Episode 17 Homes Under the Hammer

Hello. Now, with the property market in a state of flux,

you have to make your own decisions,

do your research and trust your instincts.

One way to find out how the market is performing is to see for yourself

and you can get a grandstand view at a property auction.

All sorts of properties go up for auction.

There are hundreds of lots on offer every month all around the country.

So why not nip along to your local auction house and see what

they've got for sale.

Here's what we've got for you on today's show.

If you can't stand the heat in this Jarrow kitchen there are two ways to leave.

You've now got a door and an archway which is a little bit odd.

In Harlesden, London, this property with two flats may look

inviting from outside but step inside...

It's quite oppressive and gloomy.

And this two-bed terraced house in Salford has some character

feature NOT built to last.

But you've got a half-decent...

I was going to say a half-decent fireplace.

All these properties are being sold at auction.

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

That's your property, sir.

This is Jarrow in the Northeast between Southshields and Newcastle.

It's known for St Paul's church, once home to the scholar,

the Venerable Bede and as a place of worship for over 1,300 years.

I'm heading just one mile from the centre of town to a very special spot.

This is the popular Primrose area and behind me

is the Primrose conservation area, absolutely glorious.

How fantastic to have that very close to where you live,

or even better, literally across the road from it.

With this right on your doorstep it feels

more like living in the middle of the countryside

so I hope I'll take to the property like a duck to water.

So, what am I here to see?

Well, it's a two-bedroomed, semi-detached,

ex-local authority property.

Had a guide price of 55,000 quid.

We know the views are good but what's it going to be like inside?

Ah, OK. Don't particularly like that - through the front door

and you're immediately faced by this pillar.

A dividing wall between the stairs and the rest of the room here.

And I think that's there to create more room in the living room

and it certainly does that quite effectively

but as an opening gambit for the house - not ideal.

Good to see it's got lovely views over that conservation area

which is REALLY good.

This room though, well, it's a good size in here

but it gets kind of strange as you move this way,

because there's a door here which leads through to the kitchen,

but at some point obviously in the past, somebody's put in this little archway

so you've now got a door and an archway which is a little bit odd.

But it does give a nice open-plan feel to this whole area.

The kitchen, well, nasty damage on the work surface,

the units are obviously past their best,

so spend a bit of money in here.

But it's a good-sized property

and certainly you can't complain about those views.

This is one of the few properties on the street luck enough

to benefit from views of that lovely conservation area.

And with a little work on re-jigging

and reinstating the downstairs of this house would work well.

At the back of it there's a handy utility area

and WC which could do with being replaced,

as could the bathroom upstairs.

It's certainly seen brighter days.

There are two bedrooms, both a good size

and just in need of some cosmetic attention.

The front one, as downstairs, is all about the scenery.

Well, as well as those great views out the front,

at the rear of the property there's also a bit of a garden.

The only problem is...look at the shape!

I guess it comes from the position of the property.

It's this extraordinary triangle.

I guess, fantastic for growing cheese, perhaps?!

Well, I think you'd need to consider "Caerphilly"... Ooh!

..how to make the best use of this strangely shaped space.

Before I attempt anymore cheesy jokes, it's time we invited

local property expert to this lot with its £55,000 guide price.

This house I think is inevitable needing updating,

however it is in a good location.

The room sizes are pretty good sizes for a family or first-time buyer.

It's real good.

Let's talk numbers.

What sort of returns could this house achieve? First, if sold on.

Once renovated I certainly would've hoped 80,000 to be a minimum expectation.

Possibly a little bit more depending on refit and mortar conditions.

What about the rental market? How much could it earn?

Rental value I would put £475 per calendar month.

Well, it's a good area and a good solid property.

A few internal modifications needed perhaps, but in general, yeah, great one to go for.

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

Now we move to lot number 78, do I have 55 anywhere?

All right, let's do 45, I won't go below, £45,000.

Thank you, I've got one bid,

gentleman in the white shirt £45,000.

46 on the back.

47. 48. 49. 50,000, left hand side.

I'll take 51. I'm on the left hand side at 50.

You're both out, I'm going to be selling, left hand side at 50,000.

I'll take one from either of you. I'm selling it once at 50,000.

I'm selling for the second time n the left hand side at £50,000.

Sold to gentleman on the left hand side at £50,000.

After that swift auction,

the successful £50,000 bid was 5,000 below the guide price.

It came from buiness-adviser Ross

and his account-manager sister, Rachel.

They share a passion for property and have both renovated

the houses they live in now, but with some financial help

from their mum and dad, this will be their first investment together.

Rachel and Ross, lovely to meet you both.

Nice to meet you, too.

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

Hopefully it's going to be the start of an investment portfolio

that we're putting together collectively as a family.

Oh, great. And does that interest in property go a long way back, or...

Yeah, absolutely.

My parents, they've bought a couple of properties in their time

and my dad built his own house, so there's always been...

A positive side of that.

And it's encouraged us

-to want to move on and do that for ourselves and for our future.

-Yeah.

And how does it work between the two of you?

You're really taking the lead with it, aren't you?

Cos it's more of a passion for Ross.

