Episode 47 Homes Under the Hammer


Episode 47

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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.

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

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'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

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