Episode 96 Homes Under the Hammer

With the property market more uncertain than before, everybody has to make their own decisions -

-do your research and trust your instincts.

-One way to gauge the market is to see for yourself

and one way to do that is to visit your local auction.

There's a huge amount of property up for auction. Thousands of lots go up for sale every month

-all around the country.

-So why not nip down to your local auction house and see what is on offer.

Meanwhile, here are our properties today.

I'm in scenic Devon where this tired timber cottage sits on a site to die for.

Your eye is drawn straight away to that!

This basement flat in London makes me look on the bright side.

It's not dark, it's not dingy. I think it's going to be a good one.

And in Sunderland, sometimes words fail me about the potential of a property, but not this time.

It's a whoopy-do, dog-tail-wagging, ker-ching investment!

All three went to auction. We found out who bought them and for how much

-when they went under the hammer.

-Sir, yours. Best of luck.

I'm in the beautiful county of Devon on the edge of Dartmoor National Park in an area called Lee Moor.

There are wonderful views down to Plymouth Sound. This area is also known for its china clay industry,

a material used in ceramics and paper.

So you never know, part of your bathroom suite or even your walls could have started down here.

I'm in a village with a rather unusual name. It's called Wotter.

I suppose you expect I'll get some cheap jokes out of that,

such as Wotter lot of property for the money or Wotter we going to see, but of course I'm not.

I'm here to see a property, which by virtue of its description in the auction catalogue

has me intrigued already.

'The catalogue described this lot as appealing to people who want to build a grand design replacement

'to take full advantage of the location and outlook.

'It has a guide price of £90,000-£110,000.'

Well, not the best of first impressions. Through the front door and what was the original kitchen,

that's all been removed. You've got a loo and a separate bathroom.

And through into the main living area. Open fire, that's good.

But the moment you walk in, your eye is drawn straight away to that.

And I mean - wow! What an incredible view.

All the way out to Plymouth Sound.

All the time I've been doing the show, I have never seen a house

with such a spectacular, spectacular view.

# Wow, wow, wow, wow You got it

# Wow, wow, wow, wow... #

The scenery takes your breath away and so does the rest of the house, but not in such a good way.

Clearly, the stripping back has begun, but it looks like whoever started has thrown in the towel,

probably overwhelmed by the scale of the task.

Seeing the property in this state really does help you appreciate the size of the job.

Outside, with the sun glinting on the sea, you could easily be distracted,

but there's no getting away from the fact that it needs serious repair work and you won't get a mortgage

on a house of this construction. However, it's in a prime spot,

and I think the real potential lies not in the house itself, but in the plot and its surroundings.

Let's be honest. The likelihood is you are going to knock that down.

The good news is that the lot comes with a quarter of an acre, approximately, of land.

This is it here. It slopes up somewhat,

but I'm thinking why don't we use this land to build an entirely new property here?

Obviously, you need planning permission, but I don't think restoring that is a starter.

And the potential may be to dig in to this bit of ground here and put your house of dreams with that view.

Oh, no, it's getting great!

# Wow, wow, wow You got it... #

It certainly is a great opportunity. To find out more,

we invited the auctioneer who sold it to give us his opinion on this house and its guide price

of £90,000-£110,000.

The potential for the plot and it is a plot

is to create something that takes advantage of the view. It's a dream sheet of white paper.

As far as planning is concerned,

Dartmoor National Park is, happily, just over there.

They have tighter controls,

quite rightly, for the Park.

Here is a slightly better local authority as far as giving you a chance of a dream, special home.

Bearing in mind the local market, what does he think a dream home built here might be worth?

A high-quality contemporary bungalow built on this spot could fetch as much as £400,000.

Let's face it, on a scale of 0 to 10, the property itself wouldn't score very highly.

But the location, well, from my point of view that gets an 11 and all it needs

is an adventurous soul to come along here and build a property fitting of this incredible spot.

Let's find out who bought it when it went under the hammer.

It is a single-storey, three-bedroom bungalow. A wonderful opportunity.

Lovely view. I'll risk the top of the guide

and say I'm not starting at less than 110. Thank you.

At...112. 112.

114. 116.

118.

120. 122.

124. 126. 128.

130. 132. Would you go to 133?

Are you sure? OK. At 132...

Four in the background. 134. 134. You're in?

134. Five if it will help you. 134 stood at the back. And 134 and a half there.

135, straight back. 135 and a half. 136.

At 136...and a half. 137.

At 137 and a half. 138.

138 and a half. 139.

139 and a half. 140. 140.

140, once. 140, twice. Good sign. They're leaving the room.

OK! At 140, once. 140, twice.

Here we go. At 140. Gentleman in the back of the room has got it at 140. Congratulations.

