Episode 8 Homes Under the Hammer

Hello! It's difficult to judge the property market these days,

because you can't always believe what you read.

One of the best ways to find out what's going on is to see for yourself,

and one of the best ways to do that is to visit an auction.

A huge range of properties sell under the hammer,

so why not go to your local auction room and see what catches your eye?

You might be surprised by the prices,

and here's what got the bidders going on today's programme.

In Devon, the layout of this cottage is really getting on my nerves.

Well, upstairs, and the quirkiness is starting to get a bit annoying.

From the outside, this ground-floor flat in London doesn't look the most glamorous I've ever seen.

But look what you get on the inside!

And this house in Lancashire needs some love and attention.

Yes, it is in a right old state.

Certainly you'll have to do redecoration.

What do you expect for your money?

All these properties have been sold at auction.

We find out who bought them and for how much

-when they went under the hammer.

-Sir.

This is Lympstone in Devon,

an absolutely gorgeous little village

on the estuary of the River Exe, about three miles from the sea.

It's got character, it's got history,

but it's also very much alive, so I'm really excited

about the property that I'm here to see.

Lympstone is only ten miles from Exeter,

and is one of Devon's popular tourist spots.

But it's also a thriving working village,

both on and offshore.

# Oh, you crawled

# Out of the sea

# Straight into my arms

# Straight into my arms #

Well, even on a cloudy day like today, and with the tide out,

it is still spectacular. So what you'd hope for

is a property that could make the most of these extraordinary views.

And you know what? That's exactly what you've got.

This was what was up for auction. 120,000 quid.

No parking, but, hey, the location couldn't be better.

And, with those uninterrupted views,

who wouldn't be swept away by this place?

# But I can't help

# Falling in love

# With you...

The areas to the front and to the side are public,

and there's no garden to speak of,

but you do have the whole of that estuary as your playground.

# Like a river flows

# Surely to the sea

# Darling, so it goes

# Some things

# Are meant to be #

As you might have gathered from the outside,

the cottage is...well, a bit of a hotch-potch, to be honest,

added on to over the years, I imagine.

This bit here is, I guess, a living area,

then you go through to what I imagine is the oldest part,

underneath this fairly low archway into this anteroom here.

You got stairs up to two bedrooms there,

you got another bedroom there, and you got this other bit

kind of splintering off to the front of the property.

All very strange!

'The property feels like a collection of add-ons

'to what was perhaps once a beach house.

It's full of odd little extensions here, there and everywhere.

The structure seems sound, but I think it's the kind of place

that really needs to have a survey done just in case.

And on the ground floor, through the back,

the most bizarre aspect is still to come.

HE CHUCKLES

You got bathroom there. It's huge, actually,

for the size of the place, at this jaunty kind of angle.

And then through and up these steps to the very rear of the property,

where you've got the kitchen, clearly in need to total renovation,

whatever. The disappointing thing is...

Well, the key thing is, this is where your view is!

This is the most marvellous part of the house,

and yet so little of the property is situated here.

You've got to try and bring the rest of the property forward,

and that is going to need a major rethink.

But how much or how little structural work takes place here

doesn't just depend on personal taste

and whether you think the layout's quirky or a total mess.

The cottage is in a conservation area,

so you wouldn't have the final say

on what could or couldn't be done here.

Well, upstairs, and the quirkiness is starting to get a bit annoying.

Two bedrooms here, one at that side there.

You got this disastrous little corridor.

Very low ceilings here, with beams going across.

This is the other bedroom. It's small.

The cottage is starting to feel quite oppressive.

You've got big cupboards in both bedrooms

so maybe play around with that wall and create bigger bedrooms,

and ditch the storage space. It goes without saying,

things like the windows, cute though this is...

-HE LAUGHS

-..they all need replacing.

I'm struggling to figure out how you could improve this place

without doing some fairly major internal modifications.

That would mean a healthy renovation budget

on top of the purchase price.

What does the local property expert from the auction house who sold it

make of this cottage, that was guided at £120,000?

My first thoughts of this property

are to, obviously, completely renovate it,

reconfigure it, because you only have two bedrooms upstairs.

The part at the rear of the building, which overlooks the estuary,

could that become two-storey and create further accommodation above?

How much could that work cost?

It's from, probably, £90,000 to £100,000

regenerating it, developing it,

and its end zone of what it might be worth when it is done

could be somewhere in the 340, 350 mark,

just purely cos that view is priceless.

A big budget would be needed, but the rewards could be great,

as long as all the necessary planning permission was granted.

But what if the buyer decided to rent it out as it stands?

Properties with estuary views in Lympstone

could rent out in the region of £900 to £1,000 per calendar month.

Well, you know what - this is a pretty special project,

a chance to restore a wonderful old cottage

in this lovely village, and add value to boot.

It really is a developer's dream.

Let's see who spotted the opportunity at the auction.

Who's going to say to us, er... Guide, 120. Bang, straight in.

Won't start less. He knows.

22. 124. There's three of you.

126. 128 is down here. This is where our focus is.

