Episode 47 Homes Under the Hammer


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Episode 47

Martin Roberts and Lucy Alexander visit a building in Liverpool, a property in Gillingham, Kent, and a house in Derby. They learn how much each sold for at auction.


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With the property market's ups and downs, be sure what you're buying.

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-And nowhere is this more true than in the auction rooms.

-So join us now under the hammer!

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Buying at auction doesn't have to be a scary experience.

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If you do your research, you can bid with confidence.

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Today hopefully we'll meet some buyers who did just that.

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-Did they bag a bargain or get more than they bargained for?

-Let's see.

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'In Liverpool, this house brings out the archaeologist in me.'

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I love unearthing things covered up by years of paint.

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'There's a commercial property in Kent that looks ready for action.'

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You could come straight in here and start your business.

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'And in Ripley, Derbyshire, something is not on the level.'

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This corner of the room is actually just...down!

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

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-'when they went under the hammer.'

-Thank you very much.

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'Can anyone visit Liverpool without referring to the Fab Four?

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'Clearly not, as this is Penny Lane, reputedly where Lennon and McCartney caught the bus to the city centre.

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'Fast forward to the present and I've found an opportunity to turn pennies into pounds,

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'round the corner in the popular student area of Wavertree.'

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This is Studentville! Studentland, Student Central.

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Whatever you want to call it, you would be mad to consider doing anything other with this property

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than renting it out to students.

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End terrace, three bedrooms and a guide price of 90,000 quid.

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'From the outside at least this looks quite a smart red-brick Edwardian terraced house.

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'It's double-glazed, has an alley at the side and access to the rear.'

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So what's it like? Well, first impressions are quite neat and tidy. Doesn't smell damp or anything.

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And I wonder... Staircase here.

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Oh, yeah. Fantastic. Beautiful original spindles there.

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I love that feeling that you can unearth things covered up by years of paint.

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Large front room there. That, I think, could probably be turned into a bedroom

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to maximise your income from student lets.

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A smallish kitchen there. It needs complete refurbishment,

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but you can get away with that in a student house. A real good room here for your social room,

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your shared living room area. Not a bad size.

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Things like built-in cupboards.

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Oh, that's nice. In a way, this would make a beautiful family home,

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but we're thinking about the money. We're going to do students.

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# It's a cool place It's such a cool place... #

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'This could make cool student accommodation in more ways than one.

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'There's no central heating and with these sizable rooms,

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'I imagine it gets pretty cold here. But how cool would it be to have digs with these character features?'

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# Told you it's a cool place It's such a cool place... #

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'They're not just downstairs, but upstairs as well,

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'with two well-proportioned bedrooms with original fireplaces.

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'There's one smaller room, plus a bathroom that is a touch on the compact side.

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'With rejigging, you might get four bedrooms here plus a bathroom.

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'With one downstairs room a potential bedroom, that's five lettable rooms and a cool return.'

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There has been a trend in recent years away from traditional student accommodation like this

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to more purpose-built blocks with all the mod cons - laundry facilities and wifi.

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So will that affect this property?

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You know what? I don't think so. For a start, you are in the heart of student land here.

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Easy access to the universities, all the bars and clubs on your doorstep.

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And for many students it'll be their first time away from home.

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The chance of having your own front door and a bit more flexibility,

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I think they'll go for that. Much more fun.

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# I want it all

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# And I want it now... #

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'A park just over the road, lectures nearby and restaurants and bars aplenty.

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'This place ticks all the boxes for student accommodation seekers.

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'Money will have to be spent, though. It needs rewiring, central heating, kitchen, bathroom

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'and complete refurbishment. I'd also maximise the layout.

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'But there's a profit to be made. What does an estate agent reckon?'

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This will appeal to students

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and young urban professionals. It depends on how it is finished

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which market it would address. If finished in its traditional state, three bedrooms and a bathroom,

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it would appeal more, probably, to first jobbers than to students.

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If it was converted to allow more people to live in the house, then it's an ideal student house.

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There are options here, but which approach would make more financial sense for a house guided at £90,000?

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With money spent on updating it and keeping it in its present three-bedroom format,

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I would say that the selling price would be somewhere around £145,000.

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Turned into a five-bedroom student investment, I would see the sale price of this house

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to a professional investor at somewhere between £155,000 and £160,000.

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'Increasing the number of bedrooms doesn't massively increase the resale value,

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'but it will affect rental.'

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Keeping this house in its current state, modernising it, it would achieve around £675 per month.

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Students in this area would be looking to pay £50-£60 per room per week.

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'£60 a week on a student rental with five bedrooms would generate around £14,000 a year

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'on an investment of around £100,000. As you can see, it's a no-brainer.'

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Sometimes the most obvious answers are the right ones. This place just has to be a student let.

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You don't need to study the figures too hard or have a degree in development to see it's first class.

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Let's see who agreed.

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Lot 32 is the vacant end terrace property in the Wavertree area.

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How about 80,000 for this one?

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80 at the back of the room. 80,000. At 80,000.

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I'll take another 2. 82. 84?

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84. 86. 88.

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90,000.

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92.

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94. 96. 98... 98.

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New money. 100,000?

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98, new money. 99 if it helps.

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99,000. 100,000. 101?

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101.

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102? 101, then.

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New money again. 101,000.

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Sneaking in at the last minute. Good tactics. At 101.

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First time again at 101. Second time.

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All finished now? £101,000.

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-Yours. Thank you very much.

-'The successful bidder at 101,000

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'was full-time property developer and local Liverpool man John.

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'He's a joiner and has a substantial portfolio of residential and commercial properties,

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'a number of which are already student lets.'

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John, lovely to meet you. Why did you want to buy this?

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Basically, it's what I do for a living. We buy these properties all the time at auction.

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It's basically the location for me round here. I do a lot of student lets and that.

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-It's an ideal location.

-Why are you a big fan of student lets?

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The return I get on the properties, which is a lot more than a single occupancy.

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I do plan on putting five students in this one, which will bring a much better return than a family.

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'John runs his lets on annual contracts from July 1st each year

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'and charges half-rent in the summer holidays, but with the standard rate for a room at £60 per week,

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'bills not included, he could expect to see an annual return of £11,000-£14,000,

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'depending on how many rooms he lets out in this house.'

