Episode 39 Homes Under the Hammer

Hello. Despite the credit crunch, people still want a slice of property action.

If you're prepared to take the plunge, auctions are a great place to start.

It can be frightening, it can be fraught.

But it can also be a fantastic thing to do, buying your home under the hammer.

Some properties are really popular at auction. Others go unsold.

So the auction room can be a difficult place to conquer.

Here are the properties that won the hearts of our buyers on today's show.

There are surprises in store for this terraced house in Chatham, Kent.

This really is a little bonus room.

I find out that rubbish isn't a problem for this Derby house.

You get your fair share of bins!

And I'd got my hopes up for this flat in a historic building in Oxfordshire.

Oh, no! Such a disappointment!

All these properties have been sold at auction.

We find out who bought them and what they paid when they went under the hammer.

Sold!

I'm in Chatham in Kent today.

Now, Charles Dickens lived here as a boy

and described it as being the happiest period of his childhood.

Question is, will today's property be tired and throw a tantrum

or will it be adorable and well-behaved?

I'm hoping this is a happy house with no tears before bedtime.

The property is a two-bed terrace, a short walk from the town centre.

Now, it had a guide of just 65 to £70,000.

Let's go and see what you get for your money.

Already I can see that you get character, always a flying start.

The front features a lovely bay window with detailing around the pillars.

The exposed brickwork looks sound and the roof seems in a good state of repair.

These terraces were built rather on the snug side.

There's not much room in this hallway.

If I were to buy this, I'd probably take out this wall here,

this bit here, and really open this space up.

There's a nice sitting area through there, some steep stairs here

and you come to the back room.

Not a bad size, but it's all completely dated.

Whoever buys this has to clear the house out first and basically start all over again.

It looks like the previous tenant may have left in a hurry

so there's plenty to be done.

The kitchen at the back is disappointing, but there's room for improvement.

You could increase space by moving the back door and combining it with the window.

Tacked on to the end of the kitchen is a downstairs toilet,

fairly common for this area, but far from ideal.

Fingers crossed the layout is a little better upstairs.

As you'd expect in a terrace like this, you've got a bedroom that side of the stairs

and a bedroom this side. Not a bad size.

But the bedroom has seen better days

and there's been a leaky roof. The tiles have fallen down

and it does smell a bit damp so that needs to be investigated.

And... Oh.

Sadly, the bathroom is there,

leading off the main bedroom.

Not ideal!

Once you've tackled the damp problem,

you could think about turning the stairs and creating a corridor to the bathroom.

That would reduce the size of the master bedroom, though, and could be expensive.

You'd need to be sure it would add enough value to make it worthwhile.

Talking of stairs, I've found another set!

This house is full of surprises.

A cellar! You know, I didn't expect to see this

and not a room of this size.

This is an ideal opportunity for the purchaser to store their suitcases, their tools.

This really is a little bonus room.

Yeah. Brilliant.

People are always looking for ingenious ways to store clutter

and this is a perfect place to store all the bits and pieces that take up precious living space.

Outside, the garden is pleasant, level and sizeable.

With a guide price of 65 to 70,000,

what will a local estate agent think of this two-bed terrace?

This property really needs everything doing to it.

It needs timber and damp looking at, the electrics,

gas central heating, the bathroom needs sorting, it needs a new kitchen,

so it is a complete refurbishment.

With so much work to do and an established ceiling price in this area for this type of property,

how much could someone stand to make once it's renovated?

I'd have thought we're looking in the region of

115,000 to £120,000 for the property.

Could it be a money-spinning rental investment?

For the rental, we'd be looking in the region of £575 per calendar month

for the two-bed as it is.

This house is going to need a serious overhaul.

It needs everything doing to it.

To keep budgets low, I'd advise leaving the upstairs as it is

and fitting a shower room downstairs.

Spend too much here and you could come unstuck.

Somebody wanted this. Let's find out who it was as we go to auction.

A bay-fronted house with vacant possession.

Start me where you will on that one.

We have a guide of 65 to 70.

Give me 65. 65. I'm on the way.

67, now, I'm looking for. 67, do I see?

67 at the back.

Can I say 70? At 70. 72. 74.

76? 76.

78. Put it up to 80.

Nobody else coming in? £80,000 to the maiden bidder.

With you at £80,000. 81. Thank you, Will. 82.

83. 84.

£85,000. £86,000.

£87,000 bid I've got.

88. So it's against you still.

88.

Tell you what I'll do. First and only time. I'll take 87,500.

87,500 I've got. 88, it's against you, Will.

88? At 87,500 then, for the first time.

87,500 for the second time.

Third and final time. Definitely done? All out. Selling at 87,500. All done.

That was a good £500, was it not?

87,500.

That successful bid of £87,500 was placed by Romanian-born Val,

and his business partner, Daniel.

They run their own building company based in London,

doing contract work for others.

