Episode 93 Homes Under the Hammer

Hello. Buying property can have its highs and lows

and it's not always as easy as it looks.

But there is one part of the process you can eliminate -

getting rid of that dreadful property chain

by buying at auction.

-All sorts of places come up for auction.

-Variety is what keeps us interested.

So these are the places that went under the hammer on today's show.

In London, we return to a former hostel that got me hot and bothered.

Look at this - industrial strength heating!

Phwoar!

This three-bed lodge house in Gravesend, Kent,

is made of sturdy stuff.

What I do like about it is it feels really solid.

The kitchen in this mid-terrace in Lancashire is better than you think.

If you put tiles down here and cleaned these units up, it would be OK.

All these properties have been sold at auction.

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

I'm in the affluent area of Fulham, west London,

to return to a property we first visited a couple of years ago.

It's this huge building

and the auction lot was, in fact, two separate houses.

which had been sub-divided into six flats.

The three-storey property may look elegant from outside,

but was, until recently, a council hostel.

The property's a leasehold with 50 years remaining

and the guide price was a whopping 525 grand!

So, through the front door and entrance foyer into the first flat.

And, well, not a bad size space.

It's a bedsit. High ceilings, which is always a good thing.

Clearly, kitchen in need of a bit of tender loving care.

Thankfully, the bathroom slightly better and it's a good size.

Um... But, as starting points go, not bad.

'So, onwards and upwards to the first floor,

'where there are another two flats, one either side of the stairs.'

So, a similar layout on the left-hand side of the top floor,

but on the right-hand side of the top floor,

it kind of gets a bit complicated.

Another good size flat,

but the issue here is this is actually a flying freehold.

That could introduce a few complications.

'This flat sits above an office which belongs to the next door property.

'That's a flying freehold,

'when part of one property extends over another.

'It can make a mortgage difficult to obtain, so the leaseholder

'will want to speak to the freeholder

'to make sure there are no complications here.

'And we're not done yet. Down in the basement, there's another flat,

'making four in total.'

Well, all good so far. But, in case you'd forgotten,

there's a whole extra house to see yet.

'Next door, there's more of the same -

'a flat on the first floor and another one in the basement.

'On the ground floor, though, things start hotting up.'

In a place like this, one of the big considerations will be the central heating and hot water supply -

very expensive to replace.

But in this case, not a problem.

It's all been done, and look at this -

industrial strength heating!

Phwoar!

# I said, "It's getting hot in here

# "So take off all your clothes"

# I am getting so hot I want to take my clothes off! #

'And, if that's not enough to get you hot under the collar,

'there's also some office space on the ground floor that could be turned into one more flat.

'At the moment, the room feels drab and dreary

'but since we're in one of London's most sought-after areas,

'transforming these dingy hostel bedsits into stunning studio apartments

'might well be worth the challenge.

'They also had planning permission guaranteed to turn them back into two houses

'so, whether to buy for flats or homes,

'with that £525,000 guide price,

'there was amazing potential in this auction lot.'

Well, a real double bonus with this place. Two properties

and the chance to double your money. But don't underestimate the amount of work it'll take.

It's probably a developer that took it on when it went to the auction.

Do I have 600 on this? If not, where do you wish to start? It's worth six.

Standing up, 500.

505 anywhere?

505.

510?

515.

520.

520. 525?

525, madam?

530.

'Despite the slow start, this hot property was up and running.

'Eventually, the bidding was between two determined parties and had reached a staggering 690,000.'

Anyone else? That's 690.

691.

692.

693, 694.

695, 696.

697, 698.

699, 700, 701.

702, 703.

703?

702, with you, first time, second time,

third and last time, if you're all done...

Sold, 702, well done.

'After a titanic struggle, the triumphant bidder was Stephanie,

'with her bid of £702,000.

'Stephanie actually works next door,

'from where she runs her marketing company.

'She's had her eye on these properties for some time.'

# Tell the fellas We can do what they can do

# We can do it even better in broken heels... #

-Stephanie! Congratulations!

-Thank you, Martin.

Tell me why you wanted to buy it.

I bought the building next door 13 years ago.

-Oh!

-For the last 13 years, I've been trying to persuade the council to sell me the lease.

When it went up for auction, with residential planning permission, it was a no-brainer.

After 13 years, it would've been sad not to get this building.

I would've had to sit next to it, watching the building works unfold.

-You would've gone mad.

-I would've had to move offices!

The day you got it, then, how did you feel?

Scared.

Elated.

And I was approached immediately after the auction with an incremental bid to sell it on, so very happy.

Tell me more.

-For a significant amount more.

-How much?

-I can't tell you.

-Why?!

More than £150,000 more than I paid.

-What, the day after?

-The day of.

Two minutes after I bought it.

-Why didn't you take the £150,000?

-There's more value in developing this as it is, obviously.

Money in the bank, though!

-Mmmm, speculation.

-Really?

-Yep.

Obviously, it's leasehold. Does that affect you?

-I own the freehold, so I'll marry the freehold and leasehold.