128. 130.

132. 134.

136. 138.

140.

At 142. 144.

146.

148.

150. And at 152.

152. 154.

156. 158...or not. 158.

160. 161.

162. 162 I've got.

163, sir, or not?

163. 164.

165? No?

164. You're in, sir. 164.

165. 165 is sat now, sir.

166, or not? 166.

167.

168.

169.

170. 171.

172.

175. Yes, sir. 175.

At 175.

At 175.

At 175 once.

At 175 second time. Third and last time. You sure and done?

All out at 175.

Sir.

The man who beat off all the competition was Nick,

with his successful bid of 175,000.

He lives in Northampton with his wife

and son aged 18 and daughter aged 20.

He works as a property developer of a specific kind,

developing GPs' surgeries in England and Wales.

I caught up with Nick back at the cottage

to find out if he had any remedies for this property's ills.

-Nick, very nice to meet you. Congratulations.

-Thanks very much.

Why did you want to buy this place? It's not obvious.

Well, in a word, the view.

-Yeah.

-The view is knockout,

and I actually saw the details of the property

only four days before the auction, so I didn't have time

to actually look round it before the auction,

but bought it because of the view.

So... Wow! Did you know Lympstone, then?

Yes. I've had a boat on the mooring just literally opposite here

for about three years, so I know the village very well.

We actually use the slipway that is directly outside here

to get access to the boat, so we've been up and down this slipway

from the boat to the pub and back again many times,

and we've always said that if this property came on the market, we should go for it.

So, what did you think the first time you came inside?

Er, I was a little surprised. I expected it to be fairly poor,

but, yeah, it's quite bad in areas.

I've seen a survey since I bought the property,

and the survey said that there's only one wall that's worth keeping.

-Right. Which is which wall?

-That wall.

Aha! And the rest of them?

The rest should be taken down and rebuilt, including the roof,

the windows, the plumbing and the electrics.

-Apart from that, it's perfect.

-Yeah.

# It'll feel just like starting over

# Over

# Starting over #

So, have you had preliminary discussions with the planners?

-No, I haven't.

-Oh.

-No, I haven't.

OK. That's going to be an important phone call, isn't it?

It is, but again I'm not too concerned about that,

because, short term, we're going to do the property up

so that we can use it, and if, you know, two years becomes four years,

then, that's life, really.

# That's life

# That's life

# That's what all the people say #

Nick bought the cottage with that view and its location in mind,

so he and his family can enjoy it for holidays.

But he also bought it with the intention

of potentially making it a permanent home,

as his job may move to Bristol, less than 100 miles away.

Meanwhile, what's the initial plan for the makeover?

Well, the first stage is to literally get pots of paint down here

and lots of willing helpers to redecorate,

and we'll put new floor coverings down,

put the furniture down and make it habitable.

What about the kitchen and the bathroom?

The bathroom is not too bad. It does need decorating,

but the plumbing looks to be OK. The kitchen does need to be done.

How much are you going to set aside for doing that?

-A couple of thousand pounds.

-And that will be finished when?

I would expect to do that by... If we get some rainy weekends,

-on two or three rainy weekends.

-Really? OK.

And then get here and start enjoying it.

-Correct.

-Phase two, obviously, big plans.

Potentially knock it down, build something else in its place.

Any ideas for how much that's going to cost, and the timescale for it?

I think timescale would be very dependent

on the architect coming up with a design that we like.

There'll be a lot of to-ing and fro-ing and revision of that.

And then consultation with the planners,

with, also, the parish council and the town council

to see what they would want to see in what is a very prominent position

within the village. Then it's a question of putting a planning application in

and running through that period, which could be three, four months,

to actually get a decision, and then we'll need to get the builders

and build it out,

and I would say we're probably looking at building

two summers' time.

If it all goes to plan, once all the work's completed,

Nick and his wife will be able to move in permanently

to enjoy the tranquil views

and a mere hop, skip and jump to their boat.

Any thoughts about renting it out as a holiday let?

Not really, no. I'd rather not do that.

Certainly friends and family, yes, not a problem.

But I don't want to go down the holiday-let thing.

It's too far to travel down if somebody does something wrong.

-Right.

-And I don't want that hassle.

-Right.

-You've really fallen in love with this place.

-Very much so!

I can understand why.

Whatever happens, good luck with all your plans.

OK. Thank you very much indeed. Thank you.

Let's be honest - this place was going to go either to a developer

or somebody who just fell in love with it,

and Nick certainly falls into that category.

Yes, he has grand plans for the place,

which I believe he may have some problems getting through with the planners.

In the meantime, a quick lick of paint,

and he's just going to enjoy it for what it is, a lovely little cottage

in an amazing location. You can find out how he gets on

later in the show.

When it comes to desirable parts of London,

Islington's pretty high on the list.

And when it comes to desirable parts of Islington,

Canonbury's very high on that list.

Its gorgeous Georgian four-storey buildings

attract homeowners and developers alike,

and its closeness to the city makes it even more appealing.

