Episode 83 Homes Under the Hammer

Hello. Now, buying property isn't always as easy as it seems,

especially if you get stuck in one of those dreaded property chains.

But you can eliminate that part altogether, if you buy at auction.

There are all sorts of properties coming up for auction these days.

And their buyers have all sorts of plans and budgets for them.

So let's see which ones are featured on the show today.

Is it the big garden and rooms in this Canterbury house that had me jumping for joy?

I shouldn't really be doing that!

In Derby, don't be put off by the size of this property.

It needs updating, it needs modernising,

but, oh, it feels really spacious.

And this Doncaster end-of-terrace clearly needs work.

The kitchen's already been stripped out downstairs.

sadly, it doesn't get much better upstairs.

All these properties went to auction.

We'll find out who bought them and what they paid for them,

-when they went under the hammer.

-Sold.

I've come to Canterbury in Kent, a city brimming with history.

It's home to England's oldest cathedral, which has attracted thousands of pilgrims,

as Geoffrey Chaucer told in his famous The Canterbury Tales.

There are three main universities here,

so there's a large population of students.

Well, the property I'm here to see is close by this newly-built student accommodation, which bodes well.

Right by the side of a main road, but there could be bus routes, so again, that's good news.

So what is it? Basically, a two-bedroomed end-of-terrace, Victorian,

at a guide price of 90 to 100,000 quid.

Obviously, there's lots of learning going on here.

Let's learn about the property.

# Locked out... #

Right, first lesson... Can't get in through the front.

Better try the back.

# Locked out... #

Well, that's the first test failed.

Let's hope things improve round the back.

I've got to get in here somehow.

So what have we got?

Oh, dear.

Well, this is the kitchen.

As you can see, it's, er, yes, it's in a right old state.

Pfft!

You're going to rip it all out, let's face it.

What we like about the room is its size.

It is good. You could easily get a dining room table in there or whatever.

Nice high ceilings. What we don't like is all this mould.

I mean, look at it!

Well, let's hope the rest of the house isn't quite so...wet.

And the mushrooms in this kitchen aren't the edible type.

There are some serious damp issues here.

So, an alarming start for this property, that went to auction

guided at 90 to 100,000.

Let's hope this isn't a sign of things to come.

-What on earth is that?

-HE CHUCKLES

No idea!

Well, anyway, I'm liking the size of this room.

Really good-sized space and I think even these floorboards

and everything would clean up quite nicely.

Archway through to the front room, if you like.

Again, nice floorboards. Well, nice floorboards here.

But what is going on towards the bay window here. Ooh, my word!

I shouldn't really be doing that! That is not good.

My guess is that, well, the joists underneath there have rotted away,

probably due to water coming in here.

And, if I'm not mistaken...

# The dust on the ground... #

Not very good, is it?

Hmm, just as I feared, more damp.

This is a worry, as the back of the house is riddled with damp -

and the front.

I just hope whoever bought this property at auction

factored the expense of getting the damp sorted into their budget.

This place is gradually rotting away.

The large garden is slowly taking over.

So I wonder what the upstairs will be like?

Well, you've got two really good-sized bedrooms

and a view of the mountains!

# Mama, look at the mountain Papa, look at the sea... #

So, through to the bathroom and the loo. Well, it's a separate loo here.

And the bathroom itself is here.

It's got a bath and shower and it's got just way too much space.

I mean, look at it! I don't know if, at some stage, judging by the fireplace here,

this might have been a bedroom.

Well, certainly I think that is something you should consider turning it back to.

It's disproportionately big, I think.

Well, if this was a family home, maybe it would work pretty well.

But if we're thinking about using this as a student let,

it's all about maximising the number of bedrooms

and I reckon you could get another bedroom in here.

So, with a bit of playing around, how many bedrooms do we think we could get?

Two downstairs, obviously. Convert those two.

One here, that's three. Maybe that front bedroom, split that into two. So that's another one.

I reckon you could get six bedrooms in this place.

Six bedrooms, say, £80 a week, that's £480 a week.

That's nearly £25,000 a year.

Take off holidays, maybe it's 24, 23. It's still a lot of money!

There's one more surprise in this property. There's a basement.

That could be converted into the ideal communal room for a student let.

But remember, you must check with the local council

before carrying out any basement conversion.

There may be planning permission required and strict

and strict building regulations to comply with.

We asked a local estate agent to come and have a look around

and give his opinions of this house that went to auction, guided at 90 to £100,000.

There's a lot of potential here

for someone either to convert into student accommodation

or to redevelop into a family house.

If the property was just renovated and kept in its current configuration,

how much could it be worth if put back on the market?

Once renovated, if the configuration's kept as it is,

the value is going to be enhanced to probably £170,000.

What rent could it generate if it wasn't divided into flats and let to a family instead?

If renovated and refurbished as is, and then let to professionals

or a family, the rental value would be about £650 per calendar month.

How does that £650 a month compare with student lets?

Let's take a conservative example of four students.

If renovated and let to four students, they would each pay about £330 per month.

That would translate to over £1,300 a month in total.

So there's no doubt that letting to students holds the most profitable future here.

Well, there's clearly a bit of work required to sort this place out

but, you know what, spend a bit of money here and I think you've got yourself a real money-earner.

It's a big house in the right location.

Let see who spotted it when it went under the hammer.