But this is the first time they've ventured into buying property for themselves.

Whilst Daniel was digging around inside, I chatted to Val in the garden.

-Congratulations.

-Thank you.

-Well done.

-Thank you.

-I'm going to be nosey. Tell me about yourself. What's your background?

Well, my father was a handyman, and ever since I was a child,

he took me here and there to mend things around neighbours' houses.

But I graduated in economics and building was not what I'd planned for my life!

But in 2002 when I came to Britain, I set up a small business

and I thought I'd try building.

And since then, I've done it!

Val may be unexpectedly following in his father's footsteps,

but judging by the smart areas in which he usually does refurbishments,

something tells me he's more than just a DIY handyman!

What sort of properties are you used to working on, and in what areas?

My speciality is refurbishments in Kensington and Chelsea in London.

What sort of things are you used to doing on the properties you work on?

-Right.

-Are we talking sunken baths, beautiful granite worktops?

Oh, yes. Basically, I'm covering all the trades

from basic structural building up to design and bespoke bathrooms, kitchens,

living rooms and furniture.

Let's talk about what you're going to be doing in here.

Obviously you're not going to take it to the max, working on this house, are you?

That would be crazy! It's a bit of a change for me.

To be honest, we're not exactly sure what exactly we're going to do with it.

We're thinking to obviously modernise

and adding one or two bedrooms and extending the kitchen.

The good thing, the thing that made me buy this property was I found a nice cellar.

I was thinking maybe to put a nice kitchen in there,

into the basement.

How are you going to rework the space upstairs?

-The big downside to this property is the one bathroom and it's leading off the main bedroom.

-Yes.

What we are planning to do is change the layout of the staircase.

To have everything on the right hand and free up as much as possible

the space for the additional bedroom we want to do.

So I think the key of this project is to change the staircase layout

because it goes through the middle of the house.

-You're going to add a bedroom upstairs?

-We plan to raise the roof if we're allowed to.

And to create another bedroom upstairs with a shower room.

-Wow, Val, you are really going for it!

-Yes, I do!

Val and business partner Daniel have a budget of 20,000

and hope to complete all the work in just three months.

I was keen to know whether Daniel was as keen to do such radical things as Val seems to be!

My part on this business is to make sure everything is done properly

and maybe on time.

That's interesting, because I know Val wants to turn this place into a palace, doesn't he?

He has really got some grand plans for this place.

He wants a kitchen underneath, a bedroom in the top.

I'm a bit worried he might be doing too much to this property

and you'll be the man to keep him in tow.

Yes. Well...

It's good because we've got so many options.

But after the architects come and see the place,

we'll decide exactly which option we'll choose at the end.

-Are you both excited about this property venture?

-Yes,

because it's a new challenge, actually, for us.

We did so many projects in the centre of London, but this is something different.

Trying to do something great with a small budget.

They'll certainly have their hands full with this property.

But it doesn't stop here.

These guys have their sights set high and Val has a burning ambition.

So, Val, what is the future plan?

My target is within two years to be able to do a one-million pound property.

-What sort of areas do you want to target in future?

-London, definitely.

-Working your way back to Kensington and Chelsea?

-Absolutely.

I admire the guys' spirit and determination.

But I'm a little worried about their plans.

A kitchen in the cellar? I'm not so sure.

Their plans may be too ambitious for such a modest house.

Find out how they get on later on in the programme.

Today, I'm in Derby in the Midlands. There's a magnificent cathedral,

restaurants, bars, a massive shopping centre and superb transport links.

Derby is definitely a modern, cosmopolitan and developing city with plenty to offer.

Not far from Derby city centre is a small housing development of Derwent Heights.

I say small, certainly in comparison to the large Oakwood estate nearby.

Property here a little bit cheaper, for instance the property I'm here to see.

A two-bed town house at a guide price of 68,000 quid.

As an added bonus, you get your fair share of bins!

# Take out the papers and the trash! #

Yes, the bin thing is slightly curious and a design fault when these were built.

There's very little room around the back, and what access there is seems to be overgrown.

But leaving the multi-coloured wheelie-bins outside, what's inside?

So, what's on offer? Let's take a look.

Through the front door. Very small kitchen.

Blimey, that's not one for entertaining in, is it?

Need to sort those units out. Definitely tired and dated. What's this?

A little downstairs loo. That's always nice to have.

That's a cupboard there.

Then through to your main room downstairs, the living room.

Nice views out there. It's not a bad-sized space.

At the end of the day, it's a small modern house

and this is what you get.

Well, it's compact and bijou, but in pretty good condition.

It won't take much to turn this place around and ramp up its earning potential.

Upstairs, a reasonable-sized bedroom to the front of the property.

You've got your bathroom and loo up here. Avocado suite. Could have predicted that.

Not in that bad a condition but you'd want to put a white one in to modernise the place.