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-So what are you going to do?

-We'll gut this one 100%, everything back to the brickwork.

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Everything. Every room, ceiling, walls. Everything will be out.

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We'll try to leave the original features on the ceiling, but new walls, rewired, re-plumbed,

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new damp course. We've already had double-glazed windows done.

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It'll have a fitted kitchen, four bedrooms upstairs with a shower-bathroom in the middle.

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-Upstairs, we'll take every wall out.

-Oh?

-And make four good-sized bedrooms with a shower/bathroom.

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And then downstairs, this will become a bedroom.

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The rear room will be communal.

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There's a small outrigger which was a coal shed or wash house.

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We'll access that off the rear lounge as a second bathroom.

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Why hack all the plaster off?

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A lot of it will be addled, so it will all be loose.

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When we do the damp course, you have to take three foot of plaster off anyway.

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The rest becomes loose, so it's just as easy.

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We're also doing it for the long-term. We don't want to come back to problems other than maintenance.

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-It's 20 years it'll be done for.

-Get it right first time.

-Basically.

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# Get it right the first time That's the main thing... #

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'Stripping it all back to basics is also a chance to address cracks or any structural issues.

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'John hopes to do the work in 12-13 weeks so that it's ready for the next student intake.

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'He doesn't believe in half measures.'

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What budget have you put aside?

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To do the whole property, we're probably budgeting around £23,000-£25,000.

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That will be for the furnishings as well inside.

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-Will you get involved in that?

-Very much. All the time.

-What do you do?

-I'm a joiner by trade.

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Basically, we're hands on. We have everything going every day, the two of us working.

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So it'll be a big project, you know.

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-Congratulations, well done. Good luck with it.

-Thanks. Cheers.

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'I guess that with all John's experience, for him this is just another property for his portfolio.'

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Well, John certainly seems to have cracked the student market, but will this place be filled with students

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when we come back? Find out later in the show.

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Today I'm in Rainham, one of the Medway towns in north Kent,

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which also includes Gillingham, Chatham and Rochester. You can be in the capital in less than an hour,

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so it's great for commuters.

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I'm here to see a freehold semi-detached property. It had a guide of £40,000-£45,000.

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It's in the town and only a short walk to the train station, so the location couldn't be better.

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It doesn't look very homely, but that's because it's a commercial property. It's an office unit.

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I'm going to go inside to see what you get for your cash.

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'It doesn't look too bad, but double yellow lines is a real worry.

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'Parking restrictions are a bit of a no no for commercial units.

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'But it does look to be in good condition, which is a positive.'

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I know this place has B1 usage, which means predominantly offices,

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and, you know, it's a neat little unit, freshly-painted.

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It's not the biggest space, but this is ideal for a little business.

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Somebody's already worked from here. Lots of desks are set up. You've got a small kitchen space.

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There isn't actually a kitchen in it, so you'd have to install one.

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I also see a little bit of damp, so I'd check out the roof.

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A little toilet. You could come straight in and start on day one. It really is ready to go.

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'That's a bonus for any business. However, there are further options for the more adventurous.'

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I would love to get that stepladder down and nose around that loft

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to see if it's possible to improve the square footage. You could put a dormer in.

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You could even lower this ceiling. It's a wasted area at the moment.

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This unit would definitely benefit from some additional space.

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'It could also do with an outside area at the back, which it currently doesn't have.

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'There is a small bit of land, but it's not part of the freehold.

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'Inquiries could be made about purchasing this,

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'although it does depend on who wants this property and for what. It may suit them as it is.'

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# I want you just the way you are... #

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This is something that caught my eye. The auction catalogue hints at the potential for conversion.

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So you could change the use from commercial to residential.

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With so many residential properties here, the council could look favourably on that.

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Having said that, planning permission is nearly always a gamble

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and I'd advise the buyer to inquire before the auction and not after.

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A one-bedroom house in this area could achieve £100,000 so it could stack up financially.

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'So with a guide price of £40,000-£45,000,

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'what did a local estate agent make of this teeny space? I invited one along to find out.'

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It's a nice little office space.

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The problem is, if you're looking to sell something, you're off town centre.

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I think it would be better for somebody like an accountant, taxi service,

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where they don't need passing trade.

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'How about changing it entirely and altering its use to make it residential?'

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You'd need all the building rather than just part of it to make it a viable proposition.

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'How much could the new owner make in rent here?'

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It would be somewhere between £75-£100 per week.

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-'And if they sold it on?'

-I think if I was to put this on the market,

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once it had the jobs done, some damp issues,

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I'd be looking to market it at around £45,000.

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Perhaps giving a guide of £40,000-£50,000 and see what offers come in.

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You can keep this as a commercial unit or apply for change of use

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and perhaps turn this into a residential property.

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There's also room to go up into the loft. I'd find out who owns that land behind this

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and perhaps create a garden. This is a good one to go for. Let's see who else thought so.

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Lot 37 is an outstanding value refurbished office

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in good condition close to the town centre and train station.

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Start me where you will. 38? 38,000. I'm on the way.

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At 38 I have. 40 I'm looking for. £40,000 bid do I see?

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£40,000 bid I have. And 2 now, if you like. 42?

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At £40,000 in the door. 42 I'm looking for.

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If we're all done at £40,000, for the first time. £40,000 to the lady in the blue

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for the second time. £40,000 for the third and final time. In the door at £40,000.

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You've got it. £40,000.

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'The successful bid of £40,000 was placed by businesswoman Pamela.

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'She needed bigger premises for her personal care business.

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'I went back there to meet her and hear her plans for the place.'

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-Pamela, lovely to meet you. Congratulations.

-Thank you.

-Tell me about the history of this

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-and why you wanted to buy it.

-I've been looking for a long time for a property to put my office into.

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At the moment, we rent on the high street and it would have been lovely to have found somewhere there,

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but they're just too expensive and not a lot comes up.

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This place was advertised and I braved it, went along, held my card up

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and I bought it!

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-Are you happy with the price you paid?

-Very happy.

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'As well she should be because Pamela's top limit was £45,000,

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'so she's delighted she secured this for only 40 grand.

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'It suits her perfectly as she's planning on running her business from here.

