at the same crack in the wall... #

Now I'm not sure if that's something to worry about. Could it be subsidence? It's worth a look.

Is it historical? Is it progressive? I don't know.

Something worth bearing in mind.

Obviously, there's work to do and, fingers crossed, there aren't any major problems to uncover.

Talking of uncovering, the 20-foot square garden at the back could do with a bit of a clear-out,

but it's a great space to have, especially for warm summer evenings.

That guide price of £120,000 would have been tempting at auction.

What does a local property expert make of this maisonette's potential?

The property needs complete internal redecorations.

I think at the point where the carpets are lifted, you'll find

some of the floorboards and original beams are rotted and need putting back together again.

Also, once the wallpaper is taken down, a lot of plastering needs done.

There's no central heating so that needs installing.

Anything that can be done to put a bathtub in the bathroom for a full bathing facility

would be a benefit.

I think the property is a reasonable investment.

It would do very well as a buy to let, rather than just a quick development.

So if the buyer did decide to rent it out, what level of rental might it earn?

I would probably look to rent it for around £1,000-£1,100 per calendar month.

And if they decided to sell it on, what price could they put it on the market for?

I would envisage valuing the property, once the work is done, around the £150,000-£160,000 level.

With the regeneration programme in full swing, it seems like a great time to invest in East London

but the only downside for me is that tiny, tiny shower room with no bathtub.

Call me old-fashioned. Let's see what happened when it went to auction.

Start at 100. Not going below 100. 100's cheap on this.

100 down in the front. 101?

101.

102. 103.

104. 105.

106. 107.

108? 109?

110?

111?

112? 113?

114?

115?

116. 117.

118. 119.

120. 121?

Have a think. 120 in the front. 121 elsewhere?

121. 122.

123. 124.

125. 126.

127. 128?

Have a think. 127 with you, sir. 128 elsewhere?

128 back in? If not, 127 in the aisle. Anyone else?

First time. Second time.

128. Back in.

129. 130?

131?

132?

131, with you, sir. 132?

If not, 131, first time. Second time.

Third and last time. Have you all done? Sold. 131, thank you. Well done.

That final successful bid of £131,000 came from Winston.

He's a local London lad who used to be an accountant, but is now a full-time developer.

He's built up a portfolio of rental properties and I caught up with him at his latest buy

to find out his plans.

# London Keep on going back to London... #

-Winston, congratulations.

-Thank you.

-So you've got your property.

-I have.

-What was it you liked so much?

For me it was the location. It's very close to Docklands and so on.

It's fairly close to the Tube and there's a good bus route outside.

So where are you going to start with the renovations?

We'll take out everything, the whole kitchen, the shower room.

Literally gut the whole place and then refit the kitchen.

Then move on to the shower room and then redecorate throughout, laminate flooring.

And there's a garden, which is a bit of a forest, so we need to rip that out completely.

There's going to be a lot of maintenance, a few paving slabs. It'll be small, but nice.

And talking of small, what has he got in store for that toilet?

Will he rejig it to fit in a bath?

You cannot get a bath in there. So it'll really be as it is,

just retiled, new shower, new sink and toilet, et cetera.

Keep it as it is, but completely new refurbishment.

Winston certainly sounds like he's thought this project through,

but had he checked out the problems in the wall?

Do you think that could be subsidence, dare I say it?

No, because I had a survey done and that was not picked up at all.

They wouldn't have given me the funds if it had subsidence.

I'm pretty sure it's a surface crack. We'll cover that over.

Winston has set aside £12,000 for all the work and will be getting a team of builders to do it,

but that means paying labour costs so I can't help thinking £12,000 is a little on the tight side.

Em, it is tight, but unfortunately the bank put a retainer on the funds they've given me

which took more capital from my side.

So £12,000 is what it is and it has to be done within that fund.

-I'm laughing because if anybody is going to keep within that budget it's going to be you!

-Exactly, yes!

-I bet you are there with your spreadsheets...

-Yes.

-Are you?

-As we go, I add it up.

So I've got to stick to that £12,000. If something goes wrong and I have to cover it, fair enough,

-but my plan is to stick within it.

-How long do you think it'll take you before you can put it up for rent?

-I'm estimating about six weeks.

-Wow! That's quite ambitious.

-£12,000, six weeks.

-Yeah.