Eager for the hammer to fall on that bid for £140,000 was electrician Ryan.

He lives in nearby Plymouth with his wife Sarah and their three children.

This purchase represents something of a homecoming for him. I met Ryan to find out his plans.

Good to meet you. Congratulations. I'm very jealous. Amazing location.

It is. It's a lovely plot and we're really pleased with our purchase.

-So why did you want to buy it?

-Basically, we needed a project.

I finished the house I live in. I've converted the loft and various things and got itchy feet now.

-I needed a bigger project. This is it.

-Do you know the area?

-Yeah. I actually come from this village.

I lived in a cottage just up the road, so I know it very well.

I had a bit of local knowledge that it was a good plot.

So for Ryan it's a case of going back to his roots to build a brand-new home for his family.

# Going back to my roots Yeah... #

-What would you like to build?

-I think only a bungalow. There's restrictions on planning.

So a bungalow of some description.

Do you have any ideas at this stage for preliminary plans?

My wife's a building surveyor so she'll do all the drawings.

She's onto that. Not really my department. She's doing all that.

We'll hopefully move the house back slightly to keep the gardens on the south side.

This is pretty much to the front of the plot and that will enable us to live in this while we build it.

-Ah!

-It'd be a nice little rent saver.

-So, in fact, the new property wouldn't share the footprint of this one at all?

-Hopefully not.

This one's really in the wrong part of the plot. We'd like to move it back and have the garden and patios

-on this side.

-Right. They might be funny about that.

They might well not let us, in which case we'll knock it down and build on.

-How will you maximise the views?

-Because of the height restrictions, because of the bungalow,

we're not going to be able to elevate. We'll hopefully go into the loft space,

but I don't think they'll permit dormer construction so it'll just be Velux windows.

Hopefully, it'll be a nice view. But the view is one of the pulling points. It's just stunning.

-What about down on the ground floor?

-We'll have a lot of glass on the back, bi-fold doors,

going right through the back of it out onto patio areas.

-And the idea is to live in it?

-If we can get permission to build something really nice,

we'll stay for sure. If we don't, then maybe we will build it and move on. Not 100% sure yet.

# I'm homeward bound Got my head turned around... #

Extending the existing footprint to the property will be less straightforward from a planning view

but it could be well worth the hassle for the views

and Ryan certainly brings some handy skills to the table.

Tell me a bit more about you.

-I'm an electrician.

-Oh, great.

-I've got my own business. Even in the recession, I'm busy.

So you could do all the electrics on the new place.

Yeah, most things, plastering. As soon as it's up and watertight,

I'll be on my own then to do the rest of the project,

but I've got good friends - builders, carpenters. They'll all muck in and give me a hand.

What about this existing bungalow, then?

What'll you do with this? Are you just going to make it habitable?

Temporarily, I'll make it habitable. I'm going to locate a kitchen in a back bedroom.

Just generally paint right through. New carpets, put a shower in, tile that,

and just get it liveable.

Even if they make us knock it down, what we save in rent - to rent a house is £800 a month -

so what I spend I'll get back while the planning goes through.

So what's the best case and worst case scenario for the time?

Worst case, I would say 18 months to build it. I'll do a lot myself. But it could be done in 12 months.

-What budget have you got?

-We're hoping to build the property for under 100.

£100,000, somewhere around there.

That's with me doing a lot of the labour. That's basically the budget.

If you do get to build something you're proud of, is that it? Are you going to stay here?

I think we might. If we adjust to living in the country and the wife likes living up here,

then we'll probably stay for the right property.

-Good luck with it all. Congratulations. You've got a great plot. Amazing.

-Thanks a lot.

Well, what a great result for Ryan.

Not only has he got a superb bit of land and a usable building,

but it's in the village where he grew up. I'm sure his family will be delighted to return here.

Still, there is a year to a year and a half's worth of work to get this place sorted out

or to get rid of this place and put something suitable in its place.

Find out how he gets on with the planning and everything else later.

This is vibrant Hackney in East London. Hackney has had its fair share of ups and downs,

but right now there's a lot going on here in the run up to the Olympics

with much promise of better transport links, job opportunities and a boost for arts and culture.

It really is a one-off opportunity for this borough to shine for sure.

# I got a souvenir in London... #

One of the major boosts to this ever-popular part of London

will be that it is properly linked to the Tube network for the first time by the East London Line.

That's being extended to carry passengers to the Olympics just up the road.

With all these developments, Hackney's got it, or is getting it.

I'm here to see this lower ground floor flat. It's got a guide price of £210,000.

It's got its own entrance, which I love, and is part of this four-storey mid-terrace.

Unusually, it's got its own back garden. Possibly with potential for an extension? Let's take a look.