The rear bedroom. Again, it's a modern house. Unfortunately, not exactly huge.

But then again, think of the guide price.

Perfect for purpose.

One thing you can't argue about is the views over the allotments.

You can see not only the allotments, but Derby just a mile away.

You can also see the £68,000 guide price

offered a tempting starter home in good condition.

But if its guide price wasn't too steep, the same can't be said about the garden!

At the rear of the property is a smallish garden.

An interesting lawn with this fairly steep bank. Need a special lawn mower for that!

But there is also at the very rear of the garden this overgrown area.

This is a right of access and whenever I see something like this,

it makes me think I've doubly got to read that legal pack

to make sure what the legal status is.

Are you responsible for it? Can anyone use it? You don't know

until you've checked it out, or your solicitor has.

# Take a walk on the wild side

# Said, Hey, honey,

# Take a walk on the wild side. #

So, not only is it currently a bit of a walk on the wild side,

potentially there could be a legal tangle on land ownership.

Definitely something to be wary of.

That aside, the other issues that concern me here are that the windows are single-glazed

and the heating is vast storage heaters.

On the plus side, this is a quiet neighbourhood

and the house comes with its own parking space.

So how much overall appeal does it have?

We asked a local property expert for his opinion.

The property is very much in demand from a rental point of view.

It would rent overnight to a young person.

From a sale point of view,

the property would sell to a first-time buyer or a buy-to-let investor.

What level of rental values could this property attract?

The rental market in this area is very strong at the moment.

I'd expect to get around £500 per calendar month.

Not bad. What's it worth if you were to sell it on?

If you were to refurbish the property

you'd ask between 90 and £95,000.

So, all in all, a pretty decent little property.

Yes, it could benefit from a new kitchen and bathroom and a lick of paint.

But what you've got here is a really good first-time buyer's house or a potential rental unit.

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

We go over the page to Lot 11.

It's a two-bed town house, nicely located, with car parking.

Outside the front, allocated parking.

Again, it's very good investment material.

Start me on this at 72?

72?

70,000. Don't miss a bargain.

68?

68. On the guide price. £68,000 on the left. Thank you.

At £68,000 opening bid.

68,000.

69, quickly. 69,000.

At 69,000. 70 over there.

At £70,000. I'll take 500 if it'll help you.

At 70,500. 500.

70 and a half. 71 is bid.

At 71. 500.

71,500. 72?

72 is bid. Thank you. At 72.

500. 72,500. 73? Try another one?

At 73.

At 73,500?

£73,000. Seated bid here.

We're selling it. It's in the market, ladies and gentlemen.

At £73,000. All done?

Going once.

Going twice. Third time.

Sold at 73,000. Thank you.

So, for 73,000 the successful bidders for the two-bed house in Derby

were local men Steve and Andy.

They're both electricians, looking at property refurbishment as a way of earning extra money between jobs.

Andy, Steve. Lovely to meet you.

Congratulations.

Tell me why you wanted to buy this place.

Steve and I were looking for a property that we could renovate or add some value to,

to make some money. Simple as that.

-Is it something you've done before?

-We have done one property together before, yes.

-How did the relationship between you start?

-Basically, we're both electricians.

We met during a college course. So we started working together as electricians.

Then as things progressed,

we've both got properties anyway that we let out so we decided to start refurbishing.

The move into property development

was prompted by a downturn in the amount of electrical work they were getting.

Andy and Steve were looking for other income streams

and with their knowledge and contacts, a move into house refurbishment was an obvious step.

But their first development property didn't quite go to plan.

At the time we bought it, we bought it because we didn't have a lot of electrical work.

Then we got floods of it. Loads of it.

So we stopped that and the house was empty for quite a while.

-We couldn't do it cos of the electrical work.

-How ironic!

-Yes!

-You could have employed somebody else.

-Well,

we did think of that, but we wanted to do it all ourselves.

How much of a delay did that cause?

It took a year to do this property. There was a lot to do.

It was totally different to this particular project.

But it did take a year to do.

So they hardly raced through that first refurbishment.

But they hope this will be much more straightforward.

With the clock ticking, how are they going to make this a hot property?

The main thing is this house is structurally sound but it's dated.

It needs some tender loving care and attention.

The kitchen we plan to re-do completely.

-Similarly with the bathroom.

-We're not sure about the windows yet.

It all goes on budget and what prices we get in.

-You're thinking about double-glazing?

-Right.

-Yes.

Being electricians, the lighting. That's a key element.

It makes a huge difference, we find, if you change the lighting.

It illuminates the room better and catches people's eye with the right fittings.

So we'll change those as well.

-Budget for doing what you're going to do?

-Well, we'll say about five to £6,000.

-Something of that mark.

-Wow.

To keep to that five to £6,000 budget, they'll need to do most of the work themselves.

I hope that with all their plans to brighten up the house,

they don't lose track of the time to turn it round.

