Episode 98 Homes Under the Hammer

Hello. It's warm today, but how do you tell the temperature of the property market?

Sometimes it's difficult to judge whether it's blowing hot or cold.

One way to find out for yourself is to go down to your local auction.

When you go to an auction, you can soon tell

whether there's confidence in the room

or everyone's playing a cautious game.

It's usually a very revealing snapshot

of the current property market.

Let's see what happened on today's programme.

'In Liverpool, this three-bed end of terrace

'could make a lovely family home.

'But take a look at the garden.'

There's strimming to do first.

'This large Victorian house in Stratford, London,

'has lots of potential, but also, lots of this.'

There is rubbish everywhere! You can't even get in here!

'And in Stirchley, Birmingham,

'this two-bed terrace leaves me a little bemused.'

Bit of a mish-mash, really.

All different colours and things on the walls.

'All these properties have been sold at auction.

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

-'when they went under the hammer.'

-It's yours, sir.

# I'm going down to Liverpool to do nothing

# All the days of my life. #

'I'm in Liverpool.

'A city with a strong maritime history

'which put it on the world map.

'This made it a prime target during the war

'and large areas of housing were destroyed.

'As a result, many suburbs sprung up in the '50s and '60s.

'Today, I'm in one such area, Fazakerley,

'which is very popular with families

'and has a close-knit community feel.'

The property I'm here to see

is about four miles outside the city centre.

It's located in this really nice residential area,

in this bit of a cul-de-sac, which is really good.

There's no passing traffic, nice and quiet.

The guide price, £40-£45,000.

So I'm not expecting much.

But hang on a minute, three beds, end of terrace.

Looks all right from the outside.

Maybe...it's really lousy inside.

'The large space at the front could be very handy

'as off-street parking is always a bonus.

'Especially at the end of a cul-de-sac.

'I'm just seeing good things so far,

'but will this change when I step inside?'

Oh, I don't know. It looks all right, actually.

Through the door, stairs up to the bedrooms, then into the lounge.

I love this bay window

and looks like double-glazing as well, so that's good news.

Um...a fireplace, but you'd need to get yourself a fire surround.

It's a focal point.

Bit of a downstairs storage cupboard.

You'd have to invest in some central heating

and radiators, amongst other things.

But through to the rear of the property

and what a lovely room! A sort of classic kitchen,

dining area with the added advantage of a loo just off it.

This is a really useful family space.

You can imagine a table here or whatever.

And then the kitchen itself,

I love the fact you've got light pouring in from the windows

and although it looks a bit shabby,

if you pull these units out, do whatever you're going to do,

put them back in, it would be perfectly serviceable.

So all in all, a nice surprise.

# It's just a nice surprise

# For you...#

'It's really not in a bad way at all.

'And a tremendous bonus to have double-glazing throughout the house.

'It's mostly cosmetic work that needs doing.

'You'd have to check the plumbing and wiring,

'especially as it looks like the place has been raided for parts.'

So, upstairs, lots of light flooding in from the window.

The whole house feels nice and light and airy. We really like that.

Three bedrooms up here.

A small one there, a good-sized double on the front

and then through to the second double on the back.

But walk in here and you don't really need to be Sherlock Holmes

to figure out that something really badly wrong

has gone wrong with the central-heating system.

Looks like the boiler has disappeared, as well.

So you're going to have to factor in £1,500-£2,000

to get the central-heating sorted out and reinstated.

And while I'm up here, something else I noticed.

the flat roof on the kitchen, looks like the kitchen's an extension.

It's got a flat roof. You'd need to check that out

because they are notoriously prone to leakage.

But a good thing, the garden.

Big-sized garden,

adding to this house's potential as a great family home.

A bit of strimming to do first, though.

# It's a jungle out there. #

'Once the jungle at the back's been brought under control,

'this would be a great space

'and makes this place really appealing for a family with kids.

'Another bonus is the front bedroom has an ensuite shower room,

'which makes up for the fact there's no bathroom upstairs.

'I often want to change the layout of a house

'when the main bathroom is downstairs, but here, it works well.

'I think you're getting quite a bit for your money here.

'We asked a local estate agent for his views

'on this end of terrace with a guide price of £40-£45,000.'

I like the size of the garden.

The room sizes are quite decent.

And this property has got an ensuite, which is very unusual.

It certainly needs redecoration.

New floorings.

I would say the biggest thing is the rear garden needs attention.

It also needs the central-heating putting back in.

And the kitchen needs attention.

'So some hard work needed to bring it up to standard,

'but how much could it be worth once that's been done?'

Depending on the renovations,

you could achieve in the region of £80,000, maybe £85,000.

'And if you wanted to hang on to it and rent it out?'

The rental value per calendar month would be in the region of £525.

Well, this is a lot of house for that guide price.

I like the garden, I like the layout inside.

All it really needs is a bit of tender loving care.

Let's see who saw the opportunity when it went under the hammer.

Somebody start me off, then, on lot 50 at £35,000. £35,000.

I've seen you, sir. Thank you. At £35,000.