However, the property I'm here to see

isn't as grand as many others round here.

The guide was set at £325,000 -

inexpensive, I'd say, for this part of North London.

Well, here it is. It's a ground-floor garden flat

in this block. Now, it may not be a Georgian lovely,

but it does represent extremely good value on this square.

Let's go inside and see what's on offer.

A little bit grey on the outside, and it's in a conservation area.

This, and the fact that it's leasehold,

means the new owner may be limited on any external modifications they might want to make.

But of course, you should never judge a book by its cover.

I think we're all agreed that it is a bit of an ugly duckling outside.

But look what you get on the inside!

For starters, 900 square foot of space.

So far, so good.

Inside, you've got big, spacious rooms, loads of light coming in.

This area here needs a bit of work. Probably get rid of this,

update this area. You've got a cracking view

out onto a little garden - but hey, you're in the centre of London!

You've got some outside space! I think this flat is fantastic.

It needs a bit of work, but it's certainly ticking all the right boxes for me.

As a blank canvas, this place is really on the money.

All three bedrooms are a good size,

and the worst thing about it so far is the separate bathroom and toilet,

although, of course, some people prefer it that way.

Time to check out the kitchen.

Mm, this kitchen is not knockout.

I think it needs replacing.

A good quality kitchen could add five to eight percent

to the value of your home. The average spend on a kitchen

is approximately six and a half grand,

so I think it's a fantastic way to recoup on your investment.

As it stands, it's a decent, usable kitchen,

but to add value here, I think it could do with an overhaul

to give it the wow factor.

It's great to have some outside space in London,

but there's one thing that might put some buyers off.

This fence is only three foot, and here is a footpath

and it runs right alongside. Now, my first job

would be to change this fence, make it a lot higher,

perhaps put some nice laurels or conifers on the inside,

so you're looking out onto some greenery.

Don't forget, this flat is leasehold,

so the freeholder's permission will have to be sought

before any changes are made.

This flat has certainly got a lot going for it.

Time to get some useful information from a local estate agent.

Islington is vibrant, young. It's got a lot of boutique shops,

bars and restaurants. It's a good location,

good transport links and easy access to the city and the West End.

'It would benefit from having a new kitchen, new bathroom,

'a little bit of modernisation, new carpets throughout,

'and some cosmetic work.'

Apart from that, I think it's good to go.

Bearing in mind the guide price of 325,000,

how much could it be worth once renovated?

This property would go on the market for £385,000 to £395,000.

Many properties in this area are bought by investors,

so what kind of rental income could this investment earn?

This property would rent out for £1,950 per calendar month.

I like this flat, and I love where it is.

These properties are so popular with investors,

and you can see why. Let's see who wanted this little earner

as we go to auction.

Not going to go below 300. 300 with you.

305 down here. 310.

Are you bidding? 310. 315.

320 on the phone.

325 in the room.

330 on the phone.

335 in the room.

340 on the phone.

345 in the room.

350 on the phone.

355 in the room.

351.

351 in the room. 352.

353.

354 on the phone.

355 in the room.

355, back in.

356.

357.

358 on the phone.

359. 360.

361.

360 to the phone. Anyone else at 360?

First time, second time,

-third and last... Where are we?

-Straight there.

-Where?

-That bidder.

-Hey, you're crafty! 361.

New spot. 362.

362.

If not, 361 in the room.

First time...

Second time...

Yes or no? 362.

363. 364.

365 in the room.

Yeah? 365. 366 on the phone, yes?

367 in the room.

366 to the phone,

first time, second time,

third and last time. Have you all done?

Sold to the phone, 366.

The mystery phone bidder was actually Mo.

She runs a property-developing business with her brother Sharwan.

They manage a varied portfolio.

I met up with them at their latest buy to hear their plans.

-I didn't see you at the auction. Where were you?

-Stuck in Belfast.

Basically we'd booked a trip to see some friends,

and we got to the airport at six in the morning,

had planned to be back, but our flight was delayed.

Oh! What happened? Did you have to phone the auction house

-and get them to do a telephone bid?

-We'd stayed in a hotel

the night before, and we had to go back to the hotel

-and, yeah, we were back in our...

-Back in our pyjamas, actually,

cos we'd had such an early start, so we got back into our pyjamas

-and bid on the phone in pyjamas.

-Have you bought this flat together?

Is it a joint venture, or is it your flat?

This is my flat, but actually I had a bid on another flat,

and that's something we're buying together,

so we're buying two in this development.

Is this a brother-sister partnership?

Yeah. We basically find properties and then do them up.

This was one of the better places in Islington,

and we've got some big plans for it.

Mo currently lives in Birmingham, but wants a pad in London too,

so she can be close to her family.

She hasn't decided which of her two flat purchases she'll live in,

and which she'll rent out,

but they've got an impressive £40,000 budget

to get this one into shape.

Where the toilet is will be extended into a bathroom,

all fully tiled.

It's going to have that luxurious, modern, contemporary feel?

Yeah. She wants a steam room in one of them, so possibly...

She wants a steam room? Madam here?