-But I like your style.

-If anybody can do it, it's you!

-Well, I'll certainly try.

-I bet you don't take any nonsense.

-I have my way of getting around things. I don't scream and shout,

-but I'm looking to get it done.

-You're making me feel very calm.

-Good!

-I have a lot of faith in you.

-It's been so lovely meeting you. Good luck. It's going to be exciting to see the outcome.

-Thank you.

Lovely.

So Winston is a numbers man. He's an accountant by trade, so he'll be watching this budget closely.

But can he really renovate this place for £12,000? And in just six weeks?

Join us later in the programme and you can find out.

Coming up: I'll be at this house in Barnsley where I think there's a potential profit.

Here's where you could spend money and make a big difference.

There's been a change of plan in London.

We were going to go for a light refurbishment, just redecorate. We ended up stripping every wall.

But first there was added pressure on the renovation of this property.

It had to be suitable for a baby.

Now we're back in Allestree, Derby, where this three-bedroom detached house sold at auction

for £160,500. I met up with new parents Vicky and James

who were looking forward to a more spacious family home.

We wanted something a little bigger. We've just had a new little boy, so we need a bigger property.

Three bedrooms. Just having a bit more space.

Recruitment company owner Vicky and painter and decorator James

hoped to get the bulk of it done in six weeks. The schedule was tight

because a tenant was moving in to their old property. 4.5 months later, we're back

to see how they got on.

In the living room, they've removed the chimney and plastered over the bricks

for a fresh, contemporary feel to their living space.

A wall has been knocked down between the kitchen and dining room for a more modern kitchen/diner.

It's now greatly improved and fitted out in a stylish black and chrome finish.

It was out with the old-fashioned electric white cooker and in with a fantastic range oven.

We started off taking the wall out, which was here,

separating the dining room and kitchen. I took the pantry wall out next to the back door.

I took the wall out here, which was the old boiler and hot water tank.

And the chimney breast. I took it from the roof down for extra room in the bathroom and the kitchen.

It gave us all this extra space. And then a brand-new kitchen, new re-wire,

essentially, everything's new.

Upstairs, the master bedroom was given a luxurious facelift.

The second bedroom is the perfect size for Isaac's new nursery,

whilst the third bedroom has been converted into an ample dressing room for Vicky.

I wonder how long it'll take before Isaac's toys creep in here!

And remember that pokey, outdated bathroom? It's not any more.

It's stylish and sleek and, if my eyes don't deceive me, bigger too.

What James did to create more space in the bathroom was knock the chimney breast out from the roof,

brought it all the way down, so we knocked this section out.

Then it allowed us to put a full-size bath in here. We also put in a new shower.

We wanted to put that into the wall so you didn't see any of the piping. So that's gone in as well.

-We put some spotlights in just to finish it off.

-It really has been brought into the 21st century,

so are they happy with it now?

-Yeah, I think we are.

-Definitely.

-With the space that we've got, we've tried to maximise it.

By taking the chimney out, we achieved a bigger bathroom, bigger kitchen,

and we got the kitchen/diner.

They seem to have got everything they hoped for, but did they stick to their timescale of six weeks?

Pretty much, yeah. We had to be out of our property by a certain date.

-We gave ourselves that deadline and stuck to it. It was a bit of a mission, getting it done...

-Yeah.

On the day we moved in, we had about ten people here. I was laying the floor, somebody fitted the kitchen.

Unloading the vans. Because it had to be suitable for Isaac as well.

So there was no possible way we could move in with things hanging.

It had to be suitable for a baby to live in, so we had to get it done straight away.

Then we had tenants for our other property, so the timescales were really tight,

but we managed it. I'm really happy.

Baby Isaac seems happy with his new pad, too, so what have Vicky and James got left to do?

The garden we need to get sorted. Particularly in the front. We want to get two cars in.

-We're hoping to pave that.

-Yeah.

-Eventually. We'll do that next year.

And also possibly extend it at the back maybe to get a bigger living room and bigger kitchen

and possible utility room, but that's in the future.

So the grand plans for an extension and driveway have been put on hold for the moment.

Vicky and James have stuck to their original budget and spent £15,000, including fees, on the renovation.

Added to the purchase price of £160,500, that makes a total outlay of just over £175,000.

We asked two local property experts to give us their views

and tell us if Vicky and James' changes have added any value.