-You own the freehold of the building?

-Yes.

-Wow!

'The flying freehold is of no concern now

'as Stephanie owns the buildings and the land they're built on.

'So, what are her plans?

'To keep them as flats or return them to houses?'

Why are you so excited about this? What are you going to do?

It's a prime position. It's a great building - I love the building.

I think it could be very useful, either as houses, for which it already has planning permission,

or, even better, as apartments, for which I'm going to apply for permission.

Perhaps in future, I will marry the building I own next door and make a whole terrace of apartments,

-which becomes a very nice development deal.

-Absolutely.

With a view to doing what, keeping them, renting them, selling them?

Probably selling them when the market picks up, but perhaps renting now.

What are you going to do? What's the process now?

-Apply for planning permission for two-bedroom apartments.

-How many?

Seven with a couple of studios included. Seven units in total.

Um, apply for planning permission for the building next door, my offices, to residential.

Subject to that, I've got permission to put another floor on the top.

-And then see what happens.

-Wow!

-Yeah.

-This turns it into a huge...

-Quite a substantial building, yeah.

-Right.

In terms of doing this project, any idea how much it'll cost?

-How long it's going to take?

-Probably about £300,000 to refurbish the two buildings here

-and I would guess six months, maximum.

-Right.

Take it at a fairly slow pace.

They are beautiful buildings. I'd like to restore them to something of their previous glory.

They've been battered over the years, so it'll be interesting to see them come back.

'Stephanie has secured her mortgage and is using savings

'to finance her grand plans for this elegant building.'

We haven't talked about one thing, which is the boiler.

-It's a work of art!

-Yes!

-Something to behold.

The first time I came in here, I was amazed by it. I thought it might be a nuclear force!

We're going to have to put individual central heating units in.

-What happens to the boiler?

-Make me an offer!

I'll be round here with my transit van!

'Well, that was in March 2009, but when we returned 20 months later,

'there were no new apartments to admire. The interior was a mess.

'But that was because Stephanie was thinking big.

'She'd come up with a much larger scheme

'which meant starting from scratch. Even the lovely boiler had gone.

'She'd been working with her architects on applying for planning permission,

'but it took a lot longer than she'd hoped.'

We bought the property with planning permission for two family houses.

We applied to put on an extra floor and changed the planning permission to nine one-bed apartments,

which took us a while, but we got that about a year ago.

'So, Stephanie finally got planning permission for nine one-bed apartments

'with two on the basement level,

'two on the ground floor

'and three on the first floor.

'There'll be a new extension in the attic space,

'which will allow for the creation of another two flats.

'Her estimated budget for the whole project was around £1 million.

'Whilst waiting for planning permission,

'Stephanie decided to try her wings on the rental market

'by giving the flying freeholder flat a quick refurbishment.

'It's currently empty, but if this is a temporary makeover,

'I can't wait to see the finished product here.'

I'm really looking forward to getting to the finishing stages

and to seeing how a building which is really iconic, in my view,

can be restored to its former glory.

And then to seeing some very happy people living here.

'That was then.

'Stay with us to see how Stephanie transformed this elegant building.'

I'm in Gravesend in the northwest of Kent.

It's a busy commercial town with a good range of shops and great transports links to Dartford.

I'm here to see a lodge house today.

Lodge house, hmm! You're thinking wooden retreat,

log cabin, perhaps a fantastic hideaway in the hills.

Well, do away with those fancy ideas,

because this is the lodge house.

I've got to get in there and see if things can improve.

'Mm, definitely not the kind of lodge I was imagining.

'Guided at 175 to 185,000,

'this property was a halfway house for young people.

'Before that, it was the matron's house for the care home next door. Now, it's empty,

'and in serious need of some TLC.'

This house is quite depressing on the outside.

It's got boarded up doors and windows.

So, not a great start.

But, saying that, once you actually walk inside,

it's fairly big and bright.

It's a really nice open-plan space in here.

You've got light from that window, doors leading out to the garden.

This is an ideal dining area.

You could fit a big table and chairs in this space.

Through here is the kitchen.

'The living room is a good size, but I'd think about knocking this wall down

'to create a more open area, as it's slightly boxy in here.

'The kitchen's pretty poky too. I'd knock through here

'and create an open-plan kitchen living area to maximise this space.'

Upstairs in this property, you've got a series of bedrooms leading off this landing.

Even though this house is completely characterless,

what I do like about it is that it feels really solid.

# Solid as a rock... #

'Solid indeed. There isn't a damp patch in sight.

'The bathroom is in good order and perfectly serviceable.

'The three bedrooms are all a fair size too, which is good news, and the windows up here look new.

'There's an extra WC next to the boiler.

'There's some great potential inside this house

'that was guided between 175 and 185,000.

'But it's the generous plot outside where the real possibilities lie.'

It's rare to find a detached house on such a large plot

for such a low guide price.

The property...it's not inspiring, but the land on which it sits is.

Now, imagine if this house was demolished.

You'd have a real sizeable plot here.