The flat's on quite a busy road, which will not appeal to everyone,

but the promise of a garden and a fair amount of space for a London flat does appeal.

Well, THIS is a hallway! I love it! Huge amounts of space,

although it is covered in woodchip wallpaper. There's just a vast area here that is wasted.

This is a London property. You could fit another bathroom in!

You've got a bathroom here, but you could probably change the layout.

We go into this really big room, probably used as a sitting room.

Not ideal with the boiler here. I'd stick it in the kitchen.

But you've got this beautiful bay window. These old shutters, once restored, could look fantastic.

Something I'm noticing is that I'm sort of falling backwards.

You can see this floor is definitely on the slant.

Maybe that's because... that's the culprit.

A great big crack running right the way through this wall.

I'd contact a structural engineer and get that checked out.

Dare I say the word subsidence? Whoever bids for this needs to know that structurally it is sound.

But with that said,

I really like this little flat.

It's not dark, it's not dingy. I think it's going to be a good one.

It's great. Lots of space, so plenty of potential.

Assuming there's no subsidence, I'd think about changing round some of these walls to add a bathroom

and make that bedroom bigger.

I think it's safe to say that this flat has an awful lot of square footage in its favour.

A good-sized kitchen space, although this is for the tip!

And a really nice lounge area. I think it could do with changing it all, rejuggling it,

but you've got a good space, lots of light from the garden.

I'm just wondering if you could have an extension out there, some lovely doors leading out to that garden.

I'm going to go and check it out.

At the moment, access to the back garden is through what I would call the back bedroom.

And what do I find there? Well, this garden needs to be attacked by some shears

and a lawn mower. And then you'll see a pretty little walled garden.

Get this old thing knocked down. You've got quite a lot of space.

I think a tiny little extension would really benefit this property.

You may even get that within permitted development, so you might not need planning permission.

But it's worth checking out with your local council. But this space is a real golden nugget.

# In the jungle, the mighty jungle The lion sleeps tonight... #

Lovely flat, good-sized garden, potential to change it around a bit

and all for that guide price of £210,000. In Hackney! We asked a local estate agent along

to hear his opinion on this Hackney hideaway.

The property's a bit different.

It needs some refurbishment throughout and some structural attention, by the looks of it.

But ultimately it's the sort of property that a lot of people would take pleasure in restoring

-to make a lovely family home.

-Assuming no structural problems,

what would he expect to get for this flat as a rental?

We'd be looking at around about £1,300 per calendar month, rental.

Not bad at all. What about sales figures?

In my opinion, once this property is renovated, it should be looking at around about £300,000

to £320,000.

This flat has space on its side. Even though it's ground floor, it's got light.

It's in an area that can only go one way and that is up. With some layout changes and an extension,

you could have a spectacular flat with this enormous garden.

But I'd still investigate that structural crack. Let's go to auction and see who fancied it.

So Lot 13, good-sized flat, plus you've got a garden.

I don't know. 200,000?

It's worth that all day long. Thank you. 200. 205?

205 anywhere?

205. 210.

210. 215.

220?

216. 217.

-218.

-This lot was proving popular with something of a bidding battle ensuing.

We rejoin the bidding at £240,000 - 30 grand over the initial guide price.

240.

241.

242. 243.

244? Yeah? 245.

246?

247. 248?

247, standing up. First time.

Second time. Third and last time. Have you all done?

Sold, 247.

With her successful bid of £247,000, it was a clearly delighted Natalie.

Well done, congratulations.

She was at the auction with her friends and property finders, both called Phil.

I met with Natalie and one of the Phils back at the flat to find out her plans.

Natalie and Phil, congratulations. Now, Natalie, tell me about auction day.

I'd never done this before. I had no idea what to expect,

so the other Phil, who has been working with us on this, offered to bid on my behalf.

So he was bidding and I was standing tensely next to him. He waited right until the end

to jump in. I was like, "You're losing it! Get in there!"

-But it was fine.

-So you were there with Phil and the other Phil.

-Yeah.

-So what's your relationship?

-They're property finders.

They found the property for me. Also they'll be project managing the whole development of this property.

-So you left it all to the other Phil to bid on auction day.

-Yes.

-Were you happy with the price?

-Yes.

I loved this flat so I was prepared to pay way more than I'd been advised!

So I was really happy with it. It was the price I'd been given, around about what I should pay.

-But I was prepared to...

-She was prepared to go significantly over our recommended price!

# I would give everything I own... #

So Natalie was determined to get this place and she's clearly enthusiastic about it.

Huge garden, exactly the area I wanted. I'd say I was over the moon.

So you've a good idea of what you want. What is your vision for it?

Em, I'm hoping to move in in a couple of years once it's rented, so it really is my flat.