# Blinded by the light. #

Timescale for doing the work?

-About a month?

-We're looking at a month.

-Wow.

The last one took a year!

-Yes...

-That's where we made the mistakes.

This time, the kitchen and things, they'll be done straightaway.

It's about managing our time. That's one mistake we learnt.

If we can manage our time better and block some time out to do this,

and push the electrical work back, is the way to do it.

-After this, what's the plans for the future?

-We've already bought another one!

You have?! Blimey!

I think our plan at the moment is we'll continue rolling through,

-doing this type of work.

-This one, the plan is to sell it?

-Preferably.

-Yes, but if the worst comes to the worst,

then we'll probably rent it for a bit.

-Good luck with it!

-Thank you.

-Very nice to meet you both.

You, too.

Fingers crossed that electricians Steve and Andy can resist the temptation to do work for others

and can conduct the rapid refurbishment they plan.

Andy and Steve have certainly got the experience to sort this place out.

As they correctly recognise, it's all about managing your time.

So will they manage to do this place in just one month?

Find out later in the show.

Coming up: will a flat in this period property in Oxfordshire live up to its looks?

I love the price and I am very taken with this facade.

Things are looking brighter for this Derby house, once Steve and Andy get some family help.

It helps a lot to have people you know and trust to support you.

But first, were the plans for this modest terraced house right for the area?

We wanted to make something different.

It was in Chatham, Kent, that I came across a run-down two-bed terraced house

guided at 65 to 70,000.

At first glance, it was a run-of-the-mill development proposition.

But on closer inspection, the layout was not ideal.

There were unused spaces in the basement and attic.

The kitchen was cramped and you had to go through a bedroom to get to the main bathroom.

So depending on your point of view, you could say this property had problems or potential.

Business partners Val and Daniel, who run their own building company,

bought it for 87,500. This was their first attempt at development,

but with most of their work usually being high-end refurbishments in London,

they were used to thinking big. So buying and renovating this terrace

was a step into a very new market.

What are you going to do here?

Obviously you're not going to take it to the max, working on this house?

That would be crazy! We're thinking to modernise it and extend maybe the kitchen.

To raise the roof, if we're allowed to.

And to create maybe another bedroom upstairs with a shower room.

And I was thinking maybe to put a nice kitchen in the basement.

-Wow, Val, you are really going for it!

-Yes, I do!

So, ten months later, have all those ambitious plans been fulfilled?

Well, from the outside, there's no evidence of change.

It was a very, very tiny two-bedroomed house

in a very poor state with no central heating.

The rooms were miniscule.

But have Chatham streets now got London chic?

Well, inside, the two reception rooms are certainly not dark and small any more.

Here, initially we had the living room and dining room.

They were tiny so we knocked down the wall

to create one large living room.

Then, where we initially had the kitchen, we moved the entry door

and extended by two and half metres

to create a nice open plan dining area and kitchen area.

So Val had dropped one of his ambitious plans to put the kitchen in the cellar.

That's now just being used as a storage area.

But the kitchen's been extended and there are further alterations upstairs.

As I'm walking here, there was nothing.

The staircase initially was right here. So we pushed the staircase to the right of the building

to create a much larger space for the bedrooms and the main bathroom.

I think this layout now works perfectly. It creates the maximum space with the minimum hassle.

Turning the stairs not only allows Val to open up the space leading into the bedrooms,

but there's also now no need to troop through the main bedroom to get to the bathroom.

It's now accessible from the main corridor.

Val's in the middle of a luxurious refit, but his ambitions are sky-high.

So he didn't stop there. He added another floor!

Basically, we raised the pitched roof into the loft

and created a master bedroom with an en-suite shower, toilet and sink.

Crikey, it really does look like the guys have gone for it!

They've turned this small, two-bed, two reception-roomed house

into a three-storey, three-bedroomed one

with an open plan living area and what will be a contemporary kitchen.

And although it's ten months since I was here,

they've actually only been working on it for two months.

So what they've achieved here is even more remarkable.

We wanted to make something different.

You can achieve with what is a fairly modest budget

quite a good finish.

But what does Val consider a reasonable budget?

They originally planned to spend 20,000 here.

In most of the projects that I've done,

the initial budget, almost every time, it doubles up.

So we reckon we are close to £40,000 here.

But, hand on heart, I have no regrets.

He may have no regrets, but they may have no profit.

With their total outlay now in the region of 130,000,

they're not quite finished yet.

So did they get this development right?

Was it just one or maybe two steps too far?

What do two local estate agents think?

Coming to this for the second time, I cannot believe what they've done. It's amazing!

They have literally extended everywhere.

Out the back, into the loft, you name it, they've extended it.

To be honest, for the area, they've extended it too much.

I really like the space and the layout of this property

and what they've achieved, but I feel they should have just done the loft conversion

or the extension. One or the other.