Obtain planning permission to build

and this lot could be a financial winner.

# Everyone's a winner, baby That's the truth!

# That's the truth

# Making love to you is such a thrill. #

'A developer would see real potential here. You wouldn't miss this house

'if you got planning permission to demolish it and build two new ones, would you?

'With a guide price of between 175

'and 185,000, we asked a local estate agent

'what he thought of the place.'

This property is a very good size

three bedroom detached house.

I think there's minor cosmetic work that needs doing,

but, otherwise, as a whole, it would be a good buy.

'So, it's off to a good start.

'But what work is necessary?'

'The work that needs to be done to bring this up to a good standard is really minor cosmetic work.

'Bit of paintwork, and, as you go around,'

really minor work, to be honest with you.

It is as it is a good property.

'What about knocking down the house and developing the site?'

'The site is a very good size.

'As a redevelopment, I think you're more than likely better off'

extending the property rather than demolishing and rebuilding.

I think it'd stick out from the other properties around.

'So, he doesn't really agree with any grand development ideas here,

'though does think you could convert it into two flats.

'Back to basics - what could you sell it for

'if you just renovated it as it is?'

Once this property was renovated, the resale value would be about £220,000.

'What level of rental income could you get per calendar month?

Three bedroom properties are very sought after in Gravesend.

We've got a lot of people moving from London to this area.

You would be fetching around £750 plus.

The house is a good size and it doesn't require too much work.

Having said that, if you're looking to make real money on this site,

demolition and redevelopment on this site is the only way to go.

Let's see who wanted this as we go to auction.

The next one...

It's a detached modern house

for investment, occupation or possible redevelopment.

What can I be bid for this one?

Lovely opportunity. Guide at 175 to 185.

170 anywhere to start me off?

Looking for 170.

170 anywhere. Give me 160,

not going lower than 160, if you're here to bid. 160, I've got.

160 and 5.

165, 170.

170 and 5. He says no.

Got 170 sitting down on the right, looking for 175,000.

I'll take 2 if it helps.

170 on the right, looking for 172.

172 and 5.

And 5, and 7...

177 and 180.

180 and 2.

Says no. 180, sitting down on the right.

It's in the room and it will be sold.

180, and it'll be sold. For the first time at 180,

second time at 180. Sure you don't want to go another 2?

180, second time. Third and final time, 180,000,

if you're sure you're all out, 180,000,

sitting down, it's going to be sold.

180,000. Your number is?

'The successful bid of 180,000 was made by Graham

'bidding on behalf of a charity for the elderly.

'He's been finance director of the charity for three years

'and, before that, worked in the film industry

'when he ran the South Bank Studios.

'I caught up with Graham back at the house to hear his plans for it.'

Graham, congratulations. What were your reasons for wanting to buy this house at auction?

We own the property next door

which we're going to completely remodel or rebuild for elderly care.

This house basically completes the site

and enables us to put probably at least a dozen independent housing, affordable housing, units

on the site, which makes it all viable and a complete site.

So, what has this been over the last few years?

It was the matron's house that went with the care home.

But Kent County Council, when they sold us the care home,

kept this as a drop-in centre for some kind of social care,

step-up, step-down social care.

They've now decided they don't want it and that's perfect timing for us.

'There was a lot riding on getting this property,

'so, how did Graham feel on auction day?'

Very nervous! It's the first time I've ever taken part in an auction.

But you did look incredibly calm on the day.

Well, that's years of practice.

What is it that you do? Explain your job to me now.

I'm an accountant by background, but I spent 25 years in the film industry, strangely,

and then came to the charity world when I got too old

to relate to the film people.

I basically started as the director of finance

but I've now taken over as director of development as well.

What role will you play in developing this site?

The scary guy in the suit.

-You're not scary.

-The progress chaser.

I won't be directly involved. We will have a professional project management team.

They're quite a big firm of architects

who will be looking after it for us.

-Are you the man everybody has to answer to?

-Yeah.

'So, Graham is the head honcho on this project.

'What plans do his team have to bring this care home up to modern standards?'

We're in consultation with Gravesham Borough Council

to find out exactly what sort of housing they want.

We will then liaise with the housing corporation to decide whether or not

to knock it down and rebuild the whole site

or to remodel it extensively, to allow independent living units,

to put nursing capacity in there.

And also varying degrees of independence,

so we can cater for elderly people

at every stage of the rest of their lives.

'To get a clearer idea of the development, I asked Graham to talk me through the plans.'

-It certainly has got a contemporary feel to it.

-We think so.

We don't want to go traditional,

but we do want to be as eco-friendly as possible.

We're bringing in modern products - sustainable timber cladding,

plenty of trees and grass round the outside,

to keep the visual effect acceptable to all the local residents.

It does matter to us what they think.

We're not a property developer. We're not in it for profit.

We are care providers and that means caring for our environment.

'The plan is to build the accommodation units in a U shape around the courtyard.

'If the charity hadn't bought the former lodge house,

'the number of new units would've been much more limited,

'so this purchase has been a huge boon.