So I wanted two beds and we'll extend at the back

to make the centre area slightly bigger

with a nice-sized main bathroom.

-So you'll be doing building work.

-Yeah.

-Have you thought about planning permission

-or is it permitted development?

-The distance we want to move out will be the permitted distance,

so the only thing we might need planning permission for is changing to the French doors

and whether we change materials. Permitted development only works if we use wood.

If we were to use uPVC, which is slightly more efficient, we'd need planning permission.

Buying at auction is not for the faint-hearted. Who did the research, read the legal pack...or not?

-The lawyers read the legal pack and sent the report.

-So have any issues cropped up?

Em, getting the mortgage has been a bit prolonged, getting all the right bank statements across.

But it seems to be going well and there's a possibility they'll do some major works, the freeholder,

which will make the building last a lot longer. It may add some cost.

The costs of this communal work were unforeseen and will need to be paid upfront by Natalie

or added to the monthly service charge. Will this impact on the budget?

What's your budget to do the work for your flat, the internal work?

-With the extension at the back, it'll be £40,000.

-Can she do it on that, do you think?

-Comfortably.

-Really?

-We expect to save money on that.

-I did notice a huge crack.

-Has there been any structural movement? Did you get it surveyed?

-We did.

He came round with us about a week before the auction.

He says possibly the end wall wasn't properly built to support the lintel

but he says put up some props, knock the wall down, rebuild it. A day's work for a builder.

-We're not talking subsidence?

-No.

-So there's no huge worry?

-Definitely not.

-How much do you think it'll be worth once you've renovated it?

-We think, without the extension, about 350.

With the extension, probably up to 420, £400,000.

How long will it take your guys to get in and knock the work out?

Building time will be about six weeks. Then maybe six weeks waiting for planning permission first.

-So 3-4 months.

-Well, I'm very excited to see what happens here and what this will look like.

I can imagine it will be a fabulous pad. Guys, good luck with the build. Great meeting you both.

-Thank you very much.

-Pleasure.

-Thank you.

Phil promises to turn this Hackney flat into something special.

I am worried about that budget, although Nat seems to be calm and have full faith in their expertise.

Join us later to find out what happens.

Coming up: in Sunderland, this two-bed end of terrace is certainly not large.

It's small, but perfectly formed.

In Hackney: how much of a learning curve has it been for Natalie?

I wanted to learn from the project with the intention that perhaps I would do it again.

But first, in Devon, Ryan's clearly not sentimental about demolishing the old bungalow.

I wasn't sad. It was blocking my view!

We're back in the Devon village of Wotter. Electrician Ryan, wife Sarah and their three children

bought this bungalow at auction for £140,000. It was in a pretty bad state,

but had spectacular views so it was clear that the land was the best selling point here.

Demolishing the property to start again looked the best option given Sarah's area of expertise.

My wife's a building surveyor, so she'll do all the drawings.

She's onto that already. Not really my department.

We'll hopefully move the house back slightly, to keep the gardens on the south side.

This is to the front of the plot. That will enable us, if they let us, to live here while we build it,

which would be a nice rent saver.

The plan was to live in the existing bungalow

whilst they built their new dream family home.

That would be extra special as Ryan grew up in the village.

However, a brand new property on a different footprint required planning permission

which was far from guaranteed.

Well, we're back two years later to find out how they got on.

Wow!

The old green bungalow is a thing of the past and a little further up the hill stands a brand-new house.

Outside, there's still a bit to do. The exterior is to be rendered and the garden landscaped.

But inside there's a spectacular family home, which makes the very most of the incredible location.

So this is our open-plan kitchen.

We wanted a big island. That was the main thing, with a breakfast bar,

so the children can sit at it in the mornings.

We've got solid wood worktops. Really wanted it for a natural feel.

Through here, I built the bricks just to give it a more country cottage kind of look.

We haven't quite yet got the oven, but that will be the right size one day.

Coming around, we've got the solid wood flooring.

And then on to... the big patio doors,

which we're really pleased with.

And, beyond that, the view.

# You should come back home Back on your own now... #

Although the old bungalow is now a pile of rubble, it was very useful

as it allowed the family to live on-site while building took place.

It seems Sarah became very attached to the old place.

It was quite an emotional day when that went. It was our home for nearly two years.

-And, you know, it was the children's home.

-I wasn't sad to see it go! It was blocking my view!

But it served its purpose. I don't think we'd have been able to achieve what we have

with the budget if we hadn't lived on-site.

Living on-site gave Sarah time to design the perfect house for the plot and the family.

By using the lie of the land, she created an upstairs that doesn't look like one.

In fact, there are three levels.

On the ground level, there's the kitchen, diner, sitting room and an office study.