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'She currently rents nearby so moving shouldn't be an upheaval.'

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-So what is it that you do?

-We've got a company of home helps,

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helping to maintain people in their own homes.

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And professional couples on our books can have the weekend to themselves. Their housework is done for them.

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It's a service for anybody, really.

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-How many people work for you?

-I have 46 at the moment

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and it's increasing all the time because I have new clients all the time.

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'Pamela's business involves caring for people in their own homes

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'by helping out with shopping, cooking and cleaning.

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'Her dedicated work has won her several awards over the years.

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'Fortunately, most of her 46 employees aren't office-based or it might get a little cramped,

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'but one person who will benefit is employee and friend Tracy.

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'She came along to view her new workplace and I caught up with her to see how she feels.'

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-How long have you worked for Pamela?

-In total, about 12 years.

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-How do you feel about the new move?

-Very excited, especially for Pamela.

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Why do you think it'll be a better premises for you?

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Just because it will be Pamela's. It's like a new venture, although the business is the same.

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It'll be all fresh and new.

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-Can you see yourselves being here for years?

-Oh, yes. Onwards and upwards. It's very busy, so yes.

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Fingers crossed!

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

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'The company has already been running for 20 years, although Pamela only took over 6 years ago.

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'The move was to create an asset for the business, plus, long-term, a little pension pot for herself.

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'While there's no major work ahead here, Pamela's aware of the damp problem at the rear.'

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I know the garden outside the back is a couple of feet higher than inside.

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And I know the previous owner has replastered that.

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I'm not sure whether they put in damp-proof or tanked it.

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I tend to think they probably just plastered over it. That's the first thing I'll be investigating.

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Are you going to change the layout? I know it's not the biggest place, but you have potential to go up.

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That's what I'm hoping for. I haven't ventured up there yet, but that will be the next step,

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to see whether I can put dormers up and have another office. Sometimes, when the pair of us are in

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and a girl wants to come in for a private chat, it's always nice to have a spare room

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and not have to go to the kitchen.

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'So extending into the loft is the plan, once Pamela gets permission.

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'She's given herself a couple of months to address the damp issue.

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-'What sort of budget is she working to?'

-It's really difficult.

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If I get permission to go up there, I have no idea how much... no idea what work is involved.

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But just the office part, I mean, £5,000,

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-£10,000...

-Wow.

-Whatever it costs to get the damp done and new office equipment and kitchen.

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-Is anything worrying you about having purchased this?

-No.

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I'm quite calm and serene about it at the moment. Fingers crossed that that carries on.

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Good luck with this business. I'm sure it'll be a huge success.

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-It'll be great to come back and see what you've done.

-Thank you.

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Pamela describes herself as serene and calm, but will she be so relaxed on moving day?

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And will she go up into the loft and create that all-important private room?

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Join us later in the programme to find out.

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'Coming up: in Ripley, there's a common problem in this house.'

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The only way to access the loo is through the second bedroom.

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'In Rainham, has Pamela grabbed that extra space in the loft?'

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A couple of builders have said it is doable.

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'First, did John's total overhaul leave any room for problems?'

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Everything's being ripped out anyway.

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'Now we head to the popular student area of Wavertree, Liverpool,

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'where full-time property developer John bought this three-bed end of terrace house for £101,000.

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'He saw its future as a student rental goldmine.

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'To get the best out of it, John wasn't going to pussyfoot.'

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Tell me what you're going to do.

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We're going to gut this 100%. Everything back to the brickwork.

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-Upstairs, we'll take every wall out upstairs.

-Oh?

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And make four good-sized bedrooms with a shower/bathroom.

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'John was aiming for a 12-13 week turnaround

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'to take advantage of the next student intake. As a joiner by trade, he'd get his hands dirty.

0:23:560:24:04

'Three and a half months later, we returned and it looked like John has been very busy.

0:24:060:24:12

'The front living room is now a comfortable student pad with all the furnishings supplied.

0:24:130:24:19

'Down the renovated hall, the tired kitchen has given way to new units

0:24:190:24:25

'ready for those pots and pans to be used.

0:24:250:24:29

'Next door, the lounge has had an impressive makeover,

0:24:290:24:32

'ready for those wild student parties. Er, I mean those quiet evenings studying.'

0:24:320:24:39

In this room here, we've created a communal area for the students,

0:24:390:24:44

which is nice and cosy, basically.

0:24:440:24:46

Enough seating for five students, a dining table and chairs.

0:24:460:24:52

Here we've also installed an intercom system connected to the front door.

0:24:520:24:57

That's added security for the students. They can see who's coming and going.

0:24:570:25:03

I'm quite pleased with this.

0:25:030:25:05

This was the brick wall we knocked through for an extra bathroom.

0:25:050:25:11

We've put a shower room in and done a lot of extra work. It's really paid off. I'm pleased.

0:25:110:25:19

'I reckon John must be most pleased with the renovated bedrooms.

0:25:200:25:25

'The general layout stayed the same, but by creating new walls, each room has the same square footage.

0:25:290:25:36

'By shifting the side wall and doorway, the back bedroom has been split to allow for a bathroom.'

0:25:380:25:44

What we've done up here is we've taken every wall out and created four double bedrooms,

0:25:510:25:57

with all new furniture. In the bathroom area here,

0:25:570:26:01

we've created a shower room, so there's two bathrooms. It's worked out really well.

0:26:010:26:07

'Students nowadays expect decent living standards and John certainly won't disappoint them

0:26:070:26:13

'with these five good-sized bedrooms and an excellent finish throughout.

0:26:130:26:18

'And if they want to enjoy the afternoon sun, the rear yard has had a makeover,

0:26:200:26:26

'ready for relaxing or a barbecue.

0:26:260:26:28

'This place may be basic, but getting back to basics was part of John's plan.'

0:26:280:26:34

Everything's been back to the brickwork. It had a 100% rip out.

0:26:340:26:39

All new double-glazed windows, fully central heated and re-plumbed,

0:26:390:26:44

new damp course. Basically, 100% replastered.

0:26:440:26:49

All the woodwork's brand new, fully rewired. Everything, basically.