'How much is it all going to cost? Remember, their budget will cover development of the whole site,

'including the lodge house, care home next door, plus the land they're both on.'

At this stage, we're looking at about £4.5 million.

It'll probably take about two years to build.

We'd be targeting end of 2010 for completion.

So, if anybody goes over budget here,

you're the man in control of this! It's all down to you.

Well, yes, but as I said before, we're a not-for-profit organisation.

What we really want is the best we can produce from this site,

for the elderly of Gravesham. That's our target.

I think it's a really exciting project

and I'm so pleased it was you that got that at auction.

-I hope it goes really well for you, Graham.

-Thank you.

-It's been very nice to meet you.

-And you.

Graham has clear objectives and his cool and calm exterior

will no doubt sail him through this development.

With over £4 million in the pot,

I'm sure his team will make a huge success of this.

And what a great project to be part of -

constructing safe, secure and comfortable accommodation for the elderly.

You can find out how the build is going later on in the show.

'Coming up, this two-bed in Bury has me hunting for the bathroom.'

There, you'd expect to see a loo. It's not. It's been moved. Great.

'We head back to Kent to see if the charity's plans have come to fruition.'

Buying the house was integral to our plans. It's allowed us to develop what we've achieved.

'But, first, in Fulham, London, has Stephanie realised her vision?'

The flats look exactly as I imagined.

'Earlier in the show, we looked back to March 2009

'where, in fashionable Fulham, southwest London,

'Stephanie had bought this attractive three-storey building for £702,000.

'She owns and works in the house next door,

'where she runs her own marketing business.

'Stephanie had her sights on this building for 13 years.

'Although it looked grand on the outside,

'inside was a different story,

'with six very uninspiring flats.

'There was planning permission to turn them back into two houses,

'but Stephanie had bigger ideas - to develop nine apartments.

'When we first returned,

'the interior was nothing but a gutted shell,

'but Stephanie had got planning permission for her development and the excitement was plain to see.'

I'm really looking forward to getting towards the finishing stages,

to seeing how a building which is really iconic

can be restored to its former glory.

And then to seeing some very happy people living here.

'Well, that was 11 months ago.

'We returned to Fulham to see if Stephanie's 13-year dream

'for this building had finally come true.

'The freshly-pointed exterior

'has recaptured the elegance of this building.

'Let's hope it's the same for the interior.'

'Well, this is impressive.

'Very impressive indeed.

'From an empty shell, Stephanie has created nine new flats,

'top to bottom.

'Each just one bed, but all smart, contemporary and stylish.

'With the same attention to decor and styling,

'they're definitely going to appeal to the fashionable set of Fulham.

'Up at the top are the most attractive of all.'

These are two new flats.

A mansard roof extension, flats eight and nine, both fairly sizeable.

An open-plan kitchen, as per the other units, and the bathroom with the Italian sanitary ware.

This one's gone under offer in the last couple of days.

'Good news for Stephanie there.

'The loft flats also have balconies -

'a small one at the front, offering views of Fulham,

'and another at the rear.

'Also getting a taste of the London air are the two basement flats.'

This is one of the original lower ground floor units.

This is one I'm particularly pleased with.

It's got this conservatory finish, the open-plan kitchen

and real wow feature of the garden with bi-fold doors opening into it.

'Expanding the lower ground floor flats has eaten into the garden area

'but once the work's finished, these outdoor spaces will be a bonus

'because while the two lower ground floor flats

'and the two loft apartments are a good size,

'the remaining five properties are more compact.

'They all have an open-plan kitchen living area.

'While the two ground floor flats mirror each other,

'one benefits from a small balcony.

'On the first floor, the original flying freehold flat

'has been transformed with the addition of a balcony.

'With nine apartments in all, some still needing finishing off,

'Stephanie has almost realised her dream.'

The flats look exactly as I had imagined they would.

I think the kitchens and bathrooms are a real wow factor.

The balconies look terrific. The building's been restored to its former glory, so I'm very happy.

'And it's not just the look she's happy with.

'It seems the loft flat that was under offer was just the start!'

Yep, we have already got five flats either sold or under offer,

so that's great news as we're only just finishing at the moment.

So, yes, it's gone very much to plan.

'I love it when a plan comes together.

'It's taken much longer than the six months Stephanie anticipated,

'but the plan evolved and the 2½ year wait has been worthwhile.'

It's been a real labour of love. I've wanted to do it a long time.

I've learnt a lot in the process, not begrudgingly.

It's been a terrific piece of work to do.

'With five of the nine flats already under offer,

'it looks like this investment is already starting to pay for itself.

'But, for such a big renovation,

'how did her forecast for a £1 million spend hold out?'

The budget has gone pretty well.

It slipped a little over the original budget of a million,

but not in too bad a way.

Of course, the market has gone up in the intervening period,

so, actually, the whole profit looks quite good.

'Stephanie originally bought the building

'for £702,000, so her outlay could be just over 1.7 million.

'We asked two local estate agents

'what they thought of her big investment.'