Lot 69, it's an end terrace.

Does has a bit of gas heating, does have some double glazing.

It's two bedrooms. It's got a guide of 90 to 100,000.

Start me at 90, give you all a chance. 90, I have, thank you.

£90,000, I'm bid, and five, I have. 100, and five.

And five is bid. 110, 115, and 20, and 125?

125 and 130.

135? No. £130,000 is bid.

132?

132 in a fresh place. 135 is bid. 138?

135, 136,

137, 138.

138 in a fresh place. 139 and 140,

142 and 144.

144, 146 and 148? No.

146, I'm bid. At £146,000 is bid.

At £146,000, bid on my right-hand side, against the wall.

And a half?

And seven?

At £147,000, I have. For the first time at 147,000...

For the second time at 147,000...

Third and final time.

The bid is on my right-hand side. At £147,000, are you all done?

-BANGS GAVEL

-Sold at 147,000.

Those successful new owners, who paid £147,000, are local couple Ronnie and his wife Catherine.

They used to be teachers , but are now full-time developers

and own other buy-to-let properties in Canterbury.

I caught up with them back at the house to find out

why they were so keen to get their hands on it.

-Ronnie, Catherine, lovely to meet you both.

-And you.

-Congratulations.

-Thank you.

Tell me why you wanted to buy this place.

Well, I think there's three things about Canterbury that you need to understand.

Firstly, it's a beautiful, beautiful city. It's full of history.

It's full of culture. It's got two theatres.

The second thing is, it's a university city, a vibrant city.

It's a great place to be, which is why we live here as well.

And then the third thing is that, in October this year, the legislation's changing,

so most university city councils can now choose to give permission or

to withhold permission for people to set up multi-lets for students.

That means that university city councils like Canterbury can limit

the proportion of HMOs, or houses in multiple occupation, within a certain area.

For student landlords, that means the clock is ticking when it comes

to any likelihood of getting a new HMO licences for new premises.

So, Ronnie and Catherine bought this place just in time.

But what was so appealing about it?

I looked at the spec and I thought, "That's only going to be for four students."

And I came in here and I looked it and I thought,

"There's letting room one there." That's a good-sized room. This is a good-sized room.

Kitchen is a nice-sized kitchen.

The basement, perhaps, the hope is that we can turn it into a communal area down there.

Then upstairs, I looked and saw the bathroom and I thought, "Why does this have to be a bathroom?"

Because the other two rooms are big, as well.

So, if the bathroom is turned into a bedroom, you've got natural light.

You don't need natural light for bathrooms, really.

So we can put two bathrooms up there, still leaving

a very good-sized bedroom and then two rooms at the front, as well.

So it's going to be a very spacious student property.

But a six-bedroom one, so a bit of a money-spinner.

It depends on what happens with the student market,

because there are all sorts of changes happening with the student fees.

The numbers might drop.

But, on current status, it would be about 28,000 a year.

A healthy income from the six bedrooms they're proposing -

two on the ground floor,

while upstairs, the front bedroom will be divided into two more.

The fifth bedroom will go where the bathroom is.

And bedroom six made from what's left over after the back bedroom's

been split into two bathrooms and a bedroom.

The couple both clearly have a lot of experience,

so what are their roles in the business?

Ronnie does a lot of the maintenance

and I find the properties, organise the finance.

I do a lot of the accounts.

-I started off life as a bench joiner.

-Oh, really?

But obviously, I'll need to bring in gas-safe plumbers and electricians, and things like that.

But most of the practical work, I do myself.

And the budget, then, approximately?

We're looking at around about 25,000, that sort of figure.

And what's the timescale?

Well, we want to turn it round in about three months,

because we've got to get it ready for the end of August/September.

-The intake.

-Yeah, so it's tight, but I'm confident we can do it.

-Well, congratulations to you both. Good luck with it.

-Thank you.

-And I look forward to seeing how you get on.

-OK, thank you.

Well, Ronnie and Catherine certainly seem to know what they're doing

and they've got the experience to make a success of this place.

But I still think it's going to be, well, a bit of a squeeze to get those six bedrooms in.

And, of course, they're on a timescale to get it all sorted out before the new term.

How will they get on? You can find out later in the show.

For the next property that went under the hammer,

I'm in the Midlands, in the suburbs of Derby.

In fact, I'm about three miles from the city centre, in Alvaston.

Alvaston used to be a village on the outskirts of Derby,

but in the mid-19th century, it became a terminus for a tram route.

So with this direct commuter link straight into Derby,

it became a popular place to settle.

And Alvaston boomed with streets and streets of houses being built.

Now it's very much a suburb, but it's still a popular place to live for commuters.

# We're on the outskirts of the town... #

The tram no longer exists, but Derby is still within

easy striking distance, with plenty of road and bus links.

So what am I here to see? Well, it's this semi-detached house,

which I think looks like it's a bit crammed into the corner of this cul-de-sac.

It had a guide price of £50,000 and it was described

in the auction catalogue as "having two or three bedrooms".

So, come on, which is it, two, or is it three?

I'm going to go in and find out.

This entrance path is not that inviting, with all these weeds,

but the property has double glazing and looks basically sound.

Not a huge entrance hallway.

You sort of walk straight in to this rather unusual sort of bookcase

that goes all the way up the stairs.