0:26:490:26:54

'The original house wasn't in a bad state, but John's philosophy is no difficulties are faced now

0:26:540:27:00

-'or in the future.'

-We don't normally come across problems.

0:27:000:27:05

Everything's being ripped out and replaced with brand new stuff.

0:27:050:27:09

We don't want to come back in 18 months with the tenants saying this fell off or we have damp here.

0:27:090:27:16

We expect to come back for maintenance, but nothing structural.

0:27:160:27:21

# We were built to last

0:27:210:27:23

# On until forever... #

0:27:260:27:28

'It doesn't mean a wholesale rip-out of the old house. John's retained some original features

0:27:280:27:34

'like the living room mouldings and the ceiling rose, which give character,

0:27:340:27:39

'but doing such a complete renovation means a healthy budget.'

0:27:390:27:44

We spent about £24,000 on the property, including all the furnishings and fixings.

0:27:460:27:52

I did budget for £25,000, so we've come in under budget.

0:27:520:27:57

'For such a major overhaul, that's good news.

0:27:570:28:01

'Added to the purchase price of £101,000, John's total spend on the property is 125 grand.

0:28:010:28:08

'All the work was done in 46 days, so he's got a lot to be pleased about.'

0:28:080:28:14

This one's finished. It's fully let for the academic year to five girls.

0:28:140:28:19

So we're on to other properties now. We've got other ones running, so on to the next one.

0:28:190:28:26

John doesn't hang around, but with the house ready and waiting

0:28:270:28:31

for its new tenants, it's time to find out

0:28:310:28:34

what two local estate agents think of John's £125,000 investment.

0:28:340:28:40

The property has been fantastically finished.

0:28:410:28:44

How the developer has put it for the student market is perfect.

0:28:440:28:48

It suits ideally students who are coming out of halls.

0:28:480:28:52

In their first year, they've had en-suite facilities, the quality of fittings are quite high.

0:28:520:28:57

To come into a property like this will really appeal to that market.

0:28:570:29:01

I think it's a fantastic property. I think it's done to a really good standard.

0:29:030:29:08

It doesn't need any work done to it at all.

0:29:080:29:11

I particularly like the fact that it's got two bathrooms

0:29:110:29:15

which is beneficial for families or students moving in.

0:29:150:29:19

The finish is fantastic. You could move in and not have to do anything.

0:29:190:29:23

There's no doubting the standard of work, but with no plans to sell,

0:29:230:29:28

has John got his lean, mean rental machine working to full capacity?

0:29:280:29:32

We'd look at valuing it at a maximum £70 per week per student.

0:29:340:29:38

Probably in a property like this, the pitch would be £60, £65 a week.

0:29:380:29:43

I think that's reasonable.

0:29:430:29:45

I've let the property for £60 per person already,

0:29:450:29:49

so I'm more than pleased with 60 or 70, yeah. That's great.

0:29:490:29:53

No wonder John's smiling!

0:29:530:29:56

His annual rental income on the place will be approximately £14,000.

0:29:560:30:01

That would give him an excellent 11% yield.

0:30:010:30:05

Bearing in mind his 125 grand outlay,

0:30:050:30:07

the estate agents reckon he could achieve a possible £155,000 if he sold,

0:30:070:30:13

meaning a potential 30 grand profit.

0:30:130:30:15

That would do very nicely,

0:30:150:30:18

but somehow I don't see that changing his plans.

0:30:180:30:22

I'm planning on obviously continuing letting it now for the foreseeable future.

0:30:230:30:29

It'll just go in the mix with all the rest of the properties

0:30:290:30:33

and obviously keep them fully let for the next ten years, hopefully.

0:30:330:30:37

I'm ten miles north of Derby in the former industrial town of Ripley,

0:30:410:30:47

once a centre for mining with an impressive steelworks.

0:30:470:30:50

It's now commonly viewed as an olde-worlde tourist destination popular with commuters.

0:30:500:30:56

The town of Ripley has a motto - "character thrives on hard work."

0:31:000:31:04

The big question is, how much hard work will the property that I'm here to see demand?

0:31:040:31:10

From the outside, hopefully not too much.

0:31:100:31:13

It's a two-bedroom semi-detached. It had a guide price of just £44,000.

0:31:130:31:18

Hmm... Let's take a look inside.

0:31:180:31:21

So how hard can it be to make money out of a property that was guided at just £44,000

0:31:210:31:28

when the average house price around here is 70,000 to 80,000?

0:31:280:31:32

It has a decent roof, a side entrance to the rear

0:31:320:31:35

and potential space at the front for off-street parking.

0:31:350:31:39

It certainly shows some promise.

0:31:390:31:41

What's on offer? A reasonable-sized lounge here,

0:31:410:31:45

then through to...

0:31:450:31:47

Hang on a minute. What is going on in this corner?

0:31:470:31:50

This corner of the room is actually just down.

0:31:500:31:55

This needs investigating.

0:31:560:31:58

There you go. I didn't notice it when I first walked in.

0:32:000:32:03

In that corner on that slab, look how it's all green algae and moss, plants growing out of it.

0:32:030:32:09

In fact, if you look up there, that guttering looks like it's been dripping.

0:32:090:32:14

That's caused a problem there, but we're looking at something a bit more serious.

0:32:140:32:19

The whole area is a mining area, so there could be history of subsidence.

0:32:190:32:24

If you look at the front of the property, it's separating from the house next door.

0:32:240:32:29

This is only a first glance. You want to have this checked out by a structural surveyor.

0:32:290:32:34

But alarm bells should be ringing for sure. Let's carry on.

0:32:340:32:38

# Lean on me When you're not strong... #

0:32:380:32:42

I think potentially this could be a big issue.

0:32:420:32:46

It may be historic, but a structural survey is vital to get to the bottom of it,

0:32:460:32:51

otherwise, you might find this isn't as attractive an investment as it first appeared.

0:32:510:32:57

Bit of a shame, really, because the house itself is not in bad condition

0:32:570:33:01

if you set aside the potentially major structural problems,

0:33:010:33:05

but it looks like it's been well looked after, it doesn't smell damp.

0:33:050:33:09

The rooms are a good size and double glazing is nice to have.

0:33:090:33:13

Leading off the back reception room is quite a reasonable, if dated kitchen.