If we could pick this property up and move it to a different area,

you would achieve a good figure for this property.

But I do feel it has been over-developed.

Val and his business partner are determined to sell.

They want the capital to move on to their next project.

But could such a comprehensive refurbishment pay dividends

on the rental market?

The sort of rental I think we'll achieve on it

is going to be in the region of £695 per calendar month,

which is more than this area would normally achieve.

The rental market is very buoyant at the moment,

so we would look to put this property on at £700 per calendar month.

That's not bad, actually. If we'd built it for renting,

I'd be really happy with this.

700 a month on a 130,000 investment could earn a very reasonable

six per cent yield.

But for Val, it's all about resale.

The guide price I would suggest

would probably be somewhere round about £130,000 to £140,000.

We would put this on the resale market for approximately 135 to £145,000.

I would have expected 150 to 160.

But it's the first project that we did and we didn't expect to make a profit.

So we are, say, reasonably happy.

Despite perhaps going a little over the top here,

they may actually end up with a small profit

or come out even at least.

So, spirits are presumably quite high.

It's been a learning curve and a pleasant one.

Hard, but fun in the end!

Val's ambition is to work on a million-pound project of his own.

So who knows, maybe this small house will be the start of something big!

This isn't today's auction lot, I'm afraid, viewers,

it's Broughton Castle in Oxfordshire.

It's only a few miles from today's property.

It was built in the 14th century and enlarged 200 years later.

It's been owned by the same family for over 600 years.

It's been described as "the most romantic house imaginable".

Oh, I have certainly fallen for its charms!

The castle has played leading roles in many films

including The Madness of King George and Shakespeare in Love.

Now it can add Homes Under The Hammer to its starry list!

Just three miles away from Broughton Castle

is the auction lot I'm here to see

in the pretty village of Bodicote,

a traditional village on the outskirts of the small town of Banbury,

within easy commuting distance of Oxford.

Today's property is a ground floor flat

in what was once a large Victorian country house.

The guide was set at just £40,000.

I love the price and I am very taken with this facade.

Let's see what it's like inside.

It might not be a castle, but I'm loving what I see.

The house was converted into flats some time ago

but is still a beautiful Victorian building

with wonderful timberwork and period windows.

To get a one-bed flat here with a guide price of just £40,000, well, that's exciting!

Oh, no!

Such a disappointment!

There is not a stitch of character on the inside

and it's in a right old state.

There's no floors, there's lots of wet damp patches everywhere.

It's clear this place needs a complete overhaul.

It's not as small as I'd thought, so a bit of space to play with.

You've got a kitchen through here. Again, the size is quite good.

You could think about knocking this through to open it up.

Cooker - that's seen better days. Look at the state of that!

Yuk!

And the one nice thing about this property is you have a great view of the garden and beyond.

But look - obscured glass!

Doesn't really make sense!

# You've lost that lovin' feeling. #

It's not just the waste of a good window in the kitchen

which means my love for this place is a little faded.

The living room and bedroom look the worse for wear.

It's only the bathroom that retains a little sparkle,

and that's on account of the fairy lights!

Overall, the interior is a big let-down.

That's not the only reason this flat is hard to love.

More bad news, I'm afraid.

This property is unmortgageable

due to a short lease of only 66 years.

You can't extend the lease until you've owned the property for two years.

Working out how much your lease extension will cost is tricky

and you'll no doubt require a surveyor's valuation.

It's almost impossible to work out a fixed price.

So most surveyors will give you a high and a low price.

The final figure should be somewhere in-between.

You'd also have to pay all the solicitors' and surveyors' fees

for both yourself and the freeholder.

So it can work out quite expensive.

Hmm. Add to that a whopping service charge of £2,700 a year

and the cost of owning this place is starting to add up.

But step outside and you can see once again

why it might just all be worth it.

You wouldn't think it from in there, but this is an Arts and Crafts house.

I live in one myself and I love the design,

so I am well-placed to wax lyrical about it!

The Arts and Crafts movement was made up of English designers

who wanted to return to well-made hand-crafted goods

instead of mass-produced poor quality machine-made items.

I think it would be great to inject some of that era and that character

back into that little flat.

# Bring back that lovin' feeling... #

So if you could bring back that loving feeling to the flat,

could it be turned into a good investment?

What does a local estate agent think?

It's a nice apartment, of a good size.

Obviously needs work on it.

But some of the basics in here

are OK as they are, so it's a lot of cosmetics, really.

A nice location, and Bodicote itself is popular.

This property also benefits from outside space

which will no doubt attract people.

But then there are the high service charges and short lease.

66 years on a lease is quite short.

It might be an issue if a first-time buyer were coming to look with a lender.

They tend to want longer on the lease, so that may be a problem.

But if you have an investor buying with cash, it won't be an issue to them.

How much could someone make here once the work's done?