-Yes!

-Tell me about that.

Basically we've been looking at lots of different ideas and solutions,

and my builders said, "Have you seen these steam cabinets?"

"You don't have space to do one."

So I made Sharwan look for one that would fit in the space,

-and we've actually found one!

-We might be able to get her a steam bath.

A steam bath! Great if it's going to be your own home!

But if Mo's going to rent this flat out,

it might be a bit of a waste of money.

Anything spectacular outside?

I love the fact that you do have some outside space with this flat.

I wanted to have a hot-water tub, but that isn't possible,

so we can't have that. But our builder's a landscape gardener.

The garden's going to be the last thing we do,

depending on how much money we got left.

Mo's going for a high-spec finish throughout,

which is perhaps sensible in this affluent area.

However, she could be in danger of personalising this place a bit too much.

That would be a problem if she decides to let the flat out

rather than live here.

Do you have to keep your sister in check sometimes?

More than sometimes. We have very clear ideas

of what kind of things we want in the property.

She wants to put her own touch on it, but it might be a bit OTT,

so we're having discussions at the moment

about whether to put in a pink carpet.

Come on. Are you thinking about having a pink carpet?

In my bedroom, because that's just my territory.

I don't think anyone else should mind. It's my space.

There's pink and pink. Are we talking PINK?

-Yeah, pink, like what's on my nails.

-Oh, my goodness!

That nail-varnish colour?

It's just something I've always wanted, so let's see.

We're still negotiating, so we might end up with a baby pink or something.

Well, Mo's got some strong ideas about what she'd like to do here.

With her budget of £40,000,

and eight weeks scheduled to do the work,

she's going to have a lot of fun.

# Girls just wanna have fun #

Mo, if I had to ask you, do you think you're going to live in here

-and make this your perfect home?

-Maybe.

I really love the location, love the space.

I just, um...not 100 percent sure if I'm going to live in this one.

What's the difference between this and the other one?

The other one's on the second floor, and I love this one's garden.

The one on the second floor has a balcony,

so I do have some outdoor space,

and there's a security issue, so I need to work those things out.

It's going to be really exciting seeing what you do to this flat.

-Good luck with it.

-Thank you.

-Thanks a lot.

-Cheers, Mo.

Pink carpets, hot tubs and steam rooms!

What? Well, good job her brother is there to rein her in.

Will Mo move in, or will she rent this one out?

And will her taste be to everybody's?

You can find out what happens later on in the programme.

Coming up - in Burnley, there's something amiss upstairs.

Well, two good-sized bedrooms,

but not quite enough floorboards.

Back at this ground-floor flat in London,

it sounds like Mo has got her own way with the colour scheme!

We've changed the colour scheme. I've always wanted a pink bedroom.

But first, there's been a major rethink in Devon.

What I'd like to be able to do is turn the property upside down.

In the beautiful village of Lympstone,

if it were seaside outlooks you were after,

then, this three-bed cottage that went to auction

would be hard to beat. It was its position right on the estuary

that attracted Northamptonshire-based Nick.

He saw it first and foremost as a holiday cottage

for him and his family, with a view to turning it into their permanent home in the future.

He was under no illusion that the location here was the draw,

because the cottage itself was in need of more than a little attention.

I've seen a survey since I bought the property,

and the survey said that there's only one wall that's worth keeping.

-The rest of them?

-The rest should be taken down and rebuilt,

including the roof, the windows, the plumbing and the electrics.

-Apart from that, it's perfect.

-Yeah.

-Right.

-You've really fallen in love with this place.

-Very much so.

Well, he may have loved it, but because of the state it was in,

he was also considering redeveloping the site.

So now, 18 months on, has he transformed it

into the holiday home he hoped for?

Well, the exterior's unaltered in structure,

but it's got a much more cared-for look.

Whereas inside, the front area's been really spruced up.

But why is this a refurbishment rather than a redevelopment?

I really took a sort of three-to-five-year view,

saying, well, a good paint and carpet and minimal cost,

then we've got somewhere to live in for two, three, four, five years,

and then that would be fine.

Nick wants to spend time on this property,

and see what its potential shortcomings are

before committing a lot of money to it.

So for the time being, there's been a revamp

of what's already here, starting with a much-improved kitchen.

Bathroom...

There's a cosy and welcoming downstairs bedroom,

and he's really maximised the space for himself, his wife

and two grown-up children. This is illustrated by what he's done

with the two bedrooms upstairs.

OK. In this room... You might remember there were two rooms.

They were divided by a wardrobe partition thing in the middle,

and they were just really too small and poky.

So the easy decision was to remove all the wardrobe

and make it into the big room that we've got now.

This sort of area, which was a small bedroom,

is now used as a dressing room, and then obviously we've got the bed

over here, so much more space.

So far Nick reckons he's spent around just £2,000

turning it into his family's seaside retreat.

But when he originally bought the cottage,

he had quite ambitious plans for it. Have those changed?

Whether we redevelop or not is going to depend on

how long the roof and the rear wall actually last out for.