On the first level, there's the entrance hallway and three good-sized bedrooms.

Plus a huge family bathroom with a walk-in shower.

On the top level, there's another sitting room and a spare bedroom.

Because the site's on a slope, that's where the design comes from.

We didn't have to dig out so far at the back, so it's split level.

That was Sarah's idea.

I've never designed anything on this scale before. I've always dealt with small refurbs,

extensions, that kind of thing. From a professional point of view, it was quite a challenge for me.

I knew I had to get it right. We couldn't afford any mistakes.

By taking their time and working with the layout of the plot,

Sarah's design and Ryan's building skills have produced an original and extremely successful family home.

We wanted the rooms to flow. We wanted to keep all the sleeping accommodation at the back.

We wanted a traditional feel as well, the log burners and stuff.

We didn't want it ultra modern, too clinical. We have wooden worktops and stuff, to be homely.

Ryan and Sarah spent £140,000 buying the property and £110,000 getting it to this stage,

bringing their total outlay to £250,000.

It's time to find out what two local property experts think of all their hard work.

I am surprised at the amount of space they have here in the rooms.

I do like the top bedroom, which has the picture windows overlooking the moors

towards Plymouth Sound. On a sunny day it'd be stunning.

I think the standard of craftsmanship is fantastic.

Often you see properties that are renovated or rebuilt in not such a nice finish. This is superb.

The care and attention to detail shown by Ryan and Sarah have clearly impressed the experts.

So what do they think this brand-new house is worth?

I would put this property up for sale for £400,000-£425,000.

If I was to put this onto the market in today's market conditions,

I would hope to achieve around the £450,000 mark.

Those valuations would give an incredible profit of £150,000-£200,000

before costs and expenses.

-Great. Excellent.

-That's about where we thought. It's nice to know there's money in it,

not that we're selling.

I'm delighted that Ryan and Sarah have made such a success of this.

They had the vision to see just what a fabulous location it is

-and the talent to make the very best of it.

-We sat in the old building and wondered if it would ever be,

-but now it's here, we're really pleased.

-Like it was always here.

-It's home.

This is Sunderland in Tyne and Wear.

Long famed for shipbuilding, now it's car manufacture and new technologies

that lead the way.

Looking around, you might think I'm in some remote suburb, but how wrong you would be.

A 15-minute brisk walk takes you right into the city centre

and even closer is the Metro station. It connects the whole region from Newcastle Airport,

down to the coast, to Sunderland itself. You're far from isolated.

What am I here to see? It's this. An end of terrace. At a guide price of £20,000-£30,000, let's look.

£20,000-£30,000 doesn't sound much, especially as it looks as though it's in pretty good nick

as far as I can tell. But what's in store as I gear up to take a look around inside?

So not a lot of money, but do you get much house for that?

Well, at first glance, yes, you do. A couple of nice practicalities - a nice entrance porch there

to keep the noise and the cold out. And an open-plan staircase that definitely gives

a nice feeling to this living room area. It's not huge, but you have this sort of bay window,

which adds a little bit more space.

It needs a lot of refurbishment. It's a small place, but perfectly formed, as they say.

Through into the kitchen. This has reached the end of its useful life.

It needs to be replaced, but I'm not seeing anything that worries me so far.

How big the garden is at the rear is anyone's guess since it's so overgrown,

but at least it's a proper space, not just a yard.

Unfortunately, the word space can't be applied upstairs.

The bathroom's a standard size, but the bedrooms are small.

Very small.

Out to the front of the property and round the side and you find a little bit of garden, grass.

The first thing I'm thinking is is it worth building an extension?

Well, the answer in short is no. The amount of money it would cost,

you would never get back in terms of the value or extra money for rent. So don't do it.

Well, that was straightforward. This petite house is what it is - a petite house.

But as far as rental goes, maybe good things do come in small packages.

Just because the purchase price is quite cheap doesn't mean that rental income is similarly so.

A house like this one in good condition would rent for around £450 a month.

So let's say you got this for around £30,000, spent £10,000 doing it up. That's £40,000 invested.

£450 a month in rent is a 13% yield.

Now you may well have to pay money to a lettings agent and there's tax,

but either way that's a whoopy-doo, dog-tail-wagging, ker-ching investment!

This part of Sunderland isn't the most expensive and the waste ground isn't easy on the eye,

but if you get this for around the guide price of £20,000-£30,000,

maybe this part of Sunderland could be someone's wonderland.

We asked along a local estate agent to hear his opinions.

This area of Sunderland is a popular suburb, situated conveniently for access to the city centre.

It'll be popular for young professionals, first-time buyers and buy-to-let opportunists.

How would those figures stack up? First, rental.

Yes, it would rent very well to young professionals.