For a rental valuation, I'd say you'd easily achieve

between £500 per calendar month and £550 per calendar month.

A sale on this property, I would say you're probably looking between 75 and 90,000

depending on what's done when the renovations are finished.

If the short lease doesn't put you off, then the incredibly high service charge might.

It didn't deter somebody, though.

Let's find out who wanted this flat as we go to auction.

The lot came up late in the auction

but some bidders were determined to stick it out.

A leasehold ground floor self-contained flat.

Where do you want to be on this? 35 to start me either in the room or on the phone.

In the room, thank you, at 35.

36 now? Is here.

37?

37. 38? 38. 39?

39. And 40?

40 is here. 41 now?

41. 42?

42 is on the phone.

Thank you. 43, sir? 43.

44? 44. 45. 46.

Gentleman at the back of the room buys it at the moment. At £46,000 for the first.

46,500.

Seven now?

47, sir? 47. 47,500?

47,500. 48 now?

48. Thank you. 48,500?

48,500. 49 now?

49, sir?

49. Thank you. 49,500?

Round it off for me at 50, will you?

50 is now bid.

500 more? 50,500. 51 now?

Is that 51 at the back? Thank you very much, sir.

51 at the back. 51,500?

At 51 at the back for the first. 51 for the second.

51,250.

51,500? 51,500. 750?

52? 52.

250?

52 once.

Twice. Third. Final time.

Got it now at the back. 071.

So, for 52,000, the determined and successful bidders were Keith and Julie.

Keith is a retired antiques dealer while Julie works in a hospital.

Currently living over 200 miles away in Dorset,

they've come to the flat to tell me about their plans for it.

Guys, congratulations!

Keith, what's the story behind you wanting to buy this?

Well, we own next door, which is a holiday cottage,

and the flat which is behind you.

Initially, we steered away from it because we were tied up elsewhere,

but Keith decided that he'd go for it.

I wasn't best pleased!

We did have a limit but he didn't stick to that.

But, you know...

-Julie, what was the limit?

-A-hem!

46-and-a-half!

Keith, you're a naughty boy!

-I normally am!

-Yes.

Why did you go over so much?

Um, well, I thought this is a once-only opportunity of either doing something or not.

I think you've been very wise to buy properties almost under one roof.

-You can keep an eye on them.

-Yes, that's very good.

-Except we live in Dorset!

-Which is not very good - it's miles away!

-But our son lives...

-Our son lives down the road.

-In the village. He'll keep an eye on it.

It's certainly handy to have their son around to keep an eye on their properties.

They can also use their holiday cottage as a base while they do the work.

But three properties in the same enclave surely means some sizeable service charges.

How much do you pay in total for the properties you own?

The holiday cottage is freehold.

-This is 2,700 and that one is 3,200.

-Woo!

That's such a lot of money before you even start thinking about mortgage repayments.

-Absolutely.

-Yes.

So they really can't hang about with this one.

They need to get it earning an income as soon as possible.

So, what's their plan?

What are you going to do to turn this place around?

I'm going to put it over two phases.

We've already let it. Got a deposit yesterday.

So I've got to bring it up to a lettable standard,

albeit basic.

At a later date we want to put central heating in and anything it needs it will have.

If we can put some character in it as well. Some oak floorboards in the sitting room.

-It'll be nice.

-How much money have you put aside?

The first phase, I'm not going to spend any more than £5,000.

Julie, why are you laughing?

Oh, I can just see it!

It's going to be tight.

Good luck with it. Lovely to meet you both today.

-Well done.

-Thank you.

-Thank you very much.

I really do wish them luck.

It's not just the distance they live from the flat.

The flat itself has a long way to go before it's ready for tenants.

Gripped by auction fever, Keith spent way over his limit.

Let's hope he's not gripped by renovation fever

because he's got a lot to do in there.

He does have Julie to keep him in check and hopefully on budget.

Find out how they get on later in the programme.

Did our fearless developers emerge victorious?

Or did they flounder in the shallow end?

Let's find out!

Derwent Heights may sound like a lesser-known novel written by a Bronte sister,

but in fact it's a suburb of Derby.

It was here that a pretty decent two-bed terrace came up for auction.

Despite the outside sporting a plethora of wheelie bins,

the inside was far from rubbish.

In fact, the house just needed sprucing up to get it ready for the rental or resale market.

It was bought for £73,000 by friends Andy and Steve.

Both are qualified electricians, looking to generate extra income

through property refurbishment.

But their previous experience, though successful, had been a little slow.

We took a year to do the property. There was a lot to do.

It was totally different to this particular project.

But it did take a year to do.

# Slowly but surely

# I'm gonna wear you down

# Slowly but surely I'm gonna bring you round. #

That might not have been the speediest of refurbishments,

but they did feel they'd learnt a lot from it.

They hoped to turn this property around in just four weeks

so, armed with a budget of just £6,000, they cracked on with it.