Having come back for a quick look, there's been lots of transformation.

I remember seeing it as an unmodernised house.

They've done a good job with it and made it very 21st century.

What's good about it, apart from what they've done,

is the fact that it looks quite a good size from the outside.

Always good to draw people in.

The couple always intended this to be their family home,

but if they were to rent it out, how much could it achieve per month?

As far as rental is concerned, it's got a rental value of £575-£600 per calendar month.

This isn't usually the type of property you'd see for rent.

There's not going to be a great return on investment,

but if this was on the rental market I'd imagine you could get £750.

Yeah, that's OK. Well, the £750 one is better.

So they're happy with that, but if they decided to sell, what could the house go for,

bearing in mind their total spend of just over £175,000?

If it went on the market for sale, it would have an asking price of about £195,000

and would achieve fairly close to that.

From a sales point of view, I think if it was on the market you'd advertise around £200,000.

-Oh, that's great! Definitely.

-Yeah, that's all right. As long as we haven't lost money!

Now the hard work's finished, what are their plans?

Now that we've done everything and still made money on the house,

I think we'll want to extend and then give it ten or so years and maybe move again.

Yeah, brilliant result.

I'm in Barnsley, in Yorkshire, on the edge of the Pennines, and a jolly lovely spot it is, too.

Famous for the Barnsley chop, which isn't a martial arts manoeuvre, but a cut of meat.

There are also some lovely suburbs, one of which is Wombwell,

which is where the property I'm here to see is located.

Wombwell is five miles from Barnsley and 12 miles from Sheffield,

so it's ideal for a short commute by train.

There's no doubting the fact that times are tough, especially for first-time buyers in the UK,

especially when recent figures say that the average amount of money you have to raise for a deposit

is £37,000. Well, not if you buy around here.

Because this is a perfectly reasonable two-bed mid-terrace

and it had a guide price of £38,000. That's more like it.

From the outside, this property seems to be in good order

with exposed brickwork and double-glazed windows.

So what does that kind of money get you? Well, you might be pleasantly surprised, actually.

Through the front door into your front sitting room. A bit dated, but it doesn't look too bad.

Through here to your kitchen. Here's where you could spend money and make a big difference.

It's not a bad size. Enough room for a bit of a dining table.

But you clearly need some new units. Not a bad start.

'It's looking pretty encouraging. The boiler appears relatively new

'though the rest of the kitchen will need to be ripped out and replaced.

'But for what was a £38,000 guide price, it's not too shabby at all.'

So upstairs two bedrooms and, really great news, the bathroom.

That was probably downstairs, but somebody's moved it up here, which is fantastic.

You lose a bit of room, but the advantages outweigh that.

Radiator here. Odd place to have it. Normally they're under the window,

and that could be partly responsible for this - signs of some damp.

My thoughts are, though, that's nothing too serious. It could just be water coming in

and dripping down to the wall. A radiator would get rid of that.

So all in all, there's nothing wrong with this house.

# There's nothing wrong with you

# There's nothing wrong... #

Apart from double-checking the damp, there's not much wrong with this.

It's got an upstairs bathroom, reasonably-proportioned kitchen and even some outside space.

Well, at the rear of the property a small-ish garden, but it's a nice additional feature to have.

Remnants of some kind of an outbuilding here. Would it be worth an extension?

What's interesting is if you look down the row of adjoining properties, nobody's built one.

There's probably a reason. I don't think you would get back whatever it cost to build it.

If you're going to live here, it might create extra family space, but don't bother.

So the relatively low guide price does tend to indicate that house prices round here aren't high

and the ceiling value is relatively low. So if you spend too much, it won't be worth it

in terms of your potential return. But to find out more,

we asked a local estate agent for his take on it.

We're deep in a former mining community. This was typical to house miners and their families.

It's in need of renovation.

But as a project it would do quite nicely.

So after a refurbishment, how much could this house - guided at £38,000 - be worth?

I would put this on the market for £52,950.

Taking account of renovation costs and the usual expenses, there's not much profit to be made,

but rental could be much better.

It would achieve somewhere in the order of about £375 per calendar month.

With a healthy demand for rental properties, letting it out might be the most attractive option here.

If you're looking to add masses of value, it's probably not for you,

but as a good little rental unit, it ticks all the boxes.