OK. £35,000. 36. I've seen you. 36.

37, 38. 38, I have. 39?

Yep. 40?

I'm looking for 40,000. I'll take a half behind.

39,500. I'll take that. 39,500.

40,000 anywhere else now? I've got 40,000, I have. Thank you.

You're in, sir, at 40,500.

Can I say 41?

40,500, then, right at the back of the room.

It's good so far, unless anyone beats it.

For the first time, then, at 40,500.

Second time, then, at... You're in, 41. And a half, sir?

41,500, I have. I'm looking to you for 42.

All right. 41,500, then, is a strong bid at the very back.

Anybody else? It's all gone quiet.

£41,500 for the first time. And the second time at £41,500.

Third and final time. Are we all done?

With you at the very back of the room at £41,500.

Well done, sir. Good.

'The successful bid of £41,500 came from Tim.

'He runs a family property business started by his dad in 1960.

'With him is builder Andy,

'who is heavily involved with Tim's properties in this area.

'I met them back at the house to find out more.'

# It's family business

# Keep it in my family business. #

Tim, Andy. Great to meet you both. Congratulations.

Tell me why you bought this place.

Andy is a local lad, a Liverpool builder.

And I basically own and rent properties out.

Andy drew up a shortlist for me

because I can't see every property on the market,

and recommended which ones I should bid for, and this was one of them.

-So, why this one, Andy?

-Well, the price of it, really.

Plus it's a family home. They rent out quite easy

and sell, if we wanted to resell it, much more than a terraced house.

Because they've got gardens, etc.

And the price we paid for it was extremely reasonable.

Obviously, it needs some work, but that's what I'm here for.

'Tim runs his business with his brother who lives in Thailand.

'He's been working with Andy on properties in Liverpool

'and the surrounding area for over two years.

'They seem to have their working roles very clearly mapped out.'

Who does the actual work in terms of sorting it out?

-You do that, as well?

-I do all the building work.

-OK.

Yeah. Cos that's what I do. I find them, go to auction with Tim,

recommend that he buys this one or whichever we're bidding on,

I'll say to him, "It needs five, eight grand, whatever."

Provided it doesn't go over budget,

we know we're OK, percentage-wise, on the rent afterwards.

We'll straighten it out and have it good to go in no time.

Great. Andy sounds like a bit of a good find.

How did you stumble on him?

We already had some houses in Liverpool

we'd owned for a number of years.

Some of them needed some repairs, so we contacted...

looked through the book to get a local builder, stumbled across Andy.

-Oh, wow!

-He did a good job on the repairs

in some of the rented houses we already owned.

And he put the idea to us

and I spoke with my brother, Chris, and we said, "Let's go for it."

With Andy pulling together a shortlist of properties

coming up at auction, Tim's in a good position to make sure he doesn't miss any hidden gems.

He's been to around 500 auctions over the years, both buying and selling properties,

so knows how to handle himself in an auction room.

Tell me what you're going to do to sort it out?

First of all, we're going to strip it to the bone, the flooring,

carpets, all the rubbish in here, the kitchen

and replace everything that is in here, including the bathroom.

Then, redecoration right through. We'll have to get a JCB in the back garden,

if you've seen that! It's like a jungle.

We'll have to get that cleared and get the front tidied up.

That to-do list will keep Andy busy for a while.

The duo have set a budget of to £6-8,000 and Andy thinks he'll be finished in four to six weeks

leaving Tim to work out what he wants to do with the house when it's done.

-Is the idea to rent it out or sell it on?

-I think probably rent it out.

Unless I get a valuation that we can make a pretty good profit,

I think I'd rather rent it because we've got it for the long-term rather than the short-term gain.

What kind of rental are you expecting?

-Per month, between 500 and 550.

-Right.

-So a pretty decent return on what you paid.

-I'll be happy with 500 a month,

that's £6,000 a year in total, which would represent, even with the work that has been spent on the property,

probably around about 12% return.

With a potential 12% return, it seems Andy has chosen well for Tim and his brother yet again.

This successful business partnership looks set to continue.

-Congratulations to you both, good luck with it. We look forward to seeing how you get on.

-Thank you.

Tim has obviously bagged himself a really great property here at a really low price

and having Andy on board to do the hard work, and the finding, that's pretty priceless too.

How is he going to get on sorting this place out?

From a distance, it seems, Andy has all the experience to sort this out, no problems.

But you never know with property.

Find out how they get on later in the show.

I'm in Stratford in East London today where there is a real optimistic mood.

The organisers of the Olympics have been trumpeting positive messages since winning the bid.

One of their promises seems to be holding true.

They claimed that they would transform this part of the capital in three years.

I am definitely impressed by what I've seen today.

MUSIC: Chariots Of Fire theme

And it's only a hop, skip and a jump from the Olympic hub to today's lot.

I'm here to see a unique and rarely available property today.

That sounds exciting.

It's being used as a 12-room hostel.

So it's obviously a substantial auction lot

and it has excellent redevelopment potential, I hear.