We returned two months later. Had they sparked this place back to life?

Well, the frontage may not be significantly different.

The wheelie bins are still here,

but thanks to new double glazing,

at least the new residents won't hear the lorry on collection day!

Inside, the decor, carpets and lighting give the place a real lift.

But instead of installing new central heating,

Andy and Steve have gone for an interesting alternative.

In this room, we've replaced the fireplace.

It's a key feature in the room and I think it works very well.

We've put new windows and doors in. Cleaned up the decoration and new carpeting.

The whole thing works well. I'm very pleased.

That small, poorly-equipped kitchen has now been replaced

by a modern one with all the appliances.

We ripped out the kitchen and replaced it with a new kitchen.

We've put wall units in as well cos we need the cupboard space.

We've also put a new extractor unit in

and obviously a new cooker, oven and remote-control plinth heater.

There was no central heating in the place.

We've upgraded the lighting to make it better.

Although not the biggest house in the world,

Andy and Steve have endeavoured to lift the gloom and lighten the place up.

So they've made the two bedrooms crisp and clean.

Gone is the outdated avocado bathroom,

replaced by a white suite which maximises the feeling of space.

When we came to this property, it was pretty dingy and tired.

It generally needed an upgrade and some care and attention.

I think we've created a property that is warm and friendly

and a nice place to live for a first-time buyer.

So it may be mission accomplished in the house,

but what are the prospects for the garden?

Well, the hedges. I always felt there was a view there to be had.

It was rather overgrown and neglected this side, too.

And we came one day and the allotment association had trimmed the top of it for us.

So that was a great saving from a time point of view.

The views from Derwent Heights are one of the attractions of the area.

Thanks to some local help, Andy and Steve have given this house an outlook

that's sure to add value.

How did they divide up the labour?

I do the kitchen and the bathroom because it's to do with plumbing and things like that.

That's my side. Andy does the decorating and other things.

And electrical work. He concentrates on that.

We have family connections, too, to help with these projects.

The windows were completed by my daughter's now husband.

He's actually got his own building business.

We only used specialist labour for cutting the worktops, which was my nephew,

so that was a good price, of course!

So it helps a lot to have people that you know and can trust to support you with things.

We could perhaps have put the windows in,

but why do it if somebody's much better and knows what they're doing?

It might be two months since we were here, but the work was completed in just four weeks.

Slightly quicker than their first property!

So they've managed to balance their work as electricians with the time they spent on renovations.

It was just the Fridays that we'd go off and do the work.

-Other work.

-We've learnt that we can partition work

and get all jobs done if we do that instead of trying to do bits of jobs all over the place.

Not only did they stick to their planned timescale for the work,

but also kept to their £6,000 budget.

With a purchase price of £73,000 plus costs,

Andy and Steve's total investment here is around £80,000.

So, have they put their connections and electrical knowledge to profitable effect?

We asked two estate agents.

First impressions are that a good refurbishment has been done here.

The kitchen and bathroom are very nice.

They're finished to a good standard to appeal to first-time buyers.

The property on first impression is very neutral,

it's easy for somebody to move straight into.

But the further you look, the more you see that corners have been cut.

Ideally, the property would have gas central heating.

That will put some people off. It will still sell,

but it won't achieve a top price without gas central heating.

Ideally, Andy and Steve would sell,

but in the current climate, they may have to consider renting it out for a while.

The rental market is very strong in this location.

I would expect it to achieve £500 per calendar month.

I'd expect to achieve a rental value of up to £425 per calendar month.

£425 a month would generate a yield of around six per cent, which is very respectable.

But how does it fare as an investment if they were to sell,

bearing in mind they have spent around £80,000 buying and renovating it?

The property should go onto the market with an asking price of £89,950.

I would hope to market the property at around £90,000.

I think that's slightly low.

We'd probably get nearer the 95 mark, I'd hope, but we'll see.

A 90,000 resale price could see a potential pre-tax profit of £10,000.

That isn't too shabby for just four weeks' work,

but with valuations lower than hoped for,

what do they now intend to do?

The plan now is to actually put it on the market at the price we would like

and see what happens.

If it doesn't sell, we'll turn it into a rental.

We might just have to wait and see what they finally decide to do with the house.

But for the two electricians, no doubt whatever route they choose, there'll be a positive outcome.

In the quiet surroundings of the village of Bodicote, Oxfordshire,

a one-bed flat went to auction.

Located in what was a large country manor, from the outside it looked like a potential bargain

as it had a guide price of just 40,000.

But step inside and it was disappointing to say the least.

Not only was it devoid of character,

it was also in a pretty run-down state.

As if that wasn't bad enough, it only had a short lease

and came with a service charge of £2,700 a year.

But as Dorset-based couple Keith and Julie already owned two other properties in this enclave,

they decided this might make a good buy-to-let.