0:33:130:33:18

The downstairs space isn't bad,

0:33:180:33:20

but there's no central heating and that will ratchet up the refurbishment costs.

0:33:200:33:26

What else does this house offer?

0:33:260:33:29

This is a traditional little cottage in a traditional mining town, so what do you expect out the back?

0:33:290:33:35

Bit of a yard? Lovely surprise - there's also a fantastic little garden.

0:33:350:33:41

This garden is a real plus. It even comes with a potting shed and an outside toilet.

0:33:410:33:47

In fact, its size puts this house firmly into the potential family home category.

0:33:470:33:52

Two decent-sized bedrooms upstairs reinforce that potential

0:33:520:33:57

until you see where the bathroom is.

0:33:570:34:00

It was all looking OK, then in the bathroom it starts going wrong.

0:34:020:34:06

You've got the bathroom there, this silly waste of space here and it gets worse

0:34:060:34:11

because the only way to access the bathroom is through the second bedroom. Not ideal at all.

0:34:110:34:17

The obvious thing to do is maybe put a corridor in. This bedroom could suffer a bit of loss of space

0:34:170:34:23

and it would be worth it to have a separate access to the bathroom.

0:34:230:34:27

It's not ideal to walk this way to get to the bathroom.

0:34:270:34:32

But it wouldn't be too difficult to put in a partition corridor and not too expensive either.

0:34:320:34:38

So how does this house shape up overall?

0:34:380:34:41

The space is good, if in need of a facelift. The garden is great,

0:34:410:34:45

but structurally there are a few question marks

0:34:450:34:48

over this property. What does a local estate agent think?

0:34:480:34:52

The house is a little bit dated.

0:34:520:34:54

It's a bit tired. It's had some money spent on new windows,

0:34:540:34:58

but will need a bit of modernisation.

0:34:580:35:00

But there's more than a bit of updating needed here.

0:35:000:35:04

There are layout issues to contend with as well.

0:35:040:35:07

As far as access to the bathroom is concerned, there are two options.

0:35:070:35:11

One is to put up with it. The second is to put a corridor in which reduces the size of the second bedroom,

0:35:110:35:17

but makes the home more practical.

0:35:170:35:19

If the owners decide not to corridor off the second bedroom, that will hit demand on the house.

0:35:190:35:25

It will hit the price that they're going to achieve and it's likely to be perhaps £25 or so a month less.

0:35:250:35:32

The rental return could be hindered by the bathroom's position,

0:35:320:35:35

but what rent could you achieve if it was partitioned off?

0:35:350:35:39

In terms of rental, once it's freshened up, we'd be looking at round about £400 a calendar month.

0:35:390:35:46

And how would it do if sold on?

0:35:460:35:48

Depending on the standard of refurbishment carried out, it may be £70,000 to £75,000.

0:35:480:35:53

So, provided this house doesn't fall down, on balance, it could make a solid investment.

0:35:530:35:59

So, a nice little house in good condition, good space, benefits of the garden.

0:36:010:36:06

Why did it have that £44,000 guide price? It seems pretty low.

0:36:060:36:10

Could it be something to do with the potential subsidence?

0:36:100:36:14

Let's see who went for it at auction.

0:36:140:36:17

Lot number 33, a two-bedroomed, semi-detached property.

0:36:200:36:24

UPVC, double-glazed, got scope for some upgrading and improvement.

0:36:240:36:28

Freehold property. Proxy bid in on this property too, ladies and gentlemen.

0:36:280:36:34

I'll start it with a proxy bid at £48,000.

0:36:340:36:36

48,000. 49 somewhere else? 49 at the back.

0:36:360:36:40

50,000. At 50,000. 51?

0:36:400:36:43

51. 52. 53?

0:36:430:36:47

53. 54.

0:36:470:36:49

55?

0:36:490:36:50

55. 56?

0:36:500:36:53

£56,000. 57 with me on the proxy bid.

0:36:530:36:56

57. 58, a fresh bidder. At 58.

0:36:560:37:00

Both out there. 59 with me on a proxy bid. At 59,000. 60 may I say?

0:37:000:37:06

At 60,000. 61 with me.

0:37:060:37:09

62? 62. 63 with me.

0:37:090:37:13

64. 65?

0:37:130:37:16

65? I'll take a half if it'll help you. 65.

0:37:160:37:20

Across by the doorway at 65 and a half? 65 and a half?

0:37:200:37:24

No? First and last bid, was it?

0:37:240:37:27

£65,500 on the front row.

0:37:270:37:31

Once, twice, third time...

0:37:310:37:33

Sold at 65 and a half, thank you.

0:37:330:37:36

'At 65,500, the successful bidders for the two-bed Derby house were Karen and Steve.

0:37:360:37:43

'Karen has built up a decent-sized portfolio of rentals over the years

0:37:430:37:47

'and partner Steve works alongside her while also running his own business.

0:37:470:37:52

'I met them to find out why they were buying more houses in the current market.'

0:37:520:37:57

-Karen, Steve, pleased to meet you.

-Thank you.

-Tell me why you wanted to buy this place.

0:37:570:38:02

We're going to rent it out initially and sell it once the market recovers, so we'll rent it out short-term.

0:38:020:38:09

-Is this something you've done before?

-Yes.

0:38:090:38:12

We've got quite a few rental properties, but they are long-term rentals.

0:38:120:38:17

Since the market has taken a downward spiral, we have bought several properties with the same intentions -

0:38:170:38:23

rent them out and sell them once the market recovers.

0:38:230:38:26

-Good. So you've been buying while things have been going down?

-Yeah.

0:38:260:38:30

-And roughly how many properties have you got that you're managing?

-Quite a few.

0:38:300:38:35

-More than ten and less than a hundred?

-Yes.

0:38:350:38:39

'Karen used to be an accountant, but decided to concentrate on properties five years ago.

0:38:390:38:44

'She now works full-time on managing and building up her rental portfolio

0:38:440:38:48

'and Steve maintains and helps renovate the houses.

0:38:480:38:52

'Together, they make a formidable team.'

0:38:520:38:55

What did you like about this place?

0:38:560:38:59

We actually viewed three or four properties before we went to the auction that we were interested in

0:38:590:39:05

and this one was sort of top of the list.