The return would be around the 375 mark, possibly up to 400. Certainly no more than that.

-And what could a resale achieve?

-If the property was refurbished to a good standard,

the resale value at the moment would probably be £50,000-£55,000.

Well, the house is certainly cheap and with those potential rental returns it's also very cheerful,

but it would also make a lovely home with good transport links and proximity to the city centre.

What's not to like? Let's see who agreed.

Lot 37, guided at £20,000 to £30,000

Put me in at the bottom of the guide 20, to get me away? 20?

10 then? Put me in at 10,000?

10 we've got. 12. 12 and 14.

16 anywhere? 15.

16? 16. 17?

17. 18. 19.

20. 21?

21 anywhere?

At 20,000. 21. 22.

23. 24. 25...

'The house may be small, but the potential had been spotted by several bidders contesting this lot.

'We pick it up when the bidding reaches £35,000.'

At £35,000 then for the first time.. Take a quarter?

One more? 35 and a quarter. 35 and a half. 35,750.

36. At 36,000.

At £36,000... 250? 36,250. 36 and a half?

At £36,250 for the first time...

At 36,250 for the second...

£36,250 for the third and final time...

Sold. Thank you very much indeed.

'The successful bidder who secured the lot for 36,250 quid was Graham.'

# I'm walkin', yes, indeed

# I'm talkin' about you and me

# I'm hopin' that you'll come back to me... #

'Graham is a Sunderland local and for 20 to 30 years has run his own business in home improvements,

'so he sounds like the man for this job.

'I met him at the property to find out why he took on this investment.'

-Graham, good to meet you. Congratulations.

-Thanks.

-Tell me why you wanted to buy this place.

I came to see it before. I quite lik the area. It is improving.

I think it's a good starter home. It can appeal to a lot of different people.

So I think it'll be good for both rental and possibly re-sale

for a first purchase for perhaps a young couple.

-Have you done this kind of thing before?

-Yes, it's something I'm getting back into.

I used to develop houses quite a few years ago, then came out of the marketplace.

I think now is the time to get back involved, so that's the plan.

Were you in the financial services industry?

-No, I was an estate agent.

-OK.

-Quite a few years ago.

From there, I've been into design, so I design kitchens and bathrooms and interiors.

I've done that for some time with my own business.

I've always been involved in property in some shape or form.

-So why Sunderland then?

-It's an area I know well.

I'm from here. I think the prices here are very good.

You can get a very good return on them. It's an up-and-coming area.

And also, really, I think a bit of local expertise helps a long way

in knowing what you're doing and how to do it.

'That's a good point. It's no use just buying a house if you don't know your market,

'how much it's worth or what you should do with it, but Graham obviously does get results.'

# It ain't what you do, it's the way that you do it, it ain't what you do, it's the way that you do it

# It ain't what you do, it's the way that you do it, and that's what gets results... #

'Why does Graham feel this house will give him a healthy result?'

It's part of a fairly new estate.

It's the end of a terrace. It's structurally very sound.

It needs a fair bit doing to it. But we'll do all that and it'll be a nice, little home.

Talk me through exactly what you'll do to sort it out.

Exactly? We'll strip it right the way back,

so the mock ceilings will come off, all the rubbish, the broken floors will come up.

The garden we'll machete down and see quite what's there!

Then we'll start probably on the outside, repair the windows.

The guttering outside needs to be done straight away.

-That's created the damp in one of the bedrooms?

-Yes. We'll get that sorted as soon as we can,

re-plaster, then fit the new kitchen fit the new bathroom, and then see to the flooring and decoration.

What's the cost for the renovation?

I've got about £8,000, I think, to play with. I'm hoping to get it done for a bit less than that.

And the timescale?

Within six to eight weeks on the outside it'll be ready to put back on the market

or be available for renting.

What will make you decide to rent it or sell it on?

Basically, the valuations we get and the interest we get when the house is done.

If it generates a lot of interest at first or we have a good potential buyer, it'll probably go

and we'll take whatever money we can get out of it.

If the money's not there or there's no interest, rather than have it standing,

I'll rent it and then look to do something in five years.

So what would you expect it to maybe re-sell for?

I would think the mid-60s.

And rent?

425, 450.

'Graham obviously has his business head on

'and knows the key to making this place work financially is to keep it simple.

'The sums add up. He knows what needs to be done and there is no holding him back.'

-What's next for you?

-We're looking for more houses. I bought five in total last month.

What?!

We're jumping into it. I have some other people who are interested in me sourcing houses for them,

so I'll be doing a combination of my own and finding houses for other people

and really getting into it and just seeing what bargains are available.

-Good luck and we look forward to seeing how you get on.

-Thank you.