Sounds positive and it looks pretty good, as well.

All this for £470,000 guide price.

What a load of rubbish! No, not the house.

Look! Let's go inside.

# Oh, my old man's a dustman

# He wears a dustman's hat

# He wears cor blimey trousers

# And he lives in a council flat. #

Rubbish aside, this property looks to be in good order.

Double glazed at the front, so that's a saving straightaway.

I would have preferred to see the original sash windows in place but you can't have everything.

I'll just have to make do with the ornate moulding around the door.

You can see why this works so well as a hostel.

Everywhere you turn, there is a big bedroom.

It looks to be in fairly good condition, although there is rubbish everywhere.

Look, you can't even get in here!

What about the redevelopment potential?

Let's look closer before deciding on the best course of action.

This property is really epic.

Two very sizeable front rooms and this generous lounge area

with two kitchen areas leading off it.

Out back there's a huge garden which also gives me a chance

to take in the enormity of the place.

Upstairs, there's bedroom after bedroom.

The house is also awash with toilet and bathing facilities,

so all the necessary plumbing is in place, which is great to see.

You have to look past all the clutter and think what this house could be.

Having had a look around here today, this building could easily be turned

into say five or six decent one-bed flats.

The square footage is generous, so you could easily accommodate it.

Plus, you've got the all-important parking, and planners are so keen to see this.

There are five to six spaces out the front. That is just perfect.

This is a tremendous development opportunity, although turning it into flats

would require a significant initial outlay.

The returns could be well worth it.

The other less lucrative option is to keep things as they are

and refurbish this place completely.

New kitchens, new bathrooms and a lick of paint and a good tidy up.

This would be the cheaper way to turn this place around but it won't generate as much money.

Having said that, if you manage to rent out all these rooms,

you could achieve as much as to £4-5,000 a month.

That is not anything to be sniffed at.

We asked a local estate agent for her views on this

12-room hostel which had an auction guide price of £470,000.

It needs a bit of love and attention.

I think that you would have to spend approximately £60,000

to put it into a good standard.

What about the prospect of redeveloping the property into flats?

Planning could be difficult here, although you do have a precedent set by the three houses

to the side of this property. You would be able to argue the planning

but I think it wouldn't be a very straightforward planning.

In its current layout, how much rental income would be achieved?

You could achieve a rental of between £4,500 per calendar month

to £5,000 per calendar month.

What about resale valuation?

As a 12-bedroom multiple house of occupation,

you could sell this property on for between £680,000 to £700,000.

This is an immense building and it could quite easily be split up into flats.

Imagine the return if you were successful.

Everything is subject to planning permission, of course.

It's always a gamble.

Somebody bought this and thought it was a risk worth taking.

Let's find out who that was as we go to auction.

Start realistic, 400.

400 in the front. 405?

405, 410?

415. 420.

425, 430?

430, 435?

440, 445?

450, yeah. 455?

460. 465?

470. 475?

480, new spot coming in.

480. 485, 490?

495.

496?

497.

498, 499?

500.

501, back in. 502?

503, 504?

505, 506?

507? 506 in the front, been here most of the time.

If not, it's going. 506, first time...

Second time...

Third and last time, have you all done?

Sold 506. Well done, sir.

It was full-time property developer Dilawar who made the successful bid of 506,000.

He works very closely with his builder, Amarik, and they are no strangers to Homes Under The Hammer.

We met them in August 2010 when they purchased a three-bedroom property in Stratford.

The plan was to convert it into two flats.

Unfortunately permission was refused, which cost them a lot of time and money.

I met up with them to find out what lessons they'd learned.

So, you've come back for some more.

Yes, this is our business, we keep buying properties and doing them up.

We don't want to make the mistake we did last time. We were waiting on planning permission

while the property was empty. This time, what we've decided,

we will do it up to a basic standard, and let it out.

While we're waiting for the planning permission,

it might take like six months, maybe a year,

then you see the next-door properties, we might do something like that.

Dilawar and Amarik are clearly keen to avoid the pitfalls they fell into before.

In the short term, I think it's the right idea to get the place into a fit state to rent out

whilst they decide on what to do long term.

Dilawar hopes eventually to get permission to build flats

but in the meantime has a budget of around 40,000 to 50,000

to get the place fit for tenants as soon as possible.

Basically, if we keep the property healthy, then we don't have to worry about security and other things.

If we spend that sort of money and rent it for couple of years, surely we will get our money back

and, at the same time, we don't worry about the properties.

These are let out, people living in here and it's good to everybody.

Dilawar and Amarik are playing it smart, covering themselves in this way

whilst they decide on the long-term strategy.

They plan to consult architects, as well as the council, to explore possibilities.

Converting into flats would be their preferred option.

If you do go down the flat route and you convert this into lots of flats,

because it is ripe for something like that. How many flats do think you could get out of this building?

Well depends, again, you know...

Depends on them. If you look on the left side of the property,

there is a very huge extension.

We could put another floor up, if they allow us

and then we could go out, and a double storey at the back.

That would make about ten flats.