Let's see who bought it.

We go north to Barnsley now, Wombwell to be precise.

A two-bedroom, inner terrace house. Who'll start me at £25,000? Come on!

Surely somebody out there... Thank you, thank you.

A very discerning bidder. £25,000. We've got a little way to go. Let's see how far.

26, anybody? 26,000?

Thank you. Another discerning bidder. 27, shall we say?

28. 29?

29, thank you.

30? 31?

32?

33? 34?

35?

34 and a half?

34 and a half. 35?

35,000. 35 and a half?

£35,000 down here, sat down. At £35,000.

35 and a half. 36?

36 and a half? 37?

37 and a half?

38? 38 and a half?

No. At £38,000. Sat down at £38,000.

For the first time, then. Last chance if you've come for Wombwell.

Sat down. For the second time. Third and last time. Sold, sir. Thank you very much.

For spot-on the guide price of £38,000, the successful bidders were local developers Paul and David.

'I met up with them to find out what attracted them to this two-up, two-down.'

Good to meet you both. Congratulations.

-Tell me why you wanted to buy this.

-We've bought quite a few here and did one round the corner.

We saw it at the auction and it was ideal.

-So why this area particularly?

-Very strong rentals.

There's plenty of people living here. We get lots of inquiries for this area,

so it's really just what we want.

-Is this something you do a lot of?

-Yes.

-A business, is it?

David's been in property for 12 years, me only the last three.

-This is our third at auction this year.

-Right.

Paul's a financial adviser so he looks after the finances,

including running the property investment arm of their business.

David's more hands on and will project manage this job.

-What things do you look for?

-Mainly terraced type houses.

And semis. Nothing bigger than a three-bedroom semi.

-Our average property, the market value is £70,000-£80,000.

-Right.

We've done some new developments as well, but when we're looking at auction, it's mainly this type

-because of the area.

-Right. Is the idea to sell it on or rent it out?

Yeah, we actually... we sell them on to investors, but continue to manage the properties

-and currently we look after 45.

-Right, so you get a double hit.

-Yeah.

You sell it on and get management fees for looking after it.

This is a really interesting business model. Not only do they sell properties on quite easily,

but it also allows people who want to invest to join with other investors to buy a stake in it

and get a share of the rental income.

So Paul and David benefit by selling the property as well as managing it on the rental market.

So what are you hoping this one sells for?

The one round the corner that we did that we bought at auction earlier in the year,

-that sold for £76,500.

-Right.

-And we bought that for £38,000.

-Oh, wow.

-A good return on your investment.

-Yeah.

In order for that to happen here, this house needs refurbished first.

So what's David's strategy?

Initially, rip everything out. It's going to have a rewire.

We think the boiler's OK, but we'll replace the radiators.

New kitchen, new bathroom, re-plaster.

Fix the joinery, carpet it all.

Any issues with this property or is it fairly straightforward?

We've got a little bit of damp. We need to investigate, see where it's coming from,

-cure it, then I think everything is straightforward.

-Right.

If you go in any of our properties, they're exactly the same. Same kitchen, bathroom, paint,

carpet, everything. We can use what's left in one on the next one.

What's the budget for sorting it?

-On this particular one, we think around £8,000, £9,000 will see this finished.

-Oh, wow.

-So what about timescales?

-Six weeks.

-Bing, bang, boom. And on to the next one.

-Yeah.

It's obviously successful. Long may it continue.

-We look forward to seeing it.

-Thank you.

-All the best.

-Thank you.

David and Paul have clearly got a successful formula and will stick to it when sorting this place out.

But that budget does seem a bit tight and in terms of resale value, are they being overoptimistic?

You can find out later in the show.

Once you've bought your property, the hard work really starts and you've got to prepare for surprises.

So have today's buyers uncovered any hidden treasures or unearthed any hidden pitfalls? Let's find out.

# London

# Keep on going back to London... #

Back now to Canning Town in East London

where this first-floor flat sold at auction for £131,000.

It was bought by property developer Winston, who hoped to completely renovate it in just six weeks.

He was confident his softly softly style would prove fruitful.

I have my way. I don't scream, I don't shout, but I'm looking to get it done in that time.

You're very calm. I have a lot of faith in you!

So, cool, calm and collected, but 12 weeks on, as you can probably tell from Winston's outfit,

he's not quite finished the job.