'I think the whole project that has happened is fantastic.'

The property was obviously in pretty poor repair,

it needed a lot of work.

They've refurbished it to a very good standard.

'I think this building has been an amazing find.'

'The project is a really sweet development.'

The saying is location, location, location

and you can't get better than this.

They've been clever in the way they've incorporated outside space in the upper units.

That balcony will add a great amount of value.

The light they've created downstairs is also good, with the garden.

'The whole building itself fits in perfectly with the area.'

The buyers love this type of building.

The property itself, they've retained the character people are looking for and the feel of it.

The amount of time it's taken to do the project has worked in her favour.

If we were marketing these a year and a half ago,

we would've seen significant over-values.

Due to confidence in property against the stock market, she's caught the timing right.

'It seems like a big thumbs-up from the estate agents.

'But will Stephanie get the return she's after?

'She spent over £1.7 million on four large one-bedroom apartments

'and five smaller one-beds.

'So, what could she achieve here?'

The larger properties, I could see fetching £350,000 to £375,000.

For the smaller units, I would put them in the range of £275,000 to £300,000.

If I were to market these flats, I know I have buyers

that would buy these for about £300,000 for the smaller ones.

For the larger ones, I could see buyers paying £420,000, maybe £430,000.

I think your second agent is spot-on.

We're selling for a minimum of 300 and 420 to 440 as our top price.

So, yeah, that's spot-on, that second valuation.

'Wow! If Stephanie can get the figure she says for all nine flats,

'she could turn over a staggering £3.6 million to £3.7 million!

'That's a potential gross profit of £1.9 million to £2 million,

'minus the usual taxes, fees and expenses. Phew!'

'Although it wasn't planned, riding the dip in the London property market

'has worked to Stephanie's advantage

'and will hopefully secure her some pretty serious returns

'on this big investment. But she doesn't plan to stop there.'

We've put in a tender for a much larger development in the same area.

I don't know whether we'll get it,

but that would be six houses and 15 apartments,

so significantly bigger. We're thinking big.

'Thinking big can lead to bigger rewards, as Stephanie has seen on this project.

'I wish her all the best.'

'I'm in Bury, Lancashire, smack in the middle of England's Northwest.

'There are great transport links into Manchester city centre, with many commuting daily.

'But there's plenty going on in Bury to keep people right here.'

Bury town centre is currently undergoing a £350 million rejuvenation programme

with new shops and all sorts of things.

So, is this the place to buy? Well, it could be.

This is the property that's up for auction at a guide price of £50,000 to £55,000,

two-bed, mid terrace. Let's take a look inside.

# Got a lust for life

# Got a lust for life... #

'First impressions of the exterior are favourable,

'with lovely railings and brickwork.

'In fact, the whole terrace looks in pretty good nick.

'Let's hope it's not hiding a multitude of sins inside.'

What have we got?

A fairly standard layout so far, as far as I can see.

I'd like to see that enclosed,

a little porch is a lovely thing. It keeps the draught and the cold out.

Put a door on there, perhaps. Apart from that, decent size lounge.

At some stage, it's had an open fire. That's gone.

It's been replaced by a lovely bit of Artex-ing(!)

Replace that, I think.

'Getting rid of that Artex is an absolute must

'and, if you had the inclination, why not open up the fireplace?

'It would give the room a lovely focal point.'

Through to the kitchen and, well, it looks a lot worse cos it doesn't have anything on the floor.

I'm sure if you put tiles down here and cleaned these units up,

it would be OK. I mean, not ideal,

but if you're going to rent it out, you make do and mend.

One of the good things - there, you'd have expected to see a loo.

It's not. It's been moved. Great.

'Terraced houses like this originally had outside loos,

'but around the 1970s, they started to be moved inside.

'Back then, the trend was to put it in a ground floor extension, off the back of the kitchen.

'But it looks like the bathroom here has been and gone,

'leaving a great space for a utility or dining room.

'Fingers crossed that means the bathroom's upstairs.'

This is a fairly classic layout.

Stairs in the middle of the house, and what was originally a bedroom one side and a bedroom the other.

What do you do to get over the issue of the downstairs bathroom?

You want to move it upstairs. How do you do it?

I think they've come up with a good solution.

They've converted part of the bedroom into the bathroom,

then they've created this... a stud partition wall.

A small corridor, which leads down to the second bedroom.

This is the most effective way of getting your bathroom upstairs,

but retaining your two bedrooms.

'OK, so this bashed-up suite is beyond redemption,

'but at least the bathroom's upstairs,

'the plumbing's sorted and it's already partitioned.

'A big saving on your renovation budget for starters.

'Something else that may need attention is the ceiling.

'A spot of damp is visible in both bedrooms,

'so some roof work will be needed.

'At a guide price of between £50,000 and £55,000

'we asked a local estate agent to give us his thoughts on the place.'

'It's a very popular location, all your amenities on your doorstep.'

Quite a lot of work to be done, full scheme renovation.

There's a few signs of damp.

New kitchen, new bathroom, a full re-plaster.