A lot of work would have to go to into turning this place into ten flats

and, of course, they would need to get the planners on board.

However, if they were to succeed, one-bedroom flats in this area are valued around 160,000

so there could be big money to be made here.

What's the time frame for you guys to get people in here and paying you rent?

If we're just going to go for the cheaper move, it will be about three months.

-Three months.

-Three months, yeah.

-Come on, who's going to clear this place?

-We are going to use you as well.

-I'm not helping you clear this place!

I don't think I've ever seen anywhere so messy with so much junk everywhere.

I think you're going to need a fair few skips out the front.

We've ordered a big skip already and that is coming tomorrow morning.

-Wow! It's been lovely meeting you both today.

-Same here.

Good luck with whatever scheme you choose.

Well done, thank you very much.

Dilawar and his builder, Amarik have experienced the highs and lows

of property developing and know what it feels like to come up against the planners and lose.

I really hope, for their sake, they are successful with this project.

If all else fails, they could make quite a tidy sum annually.

Let's not feel too sorry for the guys.

You can find out how they get on later on in the programme.

Coming up, in Birmingham, it seems very much like a tale of two houses.

Front bit, good. Back bit, bad.

In London, did the renovation meet Dilawar's expectations?

Well, it's encouraging for us.

That's why we're quite happy when we've done the job.

But first, did Tim and Andy do their makeover on time in Liverpool?

We were a little bit pushed for time getting

finished for the deadline, etc.

Back now to Liverpool where earlier we met developer, Tim, on the left

and builder, Andy, on the right.

Tim bought this three-bed end townhouse at auction for £41,500.

He runs a family property business with his brother, Chris,

who lives in Thailand.

Tim's been working with Andy on properties in Liverpool and the surrounding area for two years.

Andy's the man with the plan when it comes to which properties to go for at auction.

Tim depends on him to come up with a shortlist to ensure they don't miss out on any plum properties.

They've been to around 500 auctions over the years to buy and sell

so they certainly know their plans for this place.

We're going to strip it to the bone of everything,

the flooring, carpets, the rubbish, the kitchen

and replace everything that's in here, including the bathroom and redecoration right through.

We'll probably have to get a JCB in the back garden, if you've seen that!

It's like a jungle. We've got to get all that cleared and get the front tidied up.

We're back seven weeks later to find out if Tim and Andy

have tamed the jungle and turned around this Liverpool house.

OK, as you may remember, this was rather like a jungle out here

with over a metre high in rubbish. We didn't even know the patio was at the bottom

until we got it all out. We did spend a lot of time, five skips later getting all the rubbish out

and flattening it all down a bit.

As you can see, we've cleaned it up and put new fence panels in.

We've put a decking area down, a play area for children

who are going to move into this kind of property.

Some bark there to keep it soft, and generally tidied it up and made it look smart and habitable.

Let's see what's changed inside.

Smart and habitable is definitely the story here.

The place has been smartened up with a brand-new feature fireplace installed.

That damaged, old kitchen has been replaced with tidy new units,

cooker and sink.

In this part of the house the kitchen had been pretty much vandalised.

The hob was smashed, etc. What we decided to do, because the kitchen is not that huge,

we decided to keep the layout the same and changed the units.

New hob, oven, sink, taps, the usual stuff,

retiled and generally tidied it up and put a worktop here where there wasn't one before

because they had a washing machine under there.

There was no worktop so we decided to put that there, which will keep it all tidy

and you've a work surface to work on.

It's all clean and tidy and ready to go.

# Baby, I'm ready to go

# I'm back, I'm ready to go

# From the rooftops, shout it out!

# Shout it out. #

Upstairs is also ready to go.

In the bedrooms those broken floorboards and heating system have been replaced.

Everything looks so much brighter, with new flooring

and light colours throughout. In the master bedroom, the ensuite has been replaced.

Did they get all this work done in their six-week timescale?

# Baby, I'm ready to go. #

We were a little bit pushed for time getting finished for the deadline.

We got there, near enough anyway, 99.9%.

I'm quite happy with the way everything's gone. We haven't had any major hiccups at all.

Everything's gone pretty smoothly and, as you can see, everything's looking good.

Interestingly Tim didn't oversee the building work.

In fact he's not been back to the property since he bought it at auction

and left Andy in complete control of the renovation.

We discussed one or two things - should we do this or that and we've agreed over the phone.

No, I've left it to him and I'm very happy with the result.

So did Tim's hands-off approach affect the original budget of 6,000 to 8,000?

We've gone slightly over the 10,000 mark now.

Owing probably to the landscaping gardening aspect of it.

Because it was so bad and so big and we've had to completely renovate the inside as well.

We have gone over budget, slightly, but it's still well within the figures that we need.

We wanted to do a really good job on it.

Should we ever sell it at a future date, then hopefully,

what we've perhaps overspent we'll get back in the resale value.

They bought the place at auction for 41,500 and spent around 10,000

on the refurbishment, making a total outlay of around £51,500.

We asked two local estate agents for their views on this property.