So, here we are.

Now, actually, it's just shows you first impressions can be WRONG,

because that's quite a big room.

That's quite a big room and, come in here,

look at the size of this kitchen!

Wow!

There's a lot of space in here. You could really use this to your advantage.

A lovely family table down that end, so you could eat in here.

You could get away with potentially just changing the worktops.

You could change the units as well, but they don't look to be in that bad a condition.

Er, some rather interesting features in this house so far. Look at that!

It like a radiator cover that they've wrapped round the boiler.

You know, it needs updating, it needs modernising. But, erm, cor!

It feels really spacious.

Like the kitchen, the two reception rooms could also do with

a bit of updating and redecorating.

But the house, that was guided at 50,000 plus,

has gas central heating and appears to be structurally sound.

But, at the back, the original windows and doors

have obviously been moved and the large garden needs attention.

Well, that's not great to look at when you walk out your back door,

so, I think we're agreed, a lot of that's got to go.

You need to get a skip with this house but,

when you buy a corner plot property, you don't always get a lot of room.

Well, look. Check this out.

This is a huge garden!

I can really see a family loving this,

but you must always remember, when you let to tenants,

you've got to make sure that they maintain the garden.

And it's got to be done on a regular basis.

Otherwise, this large family garden could quickly become an untamed jungle.

So, back inside, I head upstairs to discover just how many bedrooms there are.

So here we are upstairs. There's bedroom one - quite big.

We've got bedroom two over here - spacious.

A bathroom - that's really large.

Is that the possible third bedroom, as described in the catalogue?

Aha! No, it's a shower room. There is literally a shower squashed in the corner.

Now, I suppose at one point in the house's history,

it would have been the third bedroom.

Should you convert this back again?

Well, I like plenty of bathrooms, but for a house this size,

two just seems a bit excessive.

And a third bedroom, well, that would make the place more saleable.

And it will give you a higher rental return.

So, if this was mine, I would ditch the shower, I would steal a bit of the bedroom from next door,

knock that wall down so you've got a big, large bedroom here.

You could leave the bathroom where it is.

Or you could turn this bathroom into a bedroom

and put that three-piece suite into here.

So you've got a few options to help get that third bedroom.

Would all that rearranging and replumbing to get a third bedroom really be worth it?

# Everything must change... #

Time to ask a local estate agent what

she thinks of this corner house.

The property itself, tucked away in a little corner.

It's deceptive from the front, opens out into this nice, spacious house.

Needs a little bit of TLC.

In general, it's in good, solid condition.

Two bathrooms and two bedrooms doesn't really make any sense.

I think the larger of the two bathrooms could be made back into a bedroom.

If it was bought by a buy-to-let investor,

how much rental income could they hope to generate here

as a two or, if converted, three-bedroom property?

If the property remained as a two-bedroom property,

you're looking between 400 and £425 per calendar month.

If it was made into a three-bed, you'd increase that up to

approximately £475 per calendar month.

What could it be worth if sold on after a refurbishment?

If the property was improved to a reasonable standard,

yet remained as a two-bedroom property, the maximum you can expect

on the open market at the minute would be £75,000.

Made into a three-bed, you're looking at up to about 90, maybe 95,000.

This house needs a bit of an update but, other than that,

I think it's quite a nice little property.

But will the new owner think the shower room

is a bonus or better off as a bedroom?

Let's find out who bought this at the auction.

Lot number four, tucked away in the corner of a cul-de-sac,

it's a two/three-bedroom semi-detached property

with a large garden, illustrated there for you.

How much for this one? 48 will start me.

48? 48,000, thank you.

At 48,000, 49 I've got.

49,000, 50? 50,000.

At 50,000, 51 is bid.

At 51, 52?

52. At 52? 53?

53. At 53, 54? 54?

Try another one, sir. It's worth another bid. 54 and a half. 55?

At £54,500 and across the way, 55 quickly, anywhere else?

For the first time at 54,500... Second time...

Third and last...

-BANGS GAVEL

-Sold at 54,500, thank you.

Well, that final successful bid of £54,500 was made by

Birmingham-based developer Aziz.

He used to teach electrical engineering, but is now a full-time developer,

so why did he want to add this to his portfolio?

I met him back at his latest purchase to find out.

-Aziz, hello. Congratulations!

-Thank you very much.

-What a lovely surprise!

You know, from the outside, your house looks incredibly pinched,

but you walk in - it's just like a big TARDIS!

Very deceptive. Corner plot, massive garden at the back, big-size rooms.

All the amenities very close by.

So how well do you know Alvaston?

I've got a couple of other properties in Alvaston and Allenton, so I know it's an established area.

People do want it, it's in demand.

So what have you bought this for?

Renting it. I'm in the letting business, so I'll rent it.

So how many years have you been developing for?

Oh, I've been dabbling in properties on and off for the last 10-15 years. But this is now first year full-time.

How many properties are in your portfolio?

Well, in Derby, about nine or ten, in the last six months.

Being an experienced developer, Aziz did his homework with this house.

He read the legal pack before the auction, which was just as well,

because there was a potential fly in the ointment for anyone who wasn't prepared.

It was cash buyers only.

# Stop acting like the fly in my ointment

# Cos that's what you are... #

The reason he had to pay cash was because the property had only

been bought very recently and then offered straight back for sale.