A few of the windows, you could possibly get away with a clean,

but there's quite a bit of work to be done.

'Is it an advantage, having the bathroom upstairs?'

'The fact it's upstairs, they have sacrificed some bedroom space,'

but it's a good sacrifice to make.

'Is there demand for rental in this area?'

There's a great demand in the area. Two bedroom terraces are popular

and you'd look to achieve around about £425 per calendar month.

'Once refurbished, what could it sell for?'

Done up to a good standard, you'd be looking to achieve around £85,000.

So, a nice enough little property.

What do you think?

Do it up, spend a bit of money on the kitchen and bathroom,

and it'd be ideal for rental or a place to live.

Let's see who spotted it at the auction.

Vacant two bedroom terraced property, guide £50,000 to £55,000.

Start this one at 55.

55,000. Anywhere at... 55 bid, thank you.

55... Sorry, 50, I have, tell a lie.

50,000.

Your bid, 50,000. Do I see 51?

51, 52?

52.

51,500?

51,500. 52?

52,500? At 52,000, then.

At 52. 52,500 now.

53.

53, 53,500?

At 53,000, seated. It's going to be sold at 53,000.

53,500

53,500. Your turn, 54?

54,000. 54,500?

At 54,000, seated, for the first time.

At 54,000, then, for the second time, are we all done?

54,500. 55? 55.

55,500?

55,500. 56, 56,500?

56,500. 57?

57. 57,500?

No. At 57,000, then, for the first time.

At 57,000 for the second and final time, are we all done at 57,000?

At £57,000.

'It was Mohammed who got the property for 57,000.

'He was at the auction with a friend, who did the bidding.

'Mohammed owns a takeaway business and works as an area manager for a security company,

'but has always hankered at trying his hand at property developing.'

-Mohammed, lovely to meet you.

-Hi.

-Congratulations.

-Thank you.

-Tell me why you wanted to buy this place.

-It's my ambition,

to renovate a property,

then, once I'm satisfied, try to sell it or rent it

and see what is more worth.

'This is his second property purchase.

'He currently lives in the first house he bought and renovated,

'but this is his first investment project.'

It was just a hobby, you can say,

you know, hobby, plus profession.

So, do you see yourself as a property developer?

Student of property development.

THEY LAUGH

It's a big field and you can't say you are anything and you have to keep learning.

You can't learn without experience.

Once you have experience, you can say either you done well or you learnt wrong.

You need to have a start and this is going to be mine.

So, why this place, then? Why did you choose this one?

I have my place roughly two miles away.

If I come back from my work at six or seven,

still I can come over here for an hour or something

and see what I can do here.

I came here before buying this property, I looked around,

not inside, outside.

So you hadn't seen it inside before you bought it?

Not properly, but...

I had a little idea.

What do you think, now you've seen it?

It's more work than I suppose it will be.

Trust me, I've seen much worse.

I really have seen a lot worse.

'Mohammed got off lightly here, though he may not think it.

'But not viewing beforehand isn't the best way to start a property developing career.

'Mind you, he's no stranger to the auction room.

'Over the past years, he's been to quite a few.'

-22nd auction where I've been.

-Huh?

-This is the first time I've bought something.

-You've been 22 times before and not bought?

-No.

-Just looking or went over your prices?

-Prices,

looking, getting an idea and all this.

What are you going to do with it?

What actually I want to do is I will try to do bits and pieces

which I can do myself actually.

Like the walls and all this stuff,

which is quite easy.

Obviously not, like, roofing and all that stuff.

I have to hire a builder or something. But, renovation,

I will be more than happy to do myself.

I want to remove the chimney and all this stuff.

That's a big job.

Yeah, it will be a big job.

So, OK, any idea how much it's going to cost to do the work?

When I came first time, I was thinking it will be roughly 15 to 18.

But, now, it can go from 16 to 20.

Thousand pounds?

Actually, at the moment, I'm not sure what the roof will be.

If you see the upstairs,

you can easily see there's water coming from the roof.

So, first of all, the roof needs to be fixed.

You don't have any water on your head.

'Mohammed's right to prioritise fixing the roof.

'He also plans a new bathroom and kitchen, so £16,000 to £20,000 should cover that.

'He's been realistic with his timescale too.

'Because it's his first renovation, he's giving himself six months.'

And, if this is successful?

If it's successful, I'll go for another one,

cos I will learn from this place.

Obviously the next time, I'll go with a lot of experience,

with more things I can do better and stuff like that.

Listen, congratulations, well done.

-We look forward to seeing how you get on.

-Thanks a lot.

-Thank you.

Well, Mohammed broke, of course, the cardinal rule.

He didn't see the property before he bought it.

As a result, there's more work needed than he anticipated.

I don't think it's too bad

and as long as he keeps a tight rein on his budget, there's still money to be made.

Find out how he gets on later in the show.

It's been a while now since we last saw those purchasers.

Have they been busy bees?

Or have they been stung and the projects ground to a halt?

Let's go back and find out.