I think the property is quite a good property

and it's been refurbished to a decent standard.

There are a few features I quite like.

I like the way they've tidied up the back garden,

it makes it look a lot bigger.

Anyone coming here to either buy or rent will have a good spacious area.

I think it's a nice property. I think it's been done up quite well.

I love what they've done with the garden, I think that could be a real selling point.

What could this house achieve on the rental market?

A property in this condition would probably reach about 500 to 525 per calendar month.

I think, for rent, this property could achieve between 500 and 550 per calendar month.

That's pretty good. That's about what I expected.

That was the range I was expecting for the rent on the property,

bearing in mind the standard it's been finished to.

Yeah, that's what I expected, to be fair.

Wow, that's a potential rental yield of between 11 and 12%

minus the usual taxes and expenses.

As the plan was to rent it out anyway, Andy's already lined up a potential tenant.

But if they decided to sell, how much could this sell for?

If the people who have done the refurbishment are going to sell the property,

they will probably obtain between £75,000 to £80,000.

My valuation for this property would be between 70 and £75,000.

It's certainly up in the figure I was expecting or slightly better.

We've always got the option. I think prices have bottomed out at the moment.

We've got the option to rent it out for two or three years, or as long as we want,

and we've always got the option to sell it in the future if we need to.

With a potential resale profit of up to £28,500,

minus the usual tax and expenses,

Tim and Andy are on to a real winner with this place. What's next for the property duo?

I'm hoping Andy is going to look at one or two others

and draw up another shortlist for me, and if and when he does

we shall go to wherever the auction is and try and buy one or two more.

And, if we are successful, Andy can do the work again.

-It'll give you something to do, won't it?

-A production line worker!

In the 1860s, John and Richard Cadbury were looking

for new premises for their chocolate business.

Somewhere outside Birmingham town centre where the air was cleaner.

# Sweet... #

They also needed excellent transport links

so what could be better than a canal right next to a train station?

That's how the area of Bournville was developed.

Let's hope the property I've come to inspect will be just as sweet.

The property I'm here to see is in sunny Stirchley,

five minutes' walk from Bournville train station.

Great for commuting and avoiding the sticky traffic on the main road into town.

It's on this long line of Victorian terraces,

two bedrooms and at a guide price of 60,000 quid.

Let's take a look.

From the outside, it looks like this house just needs a bit more love.

On a street where people clearly take great pride in their homes, smartening up the exterior

could add some value.

# Sweet... #

Through the front door and first impressions,

a bit of a mish-mash really.

Different colours and things on the walls but not a bad sized space.

You've got an open fire there behind the gas fire which clearly needs to be ripped out.

Maybe floorboards that you could strip back here.

Under-stairs cupboard, through to a rear sitting room,

very traditional design for these sorts of properties.

Nice high ceilings, although you'd definitely want to get rid of those polystyrene tiles.

Oh, that's nice, a cupboard with beautiful lead work in there.

That's OK, then it gets horribly wrong when you come to the rear of the property.

This is your kitchen. Very low ceiling and an absolutely tiny space

and predictable, I guess, right at the rear of the property, your bathroom and loo.

In a nutshell, front bit good, back bit, bad.

# B-b-b-bad

# Bad to the bone #

Mmm, it's tricky to know what to do about this

but the £60,000 question is, do you have enough room to move the bathroom upstairs?

There are two good-sized bedrooms but trying to squeeze a bathroom up here

could seriously compromise the space.

However, it might be something to consider as the current layout is far from ideal.

And the garden - well, it's a bit more of a jungle really

and you'd need more than a whip around on the lawnmower to sort it.

But this house has more secrets. This property comes with a special set of conditions

and you'd be well advised to take note of them.

You might be surprised to learn that the property isn't freehold

but leasehold with a 125-year lease.

The council, who sold the property, retained the freehold

with a stipulation that whoever bought the property has to do the renovation works within 12 months.

I'm sure after that time, if you applied to them,

you'd probably get the freehold, but for any developer who was planning

to sit on the property and maybe not do the work, that's not an option.

So, it might be your house and your project

but it's not all up to you how and when you go about it.

This is not the house for you if you want to wait.

I think in essence the council have the right idea here.

They want to make sure houses like this don't continue to decay

and bring down the overall feel of the street.

We asked the local estate agent

if he agreed that the £60,000 guide price was rather tempting.

With regard to changing the first floor layout,

it would be a shame to lose the two double bedrooms

and it would be best to keep the bathroom downstairs.

I don't think there would be much merit in moving the bathroom upstairs from a value point of view.

What could the property be worth when it's finished?

The property, in its present condition,

is probably worth somewhere around 75,000, possibly up to £80,000,

bearing in mind it does need quite a lot of money spending on it.

When fully renovated I'd expect a property of this type, in this locality,

to achieve somewhere around £110,000.

Once fully renovated, and it would depend on the standard of renovation undertaken,

I'd expect a property of this type, in this area, to achieve a rental figure

of around £500 per calendar month.

Well, there was a lot of interest in this property before the auction and I can see why.