But the fact the work is not completely done is not down to any lack of effort.

In fact, Winston decided to do a much bigger renovation than he planned originally.

My plans were changed. Initially, we were going to go for a light refurbishment, just redecorate.

We ended up stripping every wall.

In doing that, we realised some of the plaster was basically beyond repair

and in many places we took the walls back to brick.

We then re-plastered every single wall in here and we've changed all the ceilings.

We put new coving up. We're now in the middle of decorating.

# I guess I'll have to change my plans... #

But Winston's change of plans didn't stop there.

# I guess I'll have to change my plans... #

When I first saw this small shower room, I thought you could open it up, so I'm pleased to see

he's done just that.

Well, previously in here this was just one small shower room. It was very, very narrow

and there used to be the stairwell here down into the garden.

We decided to open it all up and made it one big open space, a full-size family bathroom.

Once we finish the tiling, I think it'll be very nice.

It's a real improvement and a smart bit of rejigging.

To make space for the bathroom, he's covered the old stairway

and built a new external staircase leading out from the kitchen.

The staircase still needs a bit of work and there are lots of jobs that Winston hasn't yet completed.

The work we've got to do is just to finish off the bathroom.

It's almost there. Probably a day's work. We'll then start the kitchen.

That should take 2-3 days to do.

We've got to put laminate flooring throughout and we've got to finish the decoration.

I would imagine now we've got 7-10 days' worth of work to do.

And then it should be completed.

By the time he's finished here, it will have taken 13 weeks.

That's more than double his original six-week target.

# I got double trouble I got double trouble

# I got double trouble Twice as much as anybody else Oh, yeah... #

But it's not only the restructuring of the flat that's taken longer.

He's also rewired all the electrics and put in central heating and double glazing throughout.

# Twice as much as anybody else, oh, yeah... #

So surely all this extra work must have seriously affected his budget.

Initially, my budget was £12,000.

We're at the moment up to £16,100.

I would estimate another £1,000 to go just to finish off the final touches

so just over £17,000.

Usually Winston leaves the work to the builders, but he's been busy helping out with labouring

and doing some of the smaller jobs.

But how did he get on with that potentially massive job in the bedroom - those cracks in the walls?

# Crack me up

# You really, really do... #

They were nothing to worry about - just surface cracks so they were repaired and decorated over.

Winston spent over £4,000 extra on the renovation, so does he think it was worthwhile?

Obviously it's cost me more money, but in the long run that will add value to the property,

so I'm not disappointed with that.

He bought the house for £131,000 plus the usual expenses

and has spent more than £16,000 on the renovations so far.

What do two local property experts make of his improvements?

My first impressions are

that he's done the core work very well. I like the layout.

He's made the access to the garden quite easy.

And the bathroom's a bit bigger.

It has been up to a neutral standard and should appeal to a wider range

of purchasers or tenants.

I also think that the new refurbishments will add to the overall value.

How much rent do the experts think Winston could charge?

Once the works have been completed, the property should rent for £1,000 per calendar month.

Once fully completed, I would put the property on the rental market for £1,000-£1,050 per month.

That is bang on what I was expecting. I was estimating about £1,000.

So I'd be happy. I am going to rent it out, so that would be ideal.

Those rental figures would give him a healthy annual yield of 8%.

Whilst he's sticking to rental now, he must be curious to find out

how much extra sale value his work has added to the flat.

Remember, his total outlay here has been around £148,000.

Once the property is fully completed, I would market it between £160,000 and £165,000.

Once the works have been completed, we would look to market the property for £165,000.

160, 165 is a little bit low, I believe.

I think once we finish all the work and they can see a finished project,

when I get it revalued it should be higher than that. I'm pretty confident because I know a property

down the road which has been valued higher than that and it has not yet been updated,

the kitchen and bathroom. So I'm quite confident I'll exceed 165.

It seems that Winston's change of career from his previous job as an accountant is paying off.

He's done his sums right and this latest addition should see a great return in the future.

It sounds like going back to his old job has been ruled out completely.

There's nothing like doing something you enjoy doing. Waking up, it doesn't feel like work.

I get such a buzz about it. I like to see the before and after and the transformation.

I absolutely love it. I'm looking forward to my next property.

Just outside Barnsley in Wombwell, I saw a fairly standard two-up, two-down terraced house.