Graham has got a great little property here and I think the rental route is definitely the way to go

because onward sales of this place may be difficult in the current market.

Will he get the yields he's hoping for? Find out later in the show.

Time and tide wait for no man. The weeks and months have passed.

How have our buyers got on with their DIY efforts?

-The work should have been done. Shall we go back and find out?

-Let's do it.

Back now to Hackney in East London

where post-graduate student Natalie had bought this two-bedroomed, lower ground flat

with a good-sized garden at auction for 247,000.

Under the guidance of her friend and property finder Phil, the plan was to renovate the flat completely

and add an extension at the back. Despite the state of the place,

it seemed Natalie's enthusiasm was threatening to get the better of her.

I love this flat, so I was prepared to pay way more than I'd been advised.

So I was really happy with it.

It was the price that I was given, that was around what I should be paying,

-but I was prepared to...

-She was prepared to go significantly over our recommended top price.

We're back 12 months later to see if Natalie's passion for this project has paid off.

Clearly, she's worked very hard as the property has undergone considerable change.

From the outside, it's clear that Natalie has not done the extension,

but the exterior door has been moved, so access to the garden is no longer through the bedroom.

So what was involved to create all these changes?

We haven't actually altered anything

It was more undoing it and redoing it,

so even though it looks exactly the same, everything has had to be replaced.

# But I think I still feel the same... #

Despite the layout remaining the same, it's about the only thing that's unchanged.

The flat's been completely transformed.

The plan was for property finders Phil and Phil to project-manage the renovation,

but Natalie decided to take a more hands-on approach.

I wanted to learn from the project with the intention that perhaps I would do it again

and in order to do that, I needed to work with a company that allowed me more input and more flexibility,

so we agreed that it was probably best for me

to go off and find some builders who could show me the ropes a bit more.

# Show me, just show me

# Then shine me the light... #

Combining studying for a master's degree in psychology

with a first ever renovation project is no easy task,

but Natalie has clearly risen to the challenge with ease.

So before, there was the door over that side which we moved over here

to gain an extra bedroom and access from the kitchen

and as you came out, there was a big shed just full of gas canisters

and kind of big sewage systems.

This was just covered in weeds and nettles.

Yes, we cleared it all, turfed it

and paved the patio area.

# I see you're right on time... #

So what about the timescale for the project? Was it completed on time?

My original timescale was three months and it's taken nearly a year.

With that considerable overrun,

how did the original budget of £40,000 fare?

We ended up spending 45,000...

..plus an additional 14,000 for the external work which was down to the freeholders.

We asked along two local estate agents to give us their opinion

of the flat as it is now.

The finish is top quality. It's a quality refurb.

There's a great attention to detail in here.

I think it's a very nice finish.

She's complemented a lot of her modern attributes

with some original features which complement the property well.

The layout is excellent. They've mad excellent use of the space.

They've squeezed an en-suite into th front bedroom which is really useful

Natalie bought the property for 247,000

and spent a further £59,000 on renovations,

making a total outlay of 306,000 so far.

So what could the value of the property be if it was put up for sale?

If I was going to place this propert on the market, I'd be looking

to place it at around about £430,000

The property could be sold for in the region of £440,000.

That would be a potential profit of between £124,000

and £134,000 before costs and taxes.

Wow!

I hadn't asked about re-sale values at all

because I was somewhat concerned that I may have lost money,

so that is really exciting and really amazing.

I was dreading that part today, but that's brilliant.

If the property were to be rented out, what could the possible monthly income be?

Per calendar month, if I was going to rent this property, I'd be lookin at placing it around £1,700.

You could rent the property out for, per calendar month, £1,875.

Based on those figures, Natalie would be able to earn an annual rental yield of about 7%.

Yeah, that's brilliant. That's really good.

I was aiming for around 1,700, so yeah, that's brilliant.

So has the project been worthwhile for Natalie, now that the transformation is complete?

I think now that you've told me the figures, it's definitely all been worth it.

There were definitely highs and lows

There were minutes when I hated coming here, like so many tears,

but overall, I've really enjoyed it and I'm pretty proud of my accomplishment.

It's back to Sunderland in Tyne and Wear now

where earlier, we saw this two-bed, end-of-terrace house which was tired, shabby and run-down.

It badly needed attention from someone who runs a home improvement business when in walked Graham

who runs such a business. What are the chances of that?

He bought it for 36,250 and reckons that prices in Sunderland represent good value.

I think the prices here are very good. You can get a very good return on them.

It's an up-and-coming area

and also, really, I think a bit of local expertise helps a long way

in knowing what you're doing and how to do it.

Local man Graham aimed to turn this house around on a budget of £8,000

and have it up for the re-sale market or rental in six to eight weeks.