It's a convenient location, an improving area and a lot of house for the money.

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

Lot two at Stirchley in Birmingham.

It's being offered on behalf of Birmingham Council.

Where shall we start?

40? At 40,000 I'm bid. Yes?

45 and 50, so it's 50.

At 50. 55?

51, we've got a lot to go through. Can I have 55 anywhere?

55, thank you, at 55.

And now, can I have 60?

At 55 I'm bid, is that 60? Thank you, madam, at 60.

65, at 65. Is it 70?

At 70, thank you, madam, at 70.

Is it 75, sir?

A new bid at 75. 75 I'm bid. Madam, is it 80?

76, at 76. 77?

Is it 78?

79? 79, is it 80?

No? Are we all done?

£79,000. One, two, three...

Sold. Well done, madam, congratulations.

The winning bid of £79,000 was made by Rachel, who is a property developer.

# Sugar...

# Oh, honey, honey #

She's been in that business eight years

but this is her very first auction buy.

-Rachel, great to meet you.

-And you.

-Congratulations.

-Thank you.

-Tell me why you wanted to buy this place.

-I buy properties, or have done

for the past eight years now, but the first one was eight years ago

and I do them up, for a hobby, really, more than anything.

-So it's not your day job?

-No, but it's starting to be. It's starting to be.

It wasn't, it was a hobby to start with but now it's turning into a bit of a commitment.

-What was your job before that?

-I was a consultant for nursing homes and care homes,

-interior design, that type of thing.

-That's a useful experience to have, then?

-Yeah.

How's it gone? Because there's been some ups and downs in the market.

There have. It's gone OK, really. I've bought a few as I can, really.

As I tend to keep them and let them out, that type of thing. It's gone OK.

It hasn't really affected what I want to do.

-So you've managed to build up a portfolio, then?

-Yeah, yeah, yeah.

-Do them up, keep them, rather than sell them.

-Yes.

-Right.

What was it that attracted you to this one?

I think the price and the potential, really.

The rental market is quite good in this area,

having spoken to some of the local estate agents.

I think it's the price we could get it for and what it needed doing, really.

What we could do to achieve that and then what we could gain from it.

How was the auction?

Brilliant! I enjoyed it. It was great.

I loved it because, having gone to other auctions

you use your magazine to put your hand up but they gave you a paddle.

I quite enjoyed that bit. It was nerve-wracking. It was exciting.

It was what I wanted it to be, really.

Were you happy with what you paid?

Er, never happy with what I pay, no. I'd rather pay less.

But yeah, I think so - in the scale of things

I think that was quite a good price, really.

Time will tell, see what we get for it when it's done.

A true developer speaking there.

We always want things just a bit cheaper, don't we?

# Sweets for my sweet

# Sugar for my honey #

But this house was certainly sweet enough to catch Rachel's eye in the first place.

-Tell me your plans.

-Basically, to fully modernise the entire house.

-The bathroom at the back, we'll be moving upstairs.

-Oh, you will?

-Yes.

I know the location of that now and it will work.

-Describe exactly where it's going.

-As you walk up the stairs, you'll turn left

and then immediately to your left will be a door. That will be the bathroom.

-Right.

-In front of you there will be a door into the bedroom.

-Right.

Have you worked out the economies of doing that and how much

it will add to the house? Cos you are renting it out.

-Will it make that much difference in terms of rent?

-It probably won't.

If it improves the property, which it will do,

then I think it will be money well spent, really.

I don't personally think it will be too expensive.

I'm looking to spend 15,000, 20,000.

The whole house needs rewiring, that type of thing.

If I spend 15,000 to 20,000 doing it up, I'll be happy.

With eight years of experience,

Rachel is clear about her options once the house is complete.

I've got three options. I say I'm going to rent it.

My son is coming back from university so he might move out of our house and move in here.

I hope.

The second one will be to rent it

and the third one... Once I've done it, I will get it valued

and see how much we've made and whether it's worth selling it or not.

Having done up properties for years Rachel's in a good position

to get skilled tradesmen in to lighten the load.

I mean, I've got contacts that will do me favours and I'll do most of it myself, anyway.

I'll do the garden myself, and all the decorating myself.

I'll tackle the jungle myself!

I'll do all the stripping out, redecoration and help fit the kitchen.

I'll do all the tiling, all that sort of decor myself.

Plumbers, electricians and carpenters will be called in to do the rest, really.

-Do you enjoy getting hands-on?

-Love it. Absolutely love it.

Sounds a bit sick, actually, but I do love getting into a jungle like that

and just clearing it.

The bigger it is and the worse it is, it's great for me.

It's just to achieve... That will be me, on my own, doing that.

It's not the first time I've just gone in and cut all the trees down

and then you start to find what you've got really.

It allows you to plan a little courtyard or see what you've got.

At the moment you can't see it, you can just see trees from the bedroom window.

I have to climb out there at the moment.

It will be fantastic when I get in there.

That will be the most enjoyable bit for me.

Then seeing the end result once we've started, really.

The painting, the painting I love as well.