At the moment, from an insulation point of view,

the property is really bad, and it's got the lowest energy rating

I've ever seen for a property,

so I would hope the planners could be persuaded

it would be better to use modern materials,

and I would love to be able to create a zero-carbon building,

but a building that was sustainable, that you didn't have to have heating in at all.

Due to the current structural state of the cottage,

Nick's fairly optimistic that eventually

he'll be able to put up a new build here,

but because it's a conservation area,

he may be limited on what he can do with the external appearance

so it will have less impact on the internal layout.

In terms of the grand plan, what I'd like to be able to do

is to probably turn the property upside down,

and have the bathroom and the bedrooms on the ground floor

and, to maximise the view, have a big open-plan space

at first floor, big living-room area, big kitchen area, dining area,

so that we do get the benefit of the view

throughout the whole house, not just in the kitchen as it is at the moment.

# Upside down you're turning me

# You're giving love instinctively #

In an ideal world, Nick's upside-down house

would have lots of glass, allowing views out across the estuary.

But that's in the future.

So, how does the cottage stand now,

after an investment of 170,000 buying it

plus a spend of around £2,000 on a cosmetic refurbishment,

making a total outlay of £179,000 including fees and costs?

Has Nick's heart ruled his head, or was it a good buy?

What do two local property experts think?

Obviously the location is everything,

and the view is absolutely stunning.

Yes, of course it needs work doing to it, and it's very quirky, but it's charming.

First impressions are that he's done a straightforward

but very easy refurbishment project.

A lick of paint, cosmetic stuff from top to bottom,

has done a really good job, actually.

We know it's about location, but in this case,

does that make it worth more than his total spend

of around 179,000?

If the property was to be placed on the market today,

it would fetch somewhere in the region of £250,000 to £275,000.

The property as it is at the moment,

I would recommend marketing in the region of £250,000.

So, a makeover costing just over £2,000

and a period of 18 months has seen the value potentially improve

by between £71,000 and £96,000 before tax and expenses.

Not bad! And if Nick redevelops the site and does a new build,

how much could that be worth?

If the owner decided to put a contemporary-style property here,

with the views to die for, the sky is the limit.

Excuse the pun, but you could fetch somewhere in the region of £450,000

to £500,000.

I would recommend an asking price of round £400,000.

Nick reckons a rebuild would cost around £200,000 to £250,000,

depending on what spec of design he eventually goes for.

What does he make of the experts' valuations, then?

It would be nice to be able to feel there might be some profit in there,

but I can understand those figures, yeah. Yeah.

But I would say that I'm not selling. HE LAUGHS

Clearly at this stage it's not really about money for Nick.

It's a bolthole for him and his family,

and somewhere he loves to be.

I suppose by saying I can't imagine any situation

that would make me want to sell it, then, I guess I must love it.

Without any shadow of a doubt, this is the best purchase I've made in my life.

# You're the best thing that ever happened

# To me or my world #

The great thing about this cottage is,

if that new build goes ahead, perhaps the best is yet to come.

I'm in the former mill town of Burnley.

It's a post-industrial centre that's seen better days in parts,

and, like many such places, has struggled to recover

from the loss of industry. But it's in a good commuter belt

between Leeds and Manchester, so there's certainly still life left in this town.

SONG: "I'm Still Standing" by Elton John

There's no specific sign of regeneration in this part of Burnley,

but that means if you buy now, it could be a great long-term investment.

That's especially true when you consider

that this two-bedroomed mid-terrace house

went to auction with a guide price between £15,000 and £20,000.

The great thing about properties at that kind of price level

is that you expect very little, so one can only be pleasantly surprised.

Things like, it's got a little porch. I like that!

Makes your living-room area nice and warm,

so you haven't got draughts from the road.

Front living-room area here, solid floors,

so that's good, as long as there's a reasonable damp course in there.

Gas fire obviously wants replacing.

Yes, it is in a right old state.

Certainly you're going to have to do redecoration.

What do you expect for your money? One thing you might expect

is a kitchen. I'm afraid not. Yes, there's a space,

and it's a big space, so we like that.

All the units want to be taken out,

but you'd probably do that anyway. That's not good.

Hmm. But apart from that, it's a good start. Yes, it is!

# It's not right but it's OK

# I'm gonna make it anyway #

As you can see, this property has been sorely neglected.

Floorboards have been ripped up and fittings torn out,

but its structure is sound,

so any purchaser should be able to look past the mere cosmetics here

and think of the potential.

Well, upstairs, two good-size bedrooms,

but not quite enough floorboards. They have actually been removed,

and that's because somebody's taken away the pipes.

Oh, well, you probably would have had to replace them anyway.

But the good news is that the bathroom and loo,

which you might have expected to be downstairs,

as traditional in this kind of house,

has been moved upstairs. That will save you a fortune.

So, yes, it looks in a right old state,

and there will be remedial work up here,

but in the whole scheme of things, who cares? Just remember that price!

That £15,000 to £20,000 guide price

certainly makes up for a lot of the house's ills.