When we returned 11 weeks later,

we were hoping to see if Graham's skills in home improvement

had put the sun back into this part of Sunderland.

Certainly with fresh paint on the front door and on the upper wall, plus new double glazing,

the house is now much easier on the eye.

Gone is the shabby front room to be replaced by a far more tasteful sitting room

with new flooring and the gas-effect electric fire.

The kitchen space was small, but it has also had the benefit of Graham's eye

with new contemporary units installed.

In here we have the kitchen.

With these houses, one of the bigges problems is lack of storage space,

so I was very pleased, in quite a tight area, to get a big bank of storage units like this

which provides massive storage space

and in here we have the fridge and the freezer and everything as well.

Over here, we have more of an idea. We have the cooking area with a new hob, extractor and oven.

Obviously, we've got the drawers and in here we have the washing machine with a sink unit there.

It's quite compact, but it is very usable, so I was quite pleased with the design

and the fact that we have been able to get an eating area in here too.

Upstairs, the bathroom has been stripped and gutted

and a stylish suite, along with new tiling, has been put in.

The landing and the bedrooms have been done in simple, but effective decor,

leaving a blank canvas for whoever buys this.

The rear garden is also more attractive now after an impressive tidy-up

with a lawn laid and a patio area to relax on.

And it seems like the wasteland at the back is undergoing a transformation all of its own.

When we first looked at this site, over there was just derelict with some concrete foundations.

I knew something was going to happen but I didn't know when,

and I was delighted when a month after we bought the place, work began.

It's going to be an incubator unit for offices.

It's going to give jobs for about 100 local people, hopefully.

I'm delighted that this area is getting tidied up and it should increase the value of this property

because it's finished and there's a lot more going on with the area.

It'll look nicer and there'll be a bit more employment.

Back inside, the old timber ceiling has been replaced with walls and ceilings skimmed.

With no gas supply to the estate, Graham had new storage heaters installed.

Cleaning out the gutters solved the damp problem in the front bedroom,

so it's been a pain-free renovation for Graham.

But apart from doing the design and decor here, was he hands-on with the actual renovation?

I do have people who work for me and unfortunately, they were fairly busy

And I do have my own source of labour in the form of four sons

who have all helped reasonably willingly in one shape or form with the decoration

and helped me organise and keep an eye on what's happening.

That's an old one - exploiting the kids!

It sounds like Graham may not have even picked up a paintbrush, but he has been busy

because along with running his home improvement business, he's renovating five other properties,

so it's no wonder the timescale for this refurbishment shifted from six to eight weeks to 11 weeks.

How did his £8,000 budget cope?

I was hoping to bring it in a bit less than that. It's been a little bit more. We're just short of 9,000.

Most of that went on the electric re-wire

and also the landscaping to the garden, back and front,

which we were hoping just to be able to cut down and get something decent out of.

We've had to go back to scratch and re-do it,

so that's bumped the budget up to a little bit more than where we wanted to be.

Add that to the original purchase price of £36,250

and the total outlay here is around 45,000.

Time to ask two local estate agents if Graham's work has made this property a winner.

It's a lovely house, very nice for the area.

The finishing's not perfect, but it's just about right to move into.

It's been renovated to a high standard for an investment property.

This will attract a higher quality tenant and inevitably increase re-sale value.

But will the returns exceed Graham's possible spend of £45,000,

first, if sold?

I'd market this property at 69,950,

looking to achieve offers between £60,000 and £70,000.

I would market the property at around £65,000

with a view to achieving about £60,000.

That's about right. It's nearer the 70,000 I'd be looking for.

I certainly wouldn't sell it for less than 65

on the basis that four to five years ago, these properties changed hands for £90,000.

Those two figures could give Graham a possible pre-tax profit

of between £15,000 and £25,000, but with rental a possible option,

what sort of income could he command?

I'd expect the property to achieve £525 to £550 per calendar month rental income.

I think the house in its current state would achieve around £425 to £450 per calendar month.

550 is probably about right. That's what we were hoping to achieve.

As it happens, we now have a tenant which we're very happy with.

We've checked her out and she's looking to take it from next month.

We've agreed a rent of £525 a month.

That's an excellent annual yield of 14%,

but Graham is still considering selling on

as this newly transformed property now makes it an attractive proposition to other investors,

so overall, I reckon it's all gone well for him.

I think this has been a success,

bearing in mind what we paid for it, the work that's been done has been quite involved,

but I think we've come up with a good product

and it's very attractive for whoever wants to take it, either for a rent or to buy it.

We'll have lots more auction properties to show you next time.

-So join us then to find out what happens when that hammer comes crashing down.

-Oh! Join us then.

Subtitles by Subtext for Red Bee Media Ltd 2012