'Time to head back to Gravesend in Kent,

'where earlier we met finance director, Graham,

'who worked for an elderly care charity,

'who'd bought this detached property

'and its sizeable plot for £180,000 at auction.

'The site was ripe for redevelopment

'and that's exactly what the non-profit charity intended to do.'

What were your reasons for buying this house at auction?

We own the property next door, which we're going to completely remodel

or rebuild for elderly care.

This house completes the site

and enables us to put probably at least a dozen independent housing,

affordable housing units on the site,

which makes it all more viable and a complete site.

'There were big bucks involved in this redevelopment,

'with a proposed 4.5 million needed for the work.

'With a timescale of two years, this project depended on getting funding

'and planning before anything could start.

'The heat's been on, but three and a half years later,

'I can't wait to see how things have progressed.

'Wow! The site is unrecognisable.

'The former care home and house have been demolished and, in their place,

'there's a whole complex of apartments.

'Since Graham's now left to work elsewhere,

'it's down to Ian, the charity's director of property,

'to explain what looks like an ambitious change of plan.'

You may notice we've demolished the house we bought from the auction.

And we've built 56 apartments for older people,

obviously not all on the site of the three bedroom house,

but it's obviously quite a transformation

and buying the house was integral to our plans,

cos it's allowed us to develop what we've achieved here.

'It certainly looks very welcoming from the outside.

'Let's go inside and take a look around.'

We've built 56 apartments.

There are 42 one bedroom apartments and 14 two bedroom apartments.

The one bedroom apartments are designed for two people,

so they're suitable for a couple. Each flat, even the one-beds,

have a separate bedroom, lounge, bathroom and kitchen.

They meet the modern standards for older people's independent living.

'Independent living is a key factor in the complex.

'But it's hand-in-hand with 24/7 support, care

'and companionship and a secure building.

'It's all been carefully designed with its future residents in mind.'

We're standing in one of our standard, two bedroom apartments.

This is the kitchen, lounge, dining area.

It's fairly spacious.

It's been designed with a furniture layout

to make sure you can get all the furniture you need in here and still access everywhere in a wheelchair.

The kitchen is fully fitted out

and we've made it very easy to change the units if we need to.

We've got fittings in here, such as this advanced warden call system,

which has lots of different attachments we can put onto it to meet people's needs.

'But don't think of this place as a standard care home.

'There are still quite a few surprises.

'Anyone for a haircut?'

We've got a hairdresser's, an on-site kitchen, a restaurant,

shop, there's a health suite.

There are smaller lounges around the building, so that residents

don't have to come down into the central area,

they can chat to friends and meet them on the floor they live in.

'I'm sure these areas will nurture a real sense of community here.

'It all seems much bigger than originally planned!'

Originally, we were going to build a slightly smaller unit for each flat.

We've increased the size of each unit,

so now I think you'll find there are eight apartments on the site of the old house.

It also allowed us to make the courtyard wider.

We squeezed another two apartments over the central lounge areas.

We've achieved ten extra, probably, through purchasing the house.

'The timescale of this development was originally two years,

'but raising finance for the new plans during the economic downturn,

'plus some very bad weather, all held the building back.

'However, once the building started, it took 18 months from demolition

'to completion.

'What impact has the bigger plan had on the original 4.5 million budget?'

The building contract value was about £6.6 million.

The overall spend as a development for us is about £8.3 million,

including land purchase, fees, financing costs.

'The flats will be let out at affordable rents to elderly tenants

'on a local council waiting list.

'The overall spend here is a whopping 8.3 million.

'It'll be interesting to hear what two local estate agents

'make of this exciting development.'

All of the room sizes are well apportioned.

Good sizes. All retirement homes do have communal areas.

Here, it's been well apportioned and the quality is there to see.

'The reality is, the market is poor on residential and commercial property,

'basically down to the lack of lending.'

The beauty about retirement homes is, quite often, lending's not required.

The communal areas in this building have been spaced out quite nicely, so everybody's got their own area.

The rooms have been decorated so they have a nice, homely feel.

I've had a look around. It's very spacious, neutral decor

and the kitchen is very well equipped.

'If we were to treat this as a normal flat, what kind of rental could it earn?'

If we treated this flat as a normal residential rental,

we would expect to achieve around the £600 per consecutive month mark

for a one bedroom apartment.

For a two bedroom apartment,

we would expect to achieve £725 per consecutive month.

The rental price for a new build in Gravesend, which would carry a premium, because it's new build,

would be £525 per calendar month.

The two bedrooms, £675 per calendar month.

Obviously delighted with those, cos they're a lot more than we charge.

Obviously, being a charity, our rents are set a lot lower than that.

Delighted that they've achieved a good market rate.

'What about resale?'

The one bedroom price for a retirement home locally

would be £215,000.

For a two bedroom, it would be £235,000.

For a one bedroom, around the £220,000 mark.

For the two bedrooms, we'd be looking at £235,000.

I'm absolutely delighted.

They're much better than we estimated before we started the development.

Absolutely fantastic the charity has such a great asset.