There's no major structural work to be done here, as far as I can tell,

but it's always worth getting a full survey done just to be sure.

Let's say you got this for around that £15,000 to £20,000 price.

Let's say you paid the top end of that, 20,000 quid.

Rents in this area, for this kind of house, about £4,000 a year.

That...

£20,000 investment, £4,000 back.

20 percent yield. This place is a money-making machine!

But don't just take my word for it.

Let's hear the thoughts of a local property expert.

Well, it needs new central heating.

Most of the windows are UPVC framed,

but some of the glazing units have been broken,

so they need repairing. Probably needs a new kitchen and bathroom.

It wants redecorating, some areas of replaster.

Once the house has been successfully renovated,

what does he think the return could be

if the purchaser decides to resell?

Once the works are done,

you would expect it to be worth approaching 30,000, probably,

in the current market conditions. Not much more than that.

What if the buyer chose to rent it out?

I would expect it to bring in at least £350,

possibly £400, per calendar month.

Well, yes, there's work to be done,

but I keep coming back to that guide price.

Just 15,000 to 20,000 quid. You can't go wrong.

Let's see who agreed with me when it went under the hammer.

Where shall we begin? Someone give me 5,000 for it?

Want to give me five? Thought you might.

Five there. Ten?

Ten there. Do you want to give me 15, sir?

15 I've got. 20.

20?

No? I've got 15 here. I'll sell it for 15, so it's in the room.

-Will you take 16 for it?

-I will take 16 for it.

He's given me 17 now, so I'll take 18.

18 I've got. 19? 20?

At £19,000 with you, then, sir.

Can I say 20?

I've got 19. I'll sell it for 19,000, gentleman on the right,

on the far wall.

At 19,000 for the first time. 19,000 for the second time.

Are we finished? The answer is yes, and it belongs to you, sir,

paddle number 876.

Short but sweet, and that final bid of £19,000 came from David.

David's an entrepreneur who invests in property,

whilst Alex, who's on the right here,

is his business associate, who helps manage his investments.

I caught up with them back at the house

to find out if their business sense is as sharp as their suits.

# Lookin' back on the track

# For a little green bag

# Got to find just the kind

# Or I'm losin' my mind #

-Alex, Dave, good to see you both.

-Good to see you.

Congratulations. Tell me why you wanted to buy this place.

We're looking at a type of property which we could renovate,

rent out at a reasonable rate of return.

There's a business model behind all of this

which says if we can get something in the region of ten percent, we're happy with it.

We looked in this area and thought, for the cost

and renovation, we could achieve a rent at that level.

It sounds a bit like you know what you're doing.

There's a method in the madness lurking behind it all.

A lot of forethought goes into it. We've taken a look at the area,

-and thought, that fits the business model, happy with it.

-Right.

This house cost £19,000. How can you go wrong at that price?

It is perfectly structurally stable. Refurbishments are cosmetic,

but that'll come in comfortably inside £10,000

because it's so small.

-Tell me about you two, then.

-We work together. I'm the entrepreneur,

-and Alex is the accountant.

-So that works well.

So I'm full of enthusiasm for the ideas, and Alex costs them out.

David felt his money was better invested in property than banks,

especially in the current economic climate.

But he only opened the books on his property portfolio

less than a year ago.

So, ten months on, how many properties have you got?

-Nearly 50.

-50?!

-Yeah.

-What, in ten months?

-Yeah!

So far, David's spent about £2.5 million on his portfolio.

The current climate doesn't really bother him.

It's all about the rental return.

I'm not planning for capital appreciation,

and that's the difference. A lot of people are saying,

"I'll buy this, I'll do it up. Maybe I'll rent it,

but in the end, there's going to be some capital appreciation."

I'm working on the basis that there might be some in ten years' time,

but in the next two to three years, prices will stay the same.

# You've got the right idea

# You got the right idea #

By the sound of it, these guys have really got it sussed.

But with 50 properties in their portfolio,

for Alex to manage the renovations, he must need an army of builders.

We have a team that we're very confident in,

who can go in and assess the problem straight away,

give us a rough idea of costings, timescale for completion,

so for this house, three to four weeks

to do all the work required, no longer than that.

-And a budget of around 10,000?

-Thereabouts.

-Yeah, thereabouts.

-It's great. Congratulations,

-and good luck with it all.

-Thank you very much.

We look forward to seeing how you get on.

Well, I have to say that 50 properties in ten months

is a fantastic achievement in anybody's books,

and David certainly seems to have got the right idea

of what's happening in the property market.

He realises you can't go wrong with this.

Still, lots of work to be done. How are they going to get on?

Find out later in the show.

Well, the seasons have changed, but have the properties?

Have they remained exactly the same? Now is the moment of truth.

Now back to London, where this three-bedroom ground-floor flat

in Islington sold at auction for 366,000.

It was bought by Mo, who runs a property-developing business

with her brother Sharwan.

It sounded as though the renovation here was really going to come down

to a question of individual taste.