Well, when I say Keith and Julie decided,

in fact it was really Keith who made the decision!

Keith decided that he'd go for it. I wasn't best pleased!

We did have a limit, but he didn't stick to that.

-What was the limit?

-A-hem!

46-and-a-half!

52 once, twice, third and final time.

Got it now. Bidder 071.

At £52,000.

So, having paid 52,000,

5,500 over their agreed limit, their budget was now extremely tight.

They had just five grand to turn this flat around.

With a tenant already lined up, the clock was ticking

to get it bringing in an income as soon as possible.

So, ten weeks later, we're back.

Have they turned the flat around, ready for their tenant?

The outside shows signs of new windows and general upgrading.

But it was the inside that was the real challenge.

The property was awful when we bought it.

It was in a filthy state.

Very run-down. It was unliveable.

You couldn't see the work for the grime!

Grubby.

Tired.

A bit like me!

No wonder Keith feels tired

as he's worked hard to awaken the flat's potential.

There are new electrics and storage heating throughout.

The front living room has been redecorated with a laminate floor laid

and there's been a mixture of elbow grease and refurbishment in the reinvigorated kitchen.

Fortunately, the kitchen wasn't too bad.

It was just filthy, absolutely filthy.

We've had to replace this window. It was obscured glass,

nuts because the garden's there.

Keith had to do some plastering.

I've had to do a lot of cleaning. This was eugh!

Really grim. We would have liked to have changed the kitchen,

but the tenant is in such a hurry, we said we'd clean it up as best we can

and as time and things allow, we will replace it.

So the kitchen may have only been a temporary makeover,

but with a budget of just £5,000,

they had to make the most of what was still serviceable.

For the rental market, this kitchen is fine.

As is the bedroom.

After a splash of attention, the bathroom is back in full working order.

But as the couple live over 200 miles away in Dorset,

and there was so much to be done here, this was never going to be an easy refurbishment for them.

It's been hard work, mainly for Keith because I've had to stay at home doing work.

Well, she's joined in as well.

She's been here the last week, cleaning up after me,

making sure I do the right things.

He's done well. He knows he's done well.

He's pleased with it. I'm pleased with it. But I'm pleased to have my husband back!

With the flat just about finished, Julie should get to have Keith back in Dorset.

Although they're both pleased with the results, it's not they who are going to live here.

We had the tenant round yesterday.

She's absolutely delighted.

We have done it to her specifications, really.

White, magnolia, solid floors.

So I'm pleased she's pleased!

So, one happy tenant.

But at what cost?

It's just about 5,500, including materials.

Not counting my time in any way, of course!

Well, a £5,500 budget, added to their £52,000 purchase price

takes their current outlay to about £57,500.

But this flat also came with a £2,700 yearly service charge.

What's more, the flat has a short lease

and they've yet to find out how much it'll cost to extend.

So the bills are adding up.

Has this been a slightly rash purchase on Keith's part,

or has he made a good decision?

What do two local estate agents think?

The property today looks very good.

It's very neutral, so ideal for rental markets or sale markets.

They've done well, what they've done.

The main thing is it is quite spacious compared with some other one-beds you see around.

We've got a separate lounge and separate kitchen/diner, which is spacious.

First impressions are that it's small but fairly well renovated.

Its main attribute is the view over the garden.

I think the lease is a problem, the length of the lease.

That will need to be increased.

Obviously they can be fairly expensive.

Service charge, again, way higher than what the average ones are.

It would certainly need to be investigated fairly well

to get that sorted before you think of selling the property.

This flat is intended as a rental property in the short term.

But in the long term, could this investment, likely to be in excess of 60,000,

once the lease is extended, make a profit if sold on?

If we place the property on the market for sale,

I'd expect to achieve around 85 to £90,000.

If I put the property up for sale at the present time,

I would suggest figures within the region of 80 to 85,000.

-That's OK!

-What a mark up!

-Yeah. Not that we're going to sell it.

Those numbers suggest this is a pretty sound investment.

But with their new tenant paying around £500 a month,

are they maximising its potential on the rental market?

If we put the property on the market for rental now,

I'd expect to achieve around £525 per calendar month.

I'd put it on the rental market for somewhere around £500 per calendar month.

-Yes, that's what we thought it is.

-No, that's great.

-Good, yeah.

With a rental income of £500 a month,

taking into account that annual service charge,

this place could generate a decent yield of almost six per cent.

Perhaps Julie's reservations about it were unfounded.

Will Keith be allowed back into the auction rooms on his own?

He's not going to any auctions without me in future!

I can't trust him!

-We'll see!

-Yeah!

So Julie may go along to the next auction to hold Keith's hand.

Not only to give him support, but to keep a check on how much he bids!

Not enough for you?

We'll have plenty more for you next time.

-Join us soon for more Homes Under The Hammer.

-See you then.

-Bye!

-Bye!

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