This is known as a back-to-back sale

and mortgages are not available in these situations.

Like I always say, it really pays to do your research.

What do you intend doing here, to really get the most out of a house like this?

Relocate the bathroom, do the kitchen up again,

tile it and redecorate it, new carpets, obviously.

So let's talk about that bathroom.

You've got a really big bathroom, a very small shower room

and, currently, only two bedrooms.

Now, in the auction catalogue, it said "two or three bedrooms".

How are you going to turn that around?

Well, we're going to take the bathroom where it is

at the moment into the smaller room, where the shower cubicle is.

It's a waste of space, to me.

For my returns, the bathroom has to be the smaller one.

We'll get the shower in there, we'll get the bath in there,

we'll get the wash basin and the WC - the lot - in there.

And the current bathroom will become a third bedroom.

And downstairs, how will you change the kitchen around?

The kitchen is coming out, new kitchen is going in. This will become a kitchen-cum-diner.

The kitchen is concentrating, basically, on that window there

along there and all this will be taken out and dining table in here.

So do you think this is a really rentable house, it'll go like that?

Oh, it is. I've already got two potential tenants for it.

-Really?

-Yep.

-So what's your budget for the work here?

-About five grand.

-So you can turn this around with five grand?

-About £5,000, yes.

And have you got a team of builders?

I've got a team of workmen who work with me all the time, very closely.

For the last nine months they've been working with me.

We'll turn it around, with that money, in about four weeks.

Aziz might be very experienced, but turning this place around

in just a few weeks, on such a small budget, is going to be tough.

But he seems more than capable of getting the job done.

What is it about you that keeps you striving forward?

It's the passion about it.

I just love doing something, meeting new people. Like the properties.

I don't know whether it's in my blood or not, but I just like 'em,

like doing them and I like to get out and do something, rather than sit on my laurels and do nothing.

Aziz, I can't wait to see what you do. Congratulations. Well done.

Thank you very much.

Aziz has been property-developing for quite a while now

and he seems to have everything under control,

and he's well on his way to building up a nice rental portfolio.

But will he really be able to get this done in four weeks for just five grand?

After all, he's switching bathrooms for bedrooms

and turning showers into baths.

That's a lot of plumbing to sort out!

Will he do it? Find out later on in the programme.

Coming up. This Doncaster terrace needs major work, in the bedrooms,

the bathroom and the kitchen, as you can see, is in a right old state.

We return to Derby, where Aziz has found extra work.

I wasn't very happy with the wiring, so I took it out and rewired it.

But first, it's back to Canterbury, where the mountain air has been most refreshing.

We're very pleased with the way it's all turned out.

We're now returning to Canterbury in Kent where, earlier in the programme,

local full-time property developers, Ronnie and his wife Catherine,

bought this two-bed end-of-terrace for £147,000.

The deceptively large house was in a right old state.

The couple plan to add it to their portfolio of student lets.

And Ronnie soon discovered that the place had mountains of potential.

I looked at the spec and I thought, "That's only going to be for four students."

Then upstairs, I looked and saw the bathroom and thought, "Why does this have to be a bathroom?"

So it's going to be a very spacious student property.

But a six-bedroom one, so a bit of a money-spinner?

The numbers might drop, but on current status, it would be about 28,000 a year.

It's now four months later and we're back.

Inside, the dry rot in the bay window has been fixed and new joists

and floorboards installed, and the first of six bedrooms created.

The large through-living room has been bricked up

and bedroom two has been constructed.

The wall has been removed, so access to the kitchen is now through the hall.

That damp kitchen has been completely refitted with new appliances and units.

There's just the ceiling to plaster.

So, two bedrooms on the ground floor and four more on the first floor.

OK, so as you might remember,

this is the original door which went through to the second bedroom.

That was the one that had the big alpine fresco on the wall.

So now it's a shower room with a WC.

Then what we did, we opened up here and put in a bathroom

so we've got a bath/shower over.

So now you have the two shower facilities that you need.

Then we opened up this area here.

So we took this wall back

and created a corridor through into this bedroom.

So that's one bedroom upstairs and then the large front bedroom

has been split into two further bedrooms.

The original bathroom takes the bedroom count

to four upstairs, plus two downstairs, making a total of six.

We're very pleased with the way it's all turned out.

The outside presented just as many challenges.

So how have Ronnie and Catherine divided up the work here?

Ronnie spent more time here than me

when it was in the middle of the project.

I started off doing a lot of the wallpaper-stripping.

That was my contribution at the beginning of the project.

And then, towards the end of the project,

I organised all of the furniture and the decor.

And what about the basement? Were they able to create a communal room?

There sure were and the new window lets in lots of daylight.

So the first thing we had to do was to tank it.

Then we put a stub wall, with a cavity behind that and insulated the stub wall.

Had to build a new set of stairs so I built those in situ.

The biggest challenge, of course, though, was actually raising the ceiling.

One choice was to dig down, which didn't appeal at all.

So we just had to raise the ceiling up and that's worked brilliantly well.

Really nice space. I really like it. It's my favourite room in the whole house.

You can see the extra height Ronnie gained in the cellar

in the hall, where the floor has been raised.

Apart from building the staircase,

Ronnie's done a lot of the other work himself, too.

But he employed a certified gas-fitter and electrician

and took on an apprentice, called Louie.