She wants to put her own touch on it, but it might be a bit OTT,

so we're having discussions at the moment

about whether to put in a pink carpet.

Are you thinking about having a pink carpet in this flat?

In my bedroom, because that's just my territory,

so I don't think anyone else should mind. It's my space.

# I need the personal touch...

Five months later, we caught up with Mo and Sharwan

to find out what compromises they had to make.

Although there are no pink carpets,

Mo has definitely put her own stamp on the place.

# I need

# I need the personal touch

# I need

# I need the personal touch

# One day away from you too long is too much

# I need the personal touch #

We changed absolutely everything - rewired,

we've created an extra bathroom, we've refurbed the kitchen

and the hallway.

We have taken out the old boiler and we've changed the plumbing.

We've also done all the colour schemes.

We've redecorated throughout, and we've created a garden as well,

and made that a lot more spacious.

That area at the back is much more appealing now,

not to mention private.

They've also been clever with the space inside.

They stole a bit of the kitchen and moved some of the walls

to make that new second bathroom,

which, handily, is right next to the other one.

Both are now fitted with state-of-the-art fittings

and shower units appealing to both tenants and would-be spacemen!

SONG: "Rocket Man" by Elton John

# I'm a rocket man

# Rocket man

# Burning out his fuse out here alone #

But the extravagant touches don't stop there.

There's the newly decorated and very pink master bedroom.

We haven't actually changed the size of the bedroom.

We simply moved the doorway. As you can see, we've changed the colours.

I've always wanted a pink bedroom. You may remember,

my brother said not to have a pink carpet,

so I decided to have wallpaper instead.

This is flock velvet wallpaper, very difficult to get hold of,

and at £100 a roll, it wasn't the cheapest thing I bought for the flat.

Mo has been really passionate about the decor in the flat.

My only concern is that if they decide to rent it out

or sell it on, it's usually a safer bet to keep to neutral colours throughout.

But if Mo does opt to keep this and move in herself,

I'm sure she'll love walking up and down that new marble corridor.

# Blue light

# Can you turn on a blue light?

# Then everything will be all right

# Whoa, oh, oh, blue light #

Well, the hallway, the builders knocked out a couple of recesses

into the wall, which we wanted to put as a feature in there,

and we put a lot of marble in the hallway, again as a nice feature,

and Mo and I came up with the design for the floor, so...

I had this vision of having lights all along the hallway,

so we came up with this design of the lights,

and Shar said, "Why don't you create a pattern, have crazy paving?"

And we started sketching, and we came up with this,

and sourced the marble. Shar found some good suppliers in London,

so we went ahead, and our builders were very accommodating.

There's even more dazzling decor in the kitchen,

with floor lighting, stylish new units

and a coloured-glass worktop. There are brand-new appliances in here

as well, and even a TV to keep you entertained

while you do the dishes.

In each of the rooms we've put TV points,

but also TVs in all of the rooms.

We've put a lot of low-voltage lights in all of the rooms,

so it's a lot more eco-friendly.

Shar's been amazing at sourcing the best deals,

and you'll see all of this throughout the flat.

From the marble shelves in the hallway

to the appliances in the kitchen,

everything has been given an awful lot of thought,

and that's thanks to Shar, really.

Sharwan has done a fantastic job of getting high-end fixtures

at a low-end price, but has that been enough

to keep them within their original budget of £40,000.

We spent probably about ten percent of the purchase price

in terms of doing the actual building works,

and then another £4,000, £5,000 on furniture as well,

so the budget has come in completely as expected,

but we've got a lot more for our money.

The only thing that is outstanding, we're thinking about doing the windows,

which will be a significant cost on top,

but we think it's worth doing now.

From everything I've seen,

it looks as though Mo has well and truly made up her mind to live here.

# Wherever I lay my hat

# That's my home #

The update on whether I'm going to live here or not -

it looks like I should, doesn't it? But we've had some amazing offers

on rental, by accident, really. We've been showing people this flat

whilst the other one is being finished,

and everyone has fallen in love with this flat.

So I've had some offers above the market value.

I have got a couple of other houses to live in,

so I could live there, but my jury's still out.

So, she's undecided for now.

Maybe some valuations will help sway her decision.

We asked two local property experts for their thoughts.

Flat's been renovated to a very high standard.

The changes that have been made have certainly benefited the flat,

especially in the rental market.

I think it's quite nice, a little bit quirky,

a little bit individual.

Might have gone with more neutral colours,

but it's done nicely.

The second bathroom works very well in the flat,

as does the addition of a third double bedroom.

The size makes a big difference. Great for rentals,

great quality finish. I think it'll rent very well.

So what do they think it could rent for

if Mo decides to let it out?

I believe this property, in the current climate, would rent for £2,250 per calendar month.

This property could rent for £2,400 per calendar month.

Oh, that's kind of what we expected. We've had a couple of offers

higher than that, so that's quite good, those values!

Mo and Sharwan paid 366,000 for the property at auction,

and have spent £40,000 on the work,

making their total outlay approximately £406,000.

What sort of value have they added?