0:39:050:39:08

Why did this one make it to the top?

0:39:080:39:10

Because the house is in good condition. It's been well looked after.

0:39:100:39:15

There's not a great deal of work to do to this one and it's ready for renting out.

0:39:150:39:21

-What do you look for when you're buying houses?

-We always buy freehold, never leasehold.

0:39:210:39:26

We tend to buy houses rather than flats or apartments

0:39:260:39:30

because you tend to get a family in and they're easier to rent.

0:39:300:39:34

Minimum of two bedrooms, something reasonably spacious

0:39:340:39:38

and a garden,

0:39:380:39:41

we can make off-street parking and close to the town centre.

0:39:410:39:46

-So this one really fitted the bill?

-It did, yeah.

0:39:460:39:49

# Now I see

0:39:490:39:52

# The way it's meant to be

0:39:520:39:55

# Cos you're so right for me... #

0:39:560:40:00

'So this house was just right for them as it's a freehold house and has two bedrooms.

0:40:000:40:06

'It's nice and spacious with a good-sized family garden,

0:40:080:40:12

'so it does appear to meet all the criteria Karen and Steve check for,

0:40:120:40:16

'but there are a few issues too.'

0:40:160:40:19

Tell me exactly what you're going to do to this place to sort it out.

0:40:200:40:24

The first job will be to put a partition upstairs in the back bedroom through to the bathroom.

0:40:240:40:30

It'll be a stud wall construction, then a door off it into what will be the second bedroom.

0:40:300:40:36

-So the second bedroom will shrink by the width of a corridor?

-Yes.

-Yes, that's right.

0:40:360:40:42

And then you've got central heating and decoration.

0:40:420:40:45

-So who's going to do the work?

-The stud wall we'll take on ourselves.

0:40:450:40:49

-We have a plumber that will come and do the central heating. Decoration, we'll do ourselves.

-Right.

0:40:490:40:56

Any idea of the budget so far?

0:40:560:40:58

-We're working on a budget of approximately £5,000 to £5,500.

-And timescales?

0:40:580:41:03

-A month.

-Right.

0:41:030:41:05

-Quite quick then?

-Yeah.

-Yeah.

0:41:050:41:07

Next week, we'll start getting quotes for the central heating.

0:41:070:41:11

I'm tempted to replace the doors as well, so we'll probably get the doors replaced as well.

0:41:110:41:17

'OK, that's the cosmetic and layout issues addressed,

0:41:170:41:21

'but what about the perhaps more serious structural issues?'

0:41:210:41:25

-I noticed that the house has a bit of a tilt to it.

-Yeah.

-Is that concerning you at all?

-Not at all.

0:41:250:41:32

Most houses in Ripley do have a bit of a tilt to them because it's an old mining town.

0:41:320:41:38

-It's not too bad, so it doesn't bother me really.

-Have you had a mining survey done?

-Yes, we have.

0:41:380:41:45

-And it's OK?

-It's OK, yeah.

-The garden's not going to open up into a...?

-No, no.

0:41:450:41:50

-Just that place where you're standing!

-Yikes! Nice to talk to you. And I'm off(!)

0:41:500:41:56

Good. Listen, congratulations. Well done.

0:41:560:41:59

-I look forward to seeing how you get on.

-Thank you.

0:41:590:42:03

# If ever I fall... #

0:42:030:42:05

'Let's hope there aren't any holes to fall through

0:42:050:42:09

'and that Karen and Steve have fallen on their feet with this purchase.'

0:42:090:42:14

Karen and Steve clearly know what they're doing when it comes to properties

0:42:140:42:20

and in terms of the refurbishment they're along the right lines,

0:42:200:42:24

but I am a bit concerned about the potential subsidence. That should never be taken lightly.

0:42:240:42:29

They should get a good survey before they start any major work.

0:42:290:42:33

Find out how they get on later.

0:42:330:42:36

Time has passed since we saw our plucky buyers. I wonder how they've got on?

0:42:390:42:44

-Have they been firing on all cylinders?

-Let's find out.

0:42:440:42:47

'It's back to Kent now and the Medway town of Rainham

0:42:480:42:53

'where Pamela bought this small commercial unit at auction for 40,000.

0:42:530:42:58

'She owns and runs a home help business which is currently based at rented offices,

0:42:590:43:04

'so she's invested her own money to buy this place and give her own business a boost.'

0:43:040:43:10

-Is there anything that's worrying you about having purchased this?

-No.

0:43:100:43:15

I'm quite calm and serene about it at the moment, so fingers crossed that that carries on.

0:43:150:43:21

There was a damp problem at the rear, but Pamela hoped

0:43:210:43:25

to have the office up and running in a few months.

0:43:250:43:28

But when we returned eight months later, from the outside, there appeared to be little change.

0:43:280:43:34

But inside, the office has been overhauled.

0:43:370:43:40

The partition entrance has been removed to open up the floor space

0:43:400:43:45

while the original office furniture has been kept and put to good use.

0:43:450:43:49

The area has been redecorated and new central heating installed,

0:43:490:43:53

making this a more comfortable place to do business.

0:43:530:43:57

Pamela also made sure that staff comforts were catered for.

0:43:590:44:03

When I bought the place, this whole wall was completely damp,

0:44:060:44:10

probably up to about there,

0:44:100:44:13

because the level outside was so high.

0:44:130:44:16

It's all been dug out, a damp-proof course put in

0:44:170:44:21

and eventually when it dried out, this was re-plastered and the cupboards put in,

0:44:210:44:26

but we had to make sure it was dry first before the cupboards went in.

0:44:260:44:30

And of course, we had to install the fridge.

0:44:300:44:33

Hopefully, that rear damp problem has finally been fixed,

0:44:330:44:38

but unfortunately, there was still the side wall.

0:44:380:44:41

To solve the damp, the builder injected the wall and I think he did it twice.

0:44:420:44:48

We still had a damp issue, so it was...

0:44:480:44:51

We realised that the level out here was higher as well, a sort of gradient going up,

0:44:510:44:57

so it was dug out and a membrane put in.

0:44:570:45:01

And hopefully, that's cured it.