They set a budget of around £25,000.

Did they manage to stick to that?

Er, we've come in at around about 24,000, which was really quite remarkable,

you know, because I was expecting to have to spend more.

And I have to say that's largely due to my apprentice

doing the skirting boards and the architraves and hanging the doors.

He's made a big difference to the project.

It's been a successful, fast turnaround project for the couple.

They've let all six rooms in time for the start of the new university term.

Moneywise, including their £24,000 budget,

they've spent a total of around 171,000 here.

But how have their improvements impacted on its value?

Let's see what two local estate agents think.

I think they've reconfigured the space very well

and there's no tiny rooms.

They're all a very good size and the lounge works very well.

They've made very good use of the floor plan.

This was always a good-sized house

and they've been able to adapt the layout to provide good accommodation,

ideal for the purpose that it's intended.

How much rental income could each room achieve,

if let out to students?

Student rents here in Canterbury

are between £330 and £350 per person, per month.

If I was to rent the property out to students,

it would be £350 per student, per room, per month.

That's an income of around £2,000 a month and a yield of 13-14%,

if they let the six rooms out all year round.

What do they think of that?

Well, I think we've achieved a bit better than that and I think

-they're slightly sort of undervalued, actually, from our experience.

-Mm.

They spent £147,000 at auction

and the budget's come in at around 24,000, making 171,000 in total.

So what's the property now worth,

as a six-bedroom, student, buy-to-let investment?

The market value here would be greatest as an investment to the

buy-to-let student landlords, where the value would be towards £250,000.

I'd market this property today as a student let for 265,000 to 270,000.

That valuation range of 250 to 270,000 would generate

a gross profit, before the usual selling expenses, of between 79 and £99,000.

What do they think of that?

I was sort of thinking in excess of 200, but 250-plus is very good.

Would they perhaps consider selling and taking an instant profit?

Well, I think we might think about it!

Yes. I don't know, it is tempting.

Makes all the labour worthwhile.

These last four months have been worth it.

Well, it would certainly come in handy, since they're currently planning a renovation

and extension of their own family home, including a swimming pool.

So how many pools could you buy with that?

-Just the one will be fine.

-Yes.

Today, I'm in Hexthorpe, in Doncaster.

There are plenty of local amenities and rows and rows

of affordable Victorian houses that look perfect for rental.

Well, the property market may have its ups and downs but

there's one thing that never changes and that's the importance of yield.

That is the amount of money you have to spend on a place

and what you might get back, in terms of rent.

And, in that case, this place is absolutely brilliant!

It may not look that inspiring from the outside

but the guide price was 20,000 quid.

I don't really care what it's like inside.

# Oh, honey, I don't care

# Oh, honey, I don't care... #

When the guide price is that low,

there's potential for a good yield to be harvested as a buy-to-let.

I'd be interested whatever the state of this place.

That said, what is on offer? Well, a very pink hallway, that's for sure.

But, oh, look! We've even got some lovely original features, that's nice to have.

When you set your sights low, you can be pleasantly surprised.

And, you know what, this place is not at all bad.

I've been in a lot worse that have cost a lot more money.

Big through sort of living room/dining room area.

Obviously, we're going to have to sort out something to do with the central heating,

but a couple of fireplaces in here make it really nice.

It feels pretty spacious.

Heading back towards the rear of the property, it gets a bit strange.

A little anteroom there. That could be the place where you have your washing machine or whatever.

And the kitchen, as you can see, is in a right old state.

And, sadly, it doesn't get much better upstairs,

because there isn't actually a bathroom.

Well, there's a bathROOM, as in, the room the bath would go in.

It doesn't actually have a bath in it at the moment.

But do I care? No, I don't!

You spend, what, 2,000 quid on a kitchen, £1,000 on the bathroom,

sort out the electrics, sort out the central heating.

You'd still have this whole place sorted out for 30,000 quid. Pfft!

Brilliant!

Of course, that's if you bought it bang on that £20,000 guide price.

But it would be a lot of house for not a lot of money.

So, up the pink staircase to the pink landing and into the, er,

green bathroom, minus the bath.

The toilet looks bereft.

Wouldn't it be great if I could find the bath

and restore it to its rightful place?

Well, yippee, because I've found it!

The toilet will be happy and the new owner will be, too.

You could easily reinstate this once you've repaired the hole in the floor...

but would you, really?

Both bedrooms are good sizes, although the ceilings do look as if they've had some water damage.

A slipped roof tile may have caused this, so rectifying that would be my first job.

Well, at the rear of the property under the explosion of buddleia,

there is actually a pretty decent-sized garden

and a weekend's work out here, I think, will make a massive amount of difference.

And, another bonus, there's a garage.

# I just haven't met you yet... #

No, there really IS a garage down there.

Look hard enough and you can just make it out.

The new owner also benefits from side access to the back garden.

Apparently all the houses along here have keys for this shared gate

and pathway that leads to the back of the terrace.

It will certainly make clearing the house and renovating it much easier.

Dragging materials through a property is far from ideal,

so having this side entrance will make those problems disappear.

So, what will a local estate agent make of this place,

with its guide price of only £20,000?

We asked one along to find out.

It needs a bit of work inside.

It needs a new kitchen, bathroom, boiler, windows.

So it's a proper refurbishment job.