'What if the whole development was for sale? What could it be sold for?

'Remember the total investment here is 8.3 million.'

If they were considering selling the whole complex as a business,

I think they would achieve around the £12-13 million mark.

The price for the sale of the whole development - £12.5 million.

Again, it just proves what a good development it was, worth the effort.

It's just great they're low cost, affordable rent, but it's nice to know we invested our money wisely.

'The charity has really done itself proud here.

'They've potentially added value of between 3.7 and 4.7 million.

'to a site that's been completely transformed for the better in three and a half years.

'How does Ian think the project has gone?'

It's been a good process.

It's our first major development for many years.

We're delighted the people of Gravesend who couldn't afford to buy

this sort of accommodation can have access to it.

It's a flagship project for us and a blueprint for the future.

'Back to Bury in the northwest of England where we met Mohammed,

'who bought this house at auction for £57,000.

'He runs his own takeaway business and works for a security firm,

'but has always been interested in property developing.

'This was his first investment purchase.'

-Do you see yourself as a property developer?

-Student of property development.

THEY LAUGH

It's a big field and you can't say you are anything and you have to keep learning.

You can't learn without experience.

Once you have experience, either you done well or you learnt wrong.

You need to have a start and this is going to be my start.

'Worryingly, Mohammed bought this place without seeing it inside first,

'as he didn't get time to see it before the auction.

'When he got in, he discovered how much work it needed,

'but this didn't put him off

'as he planned to do some of it himself on a budget of £16,000 to 20,000.

'We returned six months later

'to see if Mohammed has managed to fix this place.'

It was nothing here. And we put each and every bit and pieces here,

like all the shelves,

all the cupboards, worktop, sink. We hired a professional and he did it.

'Out the back, well, it's not changed that much.

'The ground floor extension off the rear of the kitchen

'is now used as a storage area for building supplies,

'so, no utility area yet.

'Upstairs, a new bathroom's been installed

'and is starting to take shape.

'But there's still a lot of work to do here.

'As for the bedrooms,

'those cracks in the walls have been repaired and painted

'and new floorboards and carpets laid.

'Mohammed currently has house guests staying in the property while he finishes it off.

'Did he run into any problems during the renovation?'

There were a lot of difficulties, so we hired some people.

Then we hired a professional as well.

Slowly and slowly, it's almost done.

Almost 90% of the work is done.

I'm not in a rush. I want to complete everything.

It's always good to do full work, before to rent out.

'Mohammed did some of the easy jobs himself to help save the costs.

'But for everything else, he hired tradesmen.

'What is there left to do?'

Still a few bits and pieces. Toilet needs to be tidied up,

tiled up and all that.

'His original budget was between £16,000 and £20,000.

'Has he been a spendthrift or has he been on a spending spree?'

There's no ending for the spending.

But hopefully around 20.

'£20,000 does seem rather a lot for a renovation on this scale.

'Adding that to the purchase price of 57,000

brings the total outlay to 77,000.

Do two local estate agents

think it's money well spent?

First impressions - good rental property.

It does want a bit of work on the edges. Bathroom, kitchen,

little bit dated.

But rental prospect, very good.

If it's going for sale, I'd put a new kitchen in it, new bathroom,

bit of decorating,

tidy it up and it might sell quite well.

You can clearly see there's been some subtle improvements.

But I don't think enough to warrant an increase in price.

By the looks of it, there's perhaps been some minor decoration,

but, in reality, the things that counted -

central heating, kitchen, bathroom -

I don't think have been done to the extent they should've been for a profit.

'Let's get down to figures. What kind of rental could you expect?'

A property like this, in good condition, you could achieve in the region of £400 per calendar month.

In the current condition,

you'd look to achieve £400 to £420 per calendar month.

Lovely!

Yeah, fantastic.

'Those rentals would give a tidy yield of around 6% to 6.5%.

'That beats the banks hands down.

'But what about the property's resale value?

'Remember, total outlay here is around 77,000.'

To put the property on the market in its current condition,

I would recommend asking £65,000, with a view to achieving £60,000.

In its current condition,

I'd expect it to be selling for in the region of £60,000.

'A resale value of £60,000 means Mohammed would make a loss

'on his first investment project of £17,000.

'So, there's no money to be made if he sells it in its current condition.

'But all is not lost.'

It's a good rental property, so I'd expect put it on the market to rent,

put a tenant in it for a few years, then reap its capital value later.

'Wise words. It's a trend we've become very familiar with

'on Homes Under The Hammer, due to the current financial climate.

'I think Mohammed has learned some valuable lessons on his first investment,

'but will this be his last auction purchase?'

I'll go back to the auction again and I will try to have a go again.

This is the first try. I'll go for the next one as well.

But not too soon!

That's it for now. We'll be back next time with more action from the auction.

Will the buyers make huge profits or a loss? Will you be jealous or relieved?

-Find out next time on Homes Under The Hammer.

-See you then.

-Goodbye.

-Goodbye.

Subtitles by Red Bee Media Ltd