Although it was a little battered round the edges, fundamentally there wasn't much wrong with it.

-Sold, sir. Thank you very much.

-And yet it was sold for just £38,000 to developing team David and Paul.

They have a particular way of approaching all their property purchases.

We sell them on to investors, then manage the properties for them. Currently we look after 45.

-So you get a double hit.

-Yeah.

-You sell it on and get management fees for looking after it.

On the face of it, this property fits their business model perfectly.

It was relatively cheap, yet had strong rental potential.

With a 6-10 week timescale and a budget just short of £10,000,

David and his team of tradesmen were seeing to the renovation.

Paul was keeping an eye on the finances and looking for possible investors.

Less than two months later, we're back to see if their 45th property will get the investors queuing up.

Well, the outside might not be significantly different,

but inside is now modern and bright.

There's a new contemporary kitchen, just right for the rental market.

Basically, we stripped it all out.

There was only a couple of units and an old cooker anyway.

We took it back to the bare brick, re-plastered everything,

rewired. Put a new kitchen in as you can see, re-tiled and decorated it, basically.

And to go with the finished downstairs rooms, the two bedrooms were completely refurbished.

Despite the damp being a thing of the past in the large bedroom, the smaller back bedroom presented

more problems than anticipated.

We found that this wall was a really cold wall.

When we took the paper off, the plaster was coming off. We stripped it back to brick

and found a single-skimmed wall so we damp-proofed it, insulated it, reboarded it,

skimmed it, painted, new skirtings. It's made the room a lot warmer in the end.

The extra work may have turned up the heat, but David kept his cool and stuck to his deadline.

He finished the whole refurbishment in just seven weeks. While David's been rolling up his sleeves,

Paul's been busy with their other 44 properties, so how often were they both here?

Every day for me.

I probably haven't been on for about four weeks until this week.

So I've seen a massive change.

Internally, the house has been completely finished,

but the outside area still has a way to go.

We've not done a lot outside because of the recent weather. We've still got to do a bit of painting outside.

We've tidied the garden up, just a little bit. You can see the path now, which you couldn't before.

Once the weather improves, the plan is to re-turf the garden and tidy up the fence and gate.

Then they need to find a tenant and some investors.

How much has it all cost?

-The budget was, I think, £10,000.

-I think we've come just under that.

Yeah, we've come just under. With fees, just slightly over.

A renovation cost of £10,000 on top of a purchase price of £38,000

along with the usual fees and expenses, brings their total outlay to just over £50,000.

So has this been a good investment in the current market? What do two local estate agents reckon?

A vast improvement on last time.

It looks ready to move into, which is the ideal scenario.

I think the owner's done a good job. Nice kitchen, gas, double glazed.

I don't think there's anything left to do. Move the furniture in.

I would have put a shower in the bathroom. They've fully tiled, but people have busy lives

and don't want a bath every morning.

Despite the lack of a shower, this was not money down the drain.

The way their business model works is that they sell the house to a number of investors

who then have a share of it and earn their return of rental income.

They've spent £50,000 themselves here so what could they hope to get from their investors?

Going to a landlord investor, I'd say its value is about £52,000.

In my opinion, I feel the value of this property would be £50,000.

I think valuers, especially in the current climate,

are possibly down-valuing to cover their own backs, in all honesty.

I'd expect it to be worth a tad more, but I'm not surprised.

In the current market, there may be little or no profit from selling,

but the rental income potential will attract investors.

The property would fetch £375 per calendar month.

Quite comfortably I would have said £375 per calendar month.

That kind of rental income could mean an impressive yield of almost 9%.

What do the guys think of that?

Right. A bit lower than what we've estimated.

We've got somebody interested in the property.

-We have told them it's 450.

-In fact, since filming, not only have they got a tenant at £450,

but they've sold the house to three investors for £66,000.

That gives them a tidy £16,000 pre-tax profit as well as a small income from managing the property.

So their tried and tested approach has come up trumps again.

This is the third one we bought this year, so we'll definitely buy another, no problems at all.

And I'd say if you've got a successful method that works, why change it?

# The sweet smell of success. #

-We hope you've enjoyed watching.

-Join us next time for more fascinating stories.

-See you then!

Subtitles by Subtext for Red Bee Media Ltd - 2012

Email [email protected]