Lots of potential in this area.

It's a very good rental market area and first-time buyers.

Let's talk figures.

I would be able to rent this out for £325 per calendar month,

to £375 per calendar month.

When renovated, I would look to market this property at £64,950.

Well, yes, there is a hole in the bathroom floor.

Yes, it needs a complete new kitchen.

Yes, the whole house is desperately in need of some tender loving care.

But, you know what, for that guide price of just 20,000 quid,

you can't go wrong, really, can you?

Let's see who bought it at the auction.

Lot number 18. This has caused some interest, for obvious reasons.

As you can see, two bedrooms, bathroom.

Needs some modernisation. Who's going to start me?

And what's that, sir? 316,000?

Jolly good! Where do you want to start?

20,000, that's fair enough. At £20,000, I'm bid.

21, 22, 23,

24, 25, 26,

27, 28, 29,

30,000?

30,000. 31?

32, 33,

34,000.

35,000, just round the corner. 36,000?

37,500?

Is it 38?

500, sir?

500? 38,500?

39. 500?

40,000. 500?

41,000? Bear with us.

41,500?

42,000. 500?

43 now. 500?

43,500. Is it 44 now? I'm losing my way.

At 43,500 for the first time...

Second...

Third and last time, any more bids?

TAPS GAVEL

Well done. Thank you very much.

Pleased as punch with their successful bid of £43,500,

over double the auction guide price,

are husband and wife, Joanne and John.

Joanne's a full-time mum and John's a self-employed electrician

which will come in handy in this property.

I met them back there to find out their plans.

-John, Joanne, good to meet you both. Congratulations.

-Thank you.

So, how about the auction, because you were very excited, weren't you?

-Yeah. It was brilliant, wasn't it?

-Yeah, it were really good, yeah.

I didn't expect it to be like that.

We didn't think, really, that we'd get it, did we?

No, we knew that there was going to be a lot of people bidding because of, obviously, the price.

-When we got it, it were a nice surprise.

-Yeah.

Paid more than what we thought we was going to do, though.

-We said about 38, didn't we?

-Yeah.

But Jo kept nudging me!

We just... I kept nudging him!

So tell me why you wanted to buy this place.

Erm, for an investment, really. We bought it to rent, basically.

-Is this anything like you've done before?

-No.

-No, never.

-First time, isn't it?

-Yeah.

So why this house particularly?

-Erm...

-It was going really cheap!

Well, you know, that's a good reason!

-Pretty much, wasn't it?

-Yeah.

Before you bought it, did you come to see it, hopefully?

-I didn't.

-Ooh! OK.

-But you did.

-Yeah, I came round with the estate agent.

They had an open day. There were a few others having a look round.

-Bit of a poke about?

-Yeah, that's it.

-And what about the legal pack?

CLEARS THROAT

Legal pack?

Clearing of throat usually means "Hm?"

Erm, well, we didn't do anything legal until we actually bought it.

-Got a bit of a telling-off from the solicitor.

-Yeah.

-Good!

-JOANNE LAUGHS

-Yeah, we didn't do any searches or surveys or anything, did we?

-No.

I mean, I came round and had a good look.

-Had a bit of a stamp around floors.

-Right.

Had a look outside front road.

-Structurally, it looks all right, don't it?

-Yeah.

Right. But that's not quite legal stuff, is it?

It could have had all sorts of covenants and all sorts of issues.

I mean, you wouldn't know that from stomping about, would you?

No, you wouldn't, and that's why solicitor sort of had a go at us.

-It is, yeah.

-Did he? You got told off by your solicitor?

-We did, yeah, so we'll know next time, won't we?

-Yeah.

# My whole world is falling down... #

I hope the couple have learned their lesson.

Things could have been a whole lot worse than a ticking-off from a solicitor.

But it sounds like their plans for the rest of the house are right on track.

So tell me what you're going to do to sort it out.

-New flooring downstairs.

-Yeah, laminate, probably.

-Carpets upstairs.

-New kitchen, new bathroom.

-Wiring, rewiring.

-Yeah, that's your forte.

-Plumbing.

-Yeah.

Pretty much everything.

Bit of tiling. Maybe try and fit a kitchen.

-Then see if we can reach those ceilings upstairs. They are about ten-foot high!

-I know!

Never mind those ceilings, John.

That HOLEY bathroom's praying for salvation!

John's trade as an electrician will be a huge bonus,

but what about Joanne?

I'll be the decorator's lad!

-The handyman.

-I'll be the handyman.

-Apprentice.

-Yeah.

-And what's the budget for the work?

-Probably about four to five.

Somewhere around that, hopefully. Try and come in under that.

Wow! That's quite a tight.

Do you think? Well, you're the sparky, aren't ya?

Well, that don't mean I'm good with money!

I was going to say, that'll save us a few, won't it, the rewiring?

Well, hopefully that'll save us about 1,500, 2,000.

Got a few friends in t'trade, plumbers, things like that,

so if we bribe them a bit, a few cups of tea...

I'd stock up on the teabags, as I can see weeks of tea-drinking for the tradesmen.

John and Joanne expect it will take three to four months to renovate this property.

I think it will take them at least that.

-Well, congratulations and good luck with it.

-Thank you.

-I look forward to seeing how you get on.

-Thank you.