0:45:010:45:04

Only time will tell, but back inside, along with the kitchen area,

0:45:040:45:08

the WC has been totally upgraded with new units and cupboards.

0:45:080:45:13

With the business here now up and running,

0:45:130:45:16

Pamela is already looking to the loft for extra space.

0:45:160:45:20

I did phone the local council.

0:45:200:45:23

They couldn't see a reason why we couldn't go up in the roof,

0:45:230:45:28

so I've had a couple of builders in and said it is doable.

0:45:280:45:32

So, hopefully, we'll just have a nice, quiet bit for a while without any dust and dirt,

0:45:320:45:38

then I'll go ahead and put another office up above.

0:45:380:45:41

At the moment, Pamela shares the office with friend and employee Tracy,

0:45:410:45:46

so there's no pressing need for that space.

0:45:460:45:50

But for Tracy, moving to this office is definitely a move in the right direction.

0:45:500:45:56

It's nice that it's ground floor.

0:45:560:45:58

We were up a level before, so the girls come straight in to us.

0:45:580:46:02

And it's just nice to be able to look out at road level, rather than above.

0:46:020:46:07

We were on the high street, so we had the traffic noise. We don't get that here. It's quiet.

0:46:070:46:13

It may be quieter, but having an office front on the ground floor has its moments.

0:46:130:46:18

As it's a mirrored window, we do have people doing the peacock bit across

0:46:180:46:23

and it's generally men, to be honest, which is very amusing,

0:46:230:46:27

and some that really shouldn't even be looking at their reflection!

0:46:270:46:31

# Here comes the mirror man

0:46:310:46:34

# Says he's a people fan... #

0:46:340:46:38

LAUGHTER

0:46:380:46:40

Renovating the interior wouldn't have taken long,

0:46:400:46:44

but time taken solving that recurring damp problem

0:46:440:46:48

meant Pamela had to wait six months before setting up shop. Did the damp affect her five to ten grand budget?

0:46:480:46:54

Eventually, I think that all that I've done has come to about six,

0:46:540:47:00

possibly six and a half with paint and wallpaper, blinds,

0:47:000:47:05

but they're sort of incidentals.

0:47:050:47:07

The main work was probably about 6,000.

0:47:070:47:10

With her £40,000 purchase price,

0:47:110:47:13

Pamela's total outlay is a possible 46 and a half grand,

0:47:130:47:17

so is it money well spent?

0:47:170:47:20

We asked two local property experts what they thought

0:47:210:47:25

of Pamela's investment.

0:47:250:47:27

I must admit, it's such an improvement.

0:47:280:47:31

When we first came, there was so much damp.

0:47:310:47:34

You thought, "Where do you start?"

0:47:340:47:36

But what they've done is really very nice - the units, the desk area.

0:47:360:47:41

It's really lovely. People want to come in. They feel welcome in here.

0:47:410:47:45

I think it's very good, actually.

0:47:450:47:48

There's plenty of light. I like the floor finishes.

0:47:480:47:52

Good heating system. I think it's been done very well, quite frankly.

0:47:520:47:56

Both estate agents like the office space,

0:47:560:48:00

but would Pamela's idea of moving into the loft be a good way of adding value here?

0:48:000:48:05

It depends how much space you would create. Bear in mind that this is quite a small building.

0:48:050:48:11

You'll lose about 10% of the ground floor area just by putting in a staircase.

0:48:110:48:17

It would be much better for people to see you downstairs and leave the upstairs alone

0:48:170:48:22

because you'll have to spend an awful lot of money just for a small extension of area.

0:48:220:48:28

So it may be more trouble than it's worth, but have Pam's current efforts paid off?

0:48:280:48:35

Bearing in mind her £46,500 outlay, what could a resale of the unit achieve?

0:48:350:48:40

If we were going to sell the property, I think I'd be looking at somewhere around £40,000 to £50,000

0:48:400:48:47

with the hope of getting towards the £50,000.

0:48:470:48:50

I think you'd put it on the market and you'd look for offers of round about £50,000.

0:48:500:48:55

It's very nice to hear that I've made some money on it already, but it's irrelevant.

0:48:550:49:01

Maybe in five, ten years' time, I might think about selling, but at the moment, I'm quite happy.

0:49:010:49:08

Yes, for Pamela, the real value of this little property is not in any current profit,

0:49:080:49:14

but as a future home and base for her growing business.

0:49:140:49:18

It's absolutely brilliant owning my own place.

0:49:180:49:22

It's so much nicer than renting.

0:49:220:49:25

We've got our own front door, our own kitchen. It's just absolutely wonderful.

0:49:250:49:31

Back now to Derbyshire and the former mining town of Ripley.

0:49:390:49:44

Karen and Steve had bought this two-bed semi-detached for £65,500.

0:49:440:49:49

For 15 years, Karen's been building up a property portfolio.

0:49:490:49:54

She sees the recent uncertainty in the housing market as an opportunity for some great business bargains.

0:49:540:50:00

Since the market has taken a downward spiral, we have bought several properties

0:50:000:50:05

with the same intentions - rent them out and sell them once the market recovers.

0:50:050:50:10

-So you've been buying while things have been going down?

-Yeah.

0:50:100:50:14

With the uncertain state of the property market, that could prove to be a rather risky strategy.

0:50:140:50:21

The house did have a slight tilt, although a mining report has given it a clean bill of health.

0:50:210:50:27

But despite being structurally sound, it did have its problems,

0:50:270:50:30

including a sloping floor and bathroom access through the back bedroom.

0:50:300:50:36

But overall, Karen and Steve felt this place had all it needed to fit their criteria.

0:50:360:50:42

When we returned 12 months later, the house didn't appear too different on the outside,

0:50:420:50:48

but what about the inside?

0:50:480:50:50

Well, the front room does look fresher, sporting new carpets and a lick of paint.

0:50:500:50:56

And it seems Karen and Steve have already got the house to pay its way as tenants have now moved in.

0:50:560:51:02

At the back, they freshened up the kitchen with some paint.

0:51:040:51:08

Upstairs, there's a new partition wall in the bedroom,

0:51:080:51:11

making a separate access to the bathroom.

0:51:110:51:14

OK, it may mean a smaller back bedroom,

0:51:160:51:19

but fixing that unworkable layout must be a great weight off Karen and Steve's mind.