-It's all the mundane, menial tasks, I enjoy.

-That's perfect, if you do.

Essentially what started out as a hobby,

sounds like it's still enjoyable for you.

It is, yeah. I put the radio on and just paint away and I'm quite happy.

Then you see your end result, the paint goes on the walls, the colours and that type of thing.

-Great, congratulations.

-Thank you.

-Good luck with it. We look forward to seeing how you get on.

-Thanks very much.

There aren't many people who think the bigger the project the better

but Rachel clearly can't wait to get her hands dirty

and get stuck into sorting things out.

I am concerned that she'll overspend on moving that bathroom.

Find out how it all goes later in the show.

Finding good tradesmen is often the key to getting properties done up to a good standard and on time.

Sometimes people do try to do it themselves to maximise profit.

Are today's buyers getting stuck in, or just stuck? Let's find out.

Back to Stratford in East London

where full-time property developer Dilawar bought this former hostel for 506,000.

Along with his trusty builder Amarik, the long-term goal was to convert the property into ten flats.

However, they've had their fingers burnt in the past over getting planning permission.

This time they had a cunning ploy.

We don't want to make the mistake we did last time,

waiting on planning permission while the property was empty.

This time what we decided, we will do it up to a basic standard and

let it out, while we're waiting for the planning permission.

I don't know how long it will take, it might take six months, maybe a year.

And you see next door's properties, we might do something like that.

Nearly four months later, we're back to find out how Dilawar and Amarik got on

with the renovation of this mammoth property.

The front of the building has been freshened up.

A brand-new entry phone system has been installed.

And inside there have been some changes.

It's still a hostel but the larger rooms have been partitioned,

increasing the number of rooms from 12 to 16.

Although not all the work has been completed yet, there have still been some significant additions,

especially at the back as Amarik explains.

It was a big office, we turned it into a communal kitchen.

As you can see, with the six cookers and three ovens, four sinks

and hopefully it will serve all the people who live here.

As well as the larger better equipped communal kitchen area,

the increase in bedrooms required more bathroom and toilet facilities on both floors.

As extra rooms were being created, they had to be in regular consultation with the council

to ensure the work complied with all the regulations.

Well, we have done to the property whatever the council required.

You know, you have to go by certain rules and regulations.

You have to have a fire certificate, and electric and gas certificates.

We've done that. We've put emergency lighting in as well.

Smoke alarms... Whatever the requirement was, it is there.

Outside the back's been completely cleared and concreted over.

Whilst it's a shame to lose all the greenery, from a practical point of view

it makes sense while it's still a hostel.

So how does Dilawar feel it's all gone?

It's like any other project.

This one hasn't been that bad as much as we expected.

There was a lot of interest in this property to take it on from councils, different councils.

It was encouraging for us.

That's why we were quite happy when we've done the job

because we had offers already.

As the council will be renting this back from Dilawar to use as a hostel for the homeless,

it means he's got a guaranteed income for three years

while he decides what to do next.

If the council permits and they let us extend,

you can see the property on the left and right and they are extremely large.

If they let us do that, then we can easily make it into about ten flats.

Overall, how much did he have to spend to get the project to this stage?

All in all, putting everything into it, we spent about, including my legal fees,

including what we bought it at and all the repairs,

I think it's cost us about £600,000.

With that spend of around 600,000, which includes

the purchase price at auction of 506,000,

we asked two local estate agents for their opinions

on this East London hostel.

I think that the accommodation is very good.

I think that the facilities,

including the kitchen is fantastic.

The standard is quite good. The colour schemes are very neutral.

Nice property.

Dilawar has already rented the hostel out to the local council,

but what sort of rent should he be achieving for it?

In the property's entirety, I could rent this property out,

potentially to a housing association, for £5,000 per calendar month.

To rent out the property in its entirety,

you would be looking at a rental income of £5,800 per calendar month.

Too low. I won't say that.

We're achieving much more than that.

-We have achieved much more than that... 83,000.

-Per year.

That's internal repairs, plus furniture.

So Dilawar's achieving a monthly rental income from the council of around £6,900.

That's an astonishing yield of almost 14% on his investment.

At that rate, I'm guessing he's no intention of selling.

But, how much COULD it sell for?

If I was marketing this property, I would put it on the market for £900,000.

I could sell this property for approximately £650,000.

That's a very wide range on the agents' valuations

and would represent pre-tax profit of between 50 and 300,000.

Clearly, Dilawar believes it will be towards the high end of this.

I think it's between 950 and one million.

We've spent about 600, anyway.

Plus, it's a commercial building. It's not domestic.

It should achieve that sort of figure. That's what we think.

So, bearing in mind the high rental returns it's achieving,

have the future plans to develop the property into flats changed?

We're going to use it as a hostel for the time being

and if we can't get permission, we'll try to get permission

and rebuild it, or use that money to buy some other properties.

Given the success of this purchase, it seems likely we'll see Dilawar soon at another auction.

I go to every auction.

I just like... I think I've got something wrong with me!