Well, I know John's an electrician

but £4-£5,000 budget to sort this place out seems a little tight to me.

Still, he's got a very willing helper in Joanne.

How are they going to get on? You can find out later in the show.

Well, it's a while since we saw those properties.

Have our buyers been racing ahead with the work?

Or has it all come to a complete halt? Let us go back and find out.

Back now to Alvaston in Derby, where earlier in the programme,

this semi, tucked away in the corner,

was bought for £54,500 by Aziz,

a property developer based in Birmingham.

The house had two bedrooms and the potential to create a third.

Now, you've got a really big bathroom,

a very small shower room and, currently, only two bedrooms.

Now, in the auction catalogue, it said "two or three bedrooms".

How are you going to turn that around?

Well, we're going to take the bathroom, where it is at the moment, into the small room,

where the shower cubicle is, and the current bathroom will become a third bedroom.

Aziz had a team of builders standing by

and planned to have the work done in just four weeks.

Well, it was seven weeks later when we met up again with him.

At the front, the overgrown weed-filled entrance has now been cleared.

New gravel has gone down and the house looks much more inviting.

Round the back, the big, overgrown garden has been cleared.

And a new patio door has been installed.

Inside, the hall's been decorated.

The red carpet has gone from the first living room,

which has been neutrally decorated, but it has kept the wooden ceiling.

The fireplace remains in the second living room,

but it's gained a new patio door and been re-carpeted.

And the kitchen's been totally refitted.

Aziz is on hand to give us the tour.

Hi. This is the kitchen. Taken the old kitchen out, completely.

Put a new kitchen in.

Tiled the floors, smoke-alarmed it,

rewired the whole power circuit in this area.

Any family would love this kitchen, because it gives them

a good working surface and a lot of space for a dining area.

Perhaps the kitchen's not neutral enough to appeal to everyone,

but the property is now ready to rent out.

Upstairs, the two bedrooms have also been given a makeover.

And the former bathroom has been converted into bedroom three.

This is where the old bathroom was.

It was a challenge to take a bathroom out of there,

bring it into what was old shower area,

but we managed it.

It's a lovely bathroom.

Fully tiled floor, fully tiled walls and a bonus -

there is a towel rail, as well.

Gave me an extra bedroom and now I can rent it as a three-bedroom.

# Things have changed... #

So, three bedrooms and one bathroom - much more practical.

Aziz has project-managed the work, inside and out.

He's now a full-time property developer,

but he used to teach electrical engineering and,

when he started to probe around, he got a shock!

Er, unexpectedly, we had to rewire the house.

I wasn't very happy with the wiring, so I took it out and rewired it.

Extra work, so how did that affect his budget?

I wanted to ideally spend under 6,000, but it just went over 6,000 - 6,200.

How long has the work taken?

I was aiming for four weeks, but we did it in three weeks.

Fast work!

So have the plans changed or is he still looking to let?

I want to keep this property and I have rented it,

and there is a family moving in on Monday.

Aziz has spent around £61,000 on this place,

including the £54,500 purchase price.

Time to see what two local estate agents think of the house,

now it has three bedrooms

and a tiny garden.

The property now is a blank canvas really for somebody to move in

and put their own mark onto it.

I think the creation of the third bedroom

-has proved invaluable.

-The layout changes

work for the property.

Maximising the amount of bedrooms certainly works in their favour.

And reducing the bathrooms from two to one is perfect.

The level of finish certainly isn't the best that I've seen.

However, it's adequate for a property at this price range.

Aziz has already got tenants, but what sort of income

do the estate agents think he should be achieving?

I would look to offer this property to let somewhere between

£435 per calendar month and £450 per calendar month.

Rental value, I think the property will receive

approximately £450 per calendar month.

Oh, I've beaten that handsomely!

675, I've rented it.

No wonder Aziz is happy.

675 a month will give him a remarkable yield of just over 13%.

But will the estate agents' resale valuations make him smile?

Remember, he has spent around £61,000 on this property,

which he's turned around in a matter of weeks.

Resale value here, I believe, would be no more than £80,000.

I would look to put this to the market at £74,000,

with a view to achieving £70,000.

That valuation range, from 70 to 80,000, could produce

a healthy potential gross profit for Aziz of between nine and £19,000,

minus the usual selling expenses.

What does he think of that?

That's not bad. I'm happy with that.

Yeah. For three weeks' work. Beating the bank!

# Things have changed... #

So a quick turnaround. Tenants in place and a happy Aziz.

What's next?

I've got two more projects straight after this, so we're getting

ourselves involved with that and I'll be at the auction next time, as well.

So, probably see you guys!

Well, we'll keep an eye out for you!

We're back in Hexthorpe, near Doncaster, in South Yorkshire

to see how self-employed electrician John and his wife Joanne got on with that classic red-brick terrace.

The two-bedroomed house had a few problems.

The damp patches on the ceilings pointed to a probable hole in the roof,

whereas the bathroom floor was...

mostly just a hole.

First-time developers John and Joanne bought the house as a buy-to-let.

But they started off their property adventure by breaking

one of the golden Homes Under The Hammer rules.

And what about the legal pack?

CLEARS THROAT Legal pack?

Clearing of throat usually means "Hm?"

We didn't do anything legal until we actually bought it.

-Got a telling-off from the solicitor.

-Yeah.

-Good!