0:51:190:51:25

And just like the kitchen, the bathroom has had a lick of paint, giving it a new lease of life.

0:51:260:51:32

Originally, for Karen and Steve,

0:51:320:51:35

it seemed it just needed some plasterboards, paint and new carpets,

0:51:350:51:40

but things are rarely that easy.

0:51:400:51:42

It's a mining town and a lot of the properties around here have got subsidence.

0:51:420:51:48

It wasn't too bad on this property,

0:51:480:51:50

but we felt it would be beneficial to level the floor up in the front room where it dipped in a corner.

0:51:500:51:57

The living room floor is now absolutely plumb-level, smooth enough to play snooker on.

0:51:570:52:02

The house also had central heating installed

0:52:020:52:05

which will keep the tenant warm and comfortable.

0:52:050:52:09

With the main bedroom now decorated, everything inside is looking good,

0:52:090:52:13

but Karen still felt the front needed some kerb appeal.

0:52:130:52:17

We didn't do too many changes here.

0:52:170:52:19

We had a nasty porch which was above the lintel there which we decided to take down

0:52:190:52:25

and we didn't like the front door, so we had a new PVC front door put in.

0:52:250:52:29

Apart from that, we didn't really do anything else.

0:52:290:52:33

Well, it's enough to smarten up the front

0:52:330:52:35

and at the back, the garden has also benefited from a tidy-up.

0:52:350:52:40

The garden was OK. It was just a transition between the sale of the property and the work being done.

0:52:410:52:47

It had become a bit overgrown, so it was a matter of tidying it up, cut the lawns, set the borders

0:52:470:52:53

and fortunately, the tenant is keeping it looking nice.

0:52:530:52:57

In general, the property was in fairly good nick.

0:52:590:53:03

Karen and Steve reckon updating and sprucing it up has been relatively pain-free.

0:53:030:53:08

-Yeah, really easy.

-The easiest we've done, I would think.

-Definitely.

0:53:090:53:14

-It was clean and tidy. There was nothing major that needed doing.

-That's one reason we bought it.

0:53:140:53:20

# It's why I'm easy... #

0:53:200:53:23

The house may not have given Karen and Steve any problems,

0:53:250:53:29

but the same can't be said for their working relationship.

0:53:290:53:33

-Terrible.

-Volatile.

0:53:330:53:35

But we're still here in one piece.

0:53:350:53:38

I do all the labouring, running around, going to fetch materials in the van. I can decorate.

0:53:380:53:44

I go to the tip, fill the skips. And Steve gets on with the rest, all the easy stuff.

0:53:440:53:50

The more intense work I do.

0:53:500:53:52

With that division of labour, the team took only four weeks to complete the makeover.

0:53:540:54:00

They achieved the renovation within their budget of 5,000,

0:54:000:54:03

but it seems the house might be in line for some more work.

0:54:030:54:08

If and when we do sell it, obviously, that depends on the market and tenants, etcetera,

0:54:090:54:15

but we will put a new kitchen and bathroom in and do some extra work in the downstairs rooms as well.

0:54:150:54:22

For now, the house seems to be paying its way,

0:54:220:54:25

but has it been a solid investment?

0:54:250:54:27

With the property costing Karen and Steve £65,500,

0:54:270:54:31

their spend of five grand on it pushes their total outlay to £70,500.

0:54:310:54:37

We asked two local property experts what they thought of the place.

0:54:370:54:42

The accommodation's laid out pretty well.

0:54:420:54:45

You've got two separate reception rooms. The kitchen's a bit small.

0:54:450:54:49

That's not uncommon for a property of this type.

0:54:490:54:53

Upstairs, they've reconfigured the layout to provide independent access to the bathroom from both bedrooms.

0:54:530:54:59

The owners have done a really nice job in improving

0:54:590:55:03

and presenting the house.

0:55:030:55:05

The decoration, style and corridor upstairs make a real difference.

0:55:050:55:09

The property has been done up to a standard that's perfect for the rental market.

0:55:120:55:17

If it was for resale, you'd have done a higher specification on the kitchen and bathroom, but perfect for rental.

0:55:170:55:23

Karen and Steve have struck the right note with this renovation,

0:55:230:55:27

but are they getting the best bang for their buck on the rental income?

0:55:270:55:31

I'd expect this property to achieve £400 per month.

0:55:330:55:36

Looking at the rental market, it will return about £395 per calendar month.

0:55:360:55:42

We get £95 a week which works out at £411.67 per calendar month, so we're getting slightly more.

0:55:420:55:49

That gives them a healthy 7% annual rental yield,

0:55:500:55:54

but with their total outlay of £70,500, would a resale value tempt them to sell?

0:55:540:56:00

I would put it on the market for £80,000.

0:56:020:56:04

Should this property be sold, it's likely to sell at round about £75,000.

0:56:040:56:09

-OK.

-It's not far from where we said.

0:56:090:56:11

We said 75 because the market's dipped slightly since we bought it.

0:56:110:56:16

Obviously, there's no signs of recovery yet, so yeah, we're quite happy with that.

0:56:160:56:22

So Karen and Steve are playing the waiting game and plan to cash in on this asset when profits look better.

0:56:220:56:28

At the moment, that's pretty uncertain, but until then,

0:56:280:56:32

the team are enjoying the benefits of running their own little property empire.

0:56:320:56:37

It's good to be our own boss. We can work when we want and if we want,

0:56:370:56:41

although we tend to work more than we would for somebody else.

0:56:410:56:45

But it's good. It's good fun.

0:56:450:56:47

It also gives us the chance to do other things that we like to do away from work.

0:56:470:56:53

Join us next time as we meet more brave buyers from the auction rooms.

0:56:550:57:00

-We'll see you then.

-Goodbye.

-Goodbye.

0:57:000:57:02

Subtitles by Subtext for Red Bee Media Ltd 2011

0:57:190:57:23

Email [email protected]

0:57:230:57:26

Martin Roberts and Lucy Alexander visit a building in Liverpool, a property in Gillingham, Kent, and a house in Derby. All of these properties have been sold at auction, and Martin and Lucy find out who bought them and what they paid when they went under the hammer.