Back to the Stirchley area of Birmingham where property developer Rachel

bought this two-bedroom Victorian terrace at auction for 79,000.

# Sweet... #

It was a leasehold, with the council retaining the freehold and stipulating

that it had to be developed within a year.

Whilst the house had good, large rooms and high ceilings, it required a fair amount of modernising.

At the back, the kitchen was very small.

To make matters worse, it led directly onto the bathroom which made the layout far from ideal.

However, Rachel had some ideas to change all that.

-The bathroom at the back, we'll be moving upstairs.

-You will?

-Yes.

As you walk up the stairs, you'll turn left

and then immediately to your left there will be a door and that will be the bathroom.

-Right.

-In front of you there will be a door into the bedroom.

With Rachel's plans in place and with a budget between 15 and 20,000,

we returned four months later to see if her vision has come to fruition.

# Stay there

# Cos I'll be coming over

# And while our blood's still young

# It's so young it runs

# Won't stop to surrender... #

Well, it looks like Rachel has certainly not surrendered to this project, or that garden.

It's been completely transformed.

One of the windows in the kitchen extension was raised to be in line with the others

and there's also been some roof work done.

The garden, when we first bought it, you couldn't get out of here,

you had to cut your way through the garden to get to a certain point.

What we have done now, I am thoroughly overjoyed

because I never thought I'd see the day when we got some

nice turf down, a patio area and it's a bit of a sun trap.

Anybody who enjoys this property will thoroughly enjoy sitting out

here with a glass of wine, hopefully in the summer.

What about that tiny kitchen that came complete with its own ensuite bathroom?

# Stay there

# Won't stop to surrender #

Wow!

The bathroom's been ripped out, the kitchen made bigger with a wood effect flooring,

units and appliances. What a difference!

There was a small kitchen here and a single door there

and then the bath ran along here

and there was a small WC at the end.

I decided to gut all of that, put a new kitchen in

and this allows for a small dining area here.

I'm really happy with how it's turned out.

Upstairs, both bedrooms have been gutted.

There's fresh decor throughout with new carpets and radiators.

The whole place has been well spruced up

and surely Rachel must have created some space to fit the bathroom in.

Indeed, she did. This is a far more satisfactory arrangement

and she's done really well to adapt the upstairs layout to accommodate it.

Moving it upstairs, it allowed me to put a larger kitchen in

and a small dining area as well. I wouldn't have been able to do that.

Really, upstairs has got the bathroom in the middle of the two bedrooms.

We made the rear bedroom slightly smaller to accommodate the bathroom in the middle to serve both bedrooms.

There has clearly been a lot of work done on this property to turn it into an ideal family house.

Rachel's a seasoned developer but did she run into any problems during renovation?

The most difficult job was changing the roof and making it one level

because it was at two completely different levels. That was probably the most difficult, really.

What about that all-important budget?

I thought when looking at it, it would be 15,000, you know,

possibly 20. To be honest, there were a few things that I did myself

and roped in some people that owed me one and managed to spend £8,200.

It's not all quite finished, so I'd say about 8,500, 600,

which I'm quite pleased with.

Rachel's done well to stay under budget.

It just goes to show the benefits of having good contacts in the property development game.

It's been announced that a new supermarket is being built close by, and such amenities on the doorstep

are always desirable.

So Rachel could be the cat that got the cream.

She bought the property for 79,000, so with her refurbishment costs of around 8,500

that's a total outlay of around 87,500.

We invited along two local estate agents to see what they thought of the place.

I personally think the property has worked well. Good layout.

I like the bathroom going upstairs. We've got two reasonable bedrooms.

The presentation's good.

The property is leasehold.

I think I would be a little bit worried about that on a resale.

Assuming it's got a long lease and a nominal ground rent, it shouldn't have a major effect.

The first impression when I walked in was nice and bright.

Finish so far is good.

The skirtings need finishing off and there's a few other bits that need doing.

The second bedroom has been compromised by the bathroom

but I do think the kitchen has made up for it.

So it's thumbs up from them. Let's get down to the numbers.

Remember the total spend so far has been around 87,500.

What could it sell for?

I would suggest this was put on the market at offers in the region of £120,000.

I would put this house on the market at between 120 and £125,000.

Right, OK, that's OK. We can live with that.

That's a potential profit of between 32,500 and 37,500,

minus the usual taxes and expenses.

What about the rental?

I would put this on the rental market at a price range of £575 to £600 a calendar month.

Rental wise, per calendar month, something in the region of £575 a month.

I have got somebody for 625 that's interested, a couple of parties.

Hopefully, that's what I'll get.

If Rachel was to achieve £625 a month that would represent a great return on her investment.

So, is she satisfied with how it's all gone overall?

It's been hard work but I'm quite pleased with the timescales

that we've achieved it in as well, which is good.

We've done it quite quickly.

In four months we've really gutted the place and made it look how it looks now.

I'm pleased we've done it and the hard work pays off.

That's it for now, join us next time as we follow more people buying their homes under the hammer.

-Look forward to seeing you then.

-Goodbye.

-Goodbye.

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