John and Joanne paid £43,500 for the house

and had a budget of just £4-£5,000 to fix all the holes,

as well as redecorating.

They planned to rope in some friends and do as much as they could themselves.

They hoped to turn the place around in three to four months.

Well, we've come back 11 months later to see if the couple

have managed to resurrect this classic terraced house.

The rear garden dumping ground- cum-jungle has been cleared

and there are new double-glazed windows at the back.

But this project is far from finished.

Something tells me there's a story to tell here.

Yeah, we started doing things, chopping out floor sockets

and things like that.

We cleared the back garden.

We had a few kitchen companies coming round, didn't we?

-Yeah, we got some prices for kitchens.

-Yeah, bathroom.

And then what happened was, we had a lot of snow in December.

We couldn't get here for several weeks.

Once the snow had melted, we noticed that it had damaged

a lot of the roof at the front and the back.

A lot of the slates had come away.

And the melted water had come through. Caused a bit of damage.

We had insurance on the property.

With it being a vacant property,

-it were a slightly more expensive insurance premium.

-Yeah.

So we started the ball rolling with the insurance company

to claim for repairs to the roof.

Well, they basically said that

if we'd have read the small print on the insurance policy, we should

have had an extensive survey done on the property before we bought it,

-which we didn't because, initially, the roof looked OK from outside.

-Yeah.

So the insurance company wouldn't pay out for the repairs to the roof

and I couldn't do anything in the house until the roof were fixed.

I couldn't afford to repair the roof, because we hadn't budgeted for it.

-So we, kind of, were left in limbo.

-That's when it kind of all started.

# My whole world is falling down... #

So, with a tiny budget and now no insurance cover,

and a roof to repair, plus a house that was still in tatters,

John and Joanne discovered a lifeline, from the local council!

What it basically is, is that there's 21,000 people

on the waiting list, so the council were looking for properties like this

and what they do is, they'll give you a grant for up to £12,000.

And they will get their workers in. They've actually been now. They've took photographs.

So the council are going to take the property over.

-They're going to renovate it and then they'll put tenants in and pay us rent.

-Yeah.

All in all, I think we've come out quite well,

considering it were a bit of a disaster to start with.

We seem to have not done too bad, have we?

No kidding. John and Joanne have had a narrow escape.

If the council had not desperately needed rental properties in this area,

the entire financial burden for repairing this house would have fallen on their shoulders.

Now the council will spend up to £12,000 renovating the house

and then rent it on to one of their tenants for five years.

The council will charge 10%, to cover their costs, and pass on the rest of the rent to the couple.

But if there was ever a cautionary tale, it's this one.

-We try and keep cheerful about things.

-Yeah.

It's been quite, erm, at times, emotional.

It's been a bit distressing so, yeah, it's been a bit of a rollercoaster.

Hopefully, things will work out.

I hope so, too, Joanne.

And, with the house finally on the way to being mended,

the couple are now about to embark on a huge life change on the other side of the world,

which they've been considering for a few years.

We'll be leaving for Australia in about six weeks.

With a one-way ticket, hopefully, not to return.

And, hopefully, we don't have to come back and sort this place out.

-Yeah, it's exciting, but it's also a bit daunting.

-It is a bit daunting, yeah.

Well, it's a long way to go,

but John hopes he'll find more work opportunities

in the Australian building market for his electrical skills.

Talk about the highs and lows of property developing.

This has definitely been a rollercoaster ride for John and Joanne.

They bought the house for £43,500

and have spent £2,500 so far on the renovations,

bringing their total spend to £46,000.

Time to find out what two local property experts think of the house.

Positives about the property?

It's got potential to be a good family home,

once it's renovated, but there's a long way to go.

This property still needs a lot of work.

In this current market, it is only

aimed at investors.

So, if the house was refurbished,

what could it make on the resale market?

Remember, their total outlay here is £46,000

and the council are footing the bill, up to £12,000, for the renovations,

to bring it back into the housing stock.

On the market, a good two-bed mid-terrace is fetching

in the region of £60,000, to the maximum of £65,000.

I would anticipate this property achieving, fully renovated,

in the region of £60,000.

Those valuations would give John and Joanne a profit of between

14 and £19,000, before costs and expenses.

Although, of course, they are tied into a rental deal with

the council for the next five years.

I think that's what the going rate is around here, yeah.

Sounds about right for this area.

-Well, we're not selling it, are we?

-We're not going to sell it, no.

So what rent are they likely to get from the council?

They've sort of told us that, the kind of property in this area,

we should get about £400 a month.

Given the council get 10% of the rent, then the couple

would eventually get £360 a month, a yield of about 9%.

That's a light at the end of the tunnel that they really could do with right now.

So, as they embark on their new life in Australia,

what tips can they leave behind for us?

Things like older properties, where you've got old roofs, they may look fine,

it might be worth getting a survey done.

We didn't, you know, and it's caught up with us and bit us on t'bum.

-It has, yeah.

-But you never know until you try, do you?

-So at least we tried it.

-Yeah.

The world of property is never static or boring.

You need to know what you're doing and we hope we can help with that.

Yes, join us next time for more cautionary tales

and stories of success here on Homes Under The Hammer.

-See you then.

-Goodbye.

-Goodbye.

Subtitles by Red Bee Media Ltd

E-mail [email protected]