You would put this property on the current market at £450,000

and hope to achieve close to that.

I'd be quite happy marketing this property today at about £450,000.

-Wow!

-OK.

-That's very good.

That breaks the ceiling in this development,

-so that's really good news.

-We were expecting slightly less than that,

so that's really pleasing, yeah. That's well worth it.

So, all their hard work could potentially earn them

£44,000 pre-tax profit,

minus the usual fees and expenses, of course.

So, have any of those valuations helped make up Mo's mind?

# But soon you will find that there comes a time

# For making your mind up #

I don't know, because I've seen something else I really like,

and it's just one of those things that... I could move in

if I wanted to, but I think I'm quite tempted

by some of the offers I've had on the rental side.

No matter what she does decide to do in the end,

both Mo and Sharwan can rest assured that they have a dazzling future

with their eye-catching property.

Now it's back to Burnley, where this mid-terrace property

sold at auction for just £19,000.

It was in a terrible state,

and in desperate need of major renovation,

but property developer David and his business partner Alex

weren't put off.

There's a business model behind all this

which says if we can get something in the region of ten percent, we're happy,

and we looked at this area and thought, yeah, for the cost,

we could achieve a rent at that level.

It sounds a bit like you know what you're doing.

There's a method in the madness, lurking behind it all.

A lot of forethought goes into it. We've taken a look at the area

and thought, "That fits the business model. Happy with it."

SONG: "Bright Idea" by Orson

Just six weeks on, we've caught up with them

to find out if they've turned this house into a profit generator.

The property was in a poor state of repair,

so we've had a brand-new kitchen put in,

brand-new bathroom put in...

..carpeted throughout,

and it's amazing what woodchip and magnolia does to a property.

It's a fairly bland colour scheme we've got going

that allows people moving in to bring their own character to the property,

so we're pleased with the outcome. I'm sure the tenants moving in,

when they look at it, will find it an attractive spot to move to.

It's been a fairly straightforward renovation.

There have been no nasty surprises or problems,

so here's hoping that they've kept to their original timescale.

We said we would try and do the work within three to four,

and broadly we've fitted in within that.

As you can see, the property's completely renovated and ready.

So, they came in on time, but have they come in on budget?

Remember, they planned to spend £10,000 on the work.

'Well, we were very marginally over.'

If we're being pernickety on the figures, it came in at £10,229,

so we're a couple of percentage points over budget,

but that really is a good result by anybody's terms.

With the renovation now complete,

what are David and Alex's plans for this house?

The plan for this property is to rent it.

It's in an area where most of the houses are rented.

It's unlikely that we'd actually sell it.

I expect to be able to put a tenant in very soon.

David and Alex have a portfolio of around 50 properties

and often rent them out to local councils,

maximising the chances of a profitable income.

We will approach the Bolton Housing Association.

They usually have a list of tenants

looking for properties of this nature,

and there's a fixed rent that goes with a two-bed terrace property,

so we would expect to be able to offer the house to a tenant

within the very near future.

Getting a fixed rent from the council sounds like a good idea

for this developing duo, but is it better than renting it privately?

We asked two local property experts to give us their opinions

on the work, and their valuations.

First impressions are good. He's done a good job

since we were last here, done what I expected him to do.

Yes, it's good.

Seems to have been refurbished to a reasonable standard,

taking into account the type of property and its location.

It's a good job.

I think the kitchen is just about right.

It'd modern, serviceable. He's not gone over the top.

Perfect for the rental market.

The standard of workmanship's good for the market

they're looking to attract, which is the rental market.

So, with a purchase price of 19,000,

and the renovation costing just over 10,000,

the total outlay here is around £30,000.

Do the experts think there could be a good return on rental?

I think the rental value of this property is £350 to £400 per calendar month.

If I were to put the property up for rent,

I would expect to achieve £300 per calendar month.

Those figures would give the developing duo

an amazing yield of between 12 and 16 percent.

What do David and Alex make of that?

Well, the price we would've expected would be around £85 a week,

so, doing the maths, about 340 for that,

so it's in the area, in the region. Comfortable with that.

David and Alex's business model is based on renting out high-yield properties,

but should they ever decide to sell this one off,

what could they achieve, bearing in mind the total investment here

of just under £30,000 plus the usual fees and expenses?

I'd expect the property to achieve for sale probably no more than 30,000.

The prices will be held back because of the immediate location, but £30,000.

In terms of resale, that's more difficult to ascertain.

If I was to put a figure on it, I would say a maximum of £40,000,

as it is only likely to appeal to the rental market

and not to owner-occupiers.

Well, we thought 35 to 38, so again, it's in the right area.

For the time being, David's going to follow his successful business plan

and will rent it out.

With his empire starting less than a year ago,

and growing at a rapid pace, is he enjoying his new career

as a property magnate?

It's great fun doing this.

Doing homes is something that's innate to us all.

To do it for a living is really quite enjoyable.

We'll have more news from around the auction room next time.

Join us for more Homes Under The Hammer.

-See you then.

-Goodbye.

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