And I'm just doing all the paperwork and keeping everything,

you know, behind the scenes, but you're driving it forward.

Good stuff. And what did you like about the house itself?

When I walked through here I thought it had a nice feeling,

really, and I think it's got good potential to,

once we've done it up, to rent it out.

And make a profit, hopefully.

Well, yeah.

If it does prove profitable this could be

the start of a property empire for Ross and Rachel.

It will certainly help to have their family's experience behind them,

but in this place that pesky wall proved something of a barrier

when they were trying to organise the mortgage.

What about any sort of major internal modifications?

Like, particularly the wall in here,

it's got this door in it as well, it's all a bit strange.

Well, that was one of the problems, really,

as well, with the mortgage company.

They said that there was a problem with the wall

and the way that is at the moment.

And it was very close that we weren't going to get a mortgage on the property.

Really? Because they said what?

That structurally it wasn't sound

and we needed to a structural engineer's report which

we did pay for and got done but then they wanted more

and more information and it was getting tighter to the deadline.

Huh! Cos you've only got 28 days to complete, of course.

-That's right.

-Yeah.

-But we got there in the end.

-Yes!

I don't believe you didn't have a few sleepless night.

-Oh, it was really stressful!

-Oh, yes!

-Absolutely.

On Saturday we thought there was a point where we were going to have to

scrape the money together to pay for it cash, so...

Have you learned anything from that experience?

Yes, I have. With it being that the current climate is really,

really difficult to try and get the mortgage in place.

If you've just got a mortgage in principle, you know,

it can drag on and it's a lot harder now to get a mortgage,

so you've got to be really careful and make sure you have got a plan B.

Without having to resort to their plan B, Ross

and Rachel really were in luck there.

In fact, they did go over the deadline for completion,

but fortunately for them the vendor did still allowed the sale to go ahead.

If they hadn't agreed they would have lost their deposit

and been liable for any fees incurred by the vendor.

But now that they've made the narrow escape...?

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

-It needs a complete rewire

and a new central heating system put in, a new kitchen, new toilet.

Upstairs bathroom we're going to lower the ceiling in there and put some spots into it.

Strip the walls and then do it up basically, paint it - cosmetic.

They also plan to block up that archway to make the kitchen and living room separate again.

They've set a budget of £10,000 but can call on friends

and family for some of the trades.

Ross especially is looking forward to rolling his sleeves up

and getting stuck in.

It's just as well as, having secured a tenant,

time isn't exactly on their side.

I reckon it'll take round about 4-6 weeks on this one to turn it round.

It has to cos we've got the tenant wanting to move in

and we've recently bought another one on Friday...

-You bought another one?!

-Yeah, in the auction.

-Right.

-In a different auction and we've got that let out as well,

so it's all systems go.

Yes.

-Wow!

-Yeah, it is.

-"In for a penny, in for a pound," as they say.

-Yeah.

-Yeah.

-So you bought that before you've even got this one sorted?

-So what...

-HE STAMMERS

Are you going mad?! You're very enthusiastic!

The reason why we're having to do that is because of the finances

and to make it stack up. We need to pay my parents back,

-so we needed a couple so we can make enough money to pay them back.

-Great.

They'll be happy you're putting the money into property which they know.

-Yeah.

-Absolutely, yeah.

-Great. Well, good luck in your new venture. Very exciting.

A few hairy moments but you're here now.

-We look forward to seeing how you get on sorting it out.

-Thank you very much.

MUSIC: "Back In Time" by Huey Lewis And The News

Well, there's a tradition for property in the family

and brother and sister Ross and Rachel certainly have the passion

for this, but it was a bit touch and go and lessons to be learned there.

You have to get your finances sorted out before you

bid for a property at auction.

How will they get on? We'll find out later in the show.

This is Harlesden in Northwest London,

a vibrant, bustling part of the capital.

Here is a question, how much would you expect to pay for two

self-contained flats in Northwest London? Well, the average flat

in Harlesden costs around £230,000, so you can imagine my delight when

I heard two flats had gone to auction for the guide price of £230,000.

Yes, you heard right - that's two flats for the price of one!

I'm going in.

The two flats are on the first and ground floor of this end terrace.

The place is not in bad condition.

It looks a though there's double glazing and some original features.

Plus the roof looks fairly new.

There's a communal hallway and a separate door to

the upstairs flat and this one on the ground floor.

It just seems to get narrower and narrower and darker

and darker the further you come in.

It's quite oppressive and gloomy and you just get the feeling this

place needs to be opened up and there needs to be some natural light,

cos at the moment it's not got very nice feeling.

Now on a more positive note - what a HUGE room! Wow!

First things first, I'd like to put a window in there

so some of the natural light can flow through.

Get rid of that ugly old fire exit.

Perhaps, or definitely, take down this yellow, fake wooden cladding,

and how about putting a doorway in here so as you walk through

the front door, you can come straight into his room.

It's a REALLY big space

and there are a few little redeeming features still.

You've got some really lovely old cornicing.

There's even a ceiling rose up there. Not sure about that strip lighting though.

MUSIC: "Shining Light" by Ash

It's a really large room in this downstairs flat.

Yes, it needs major refurbishment

but the bay-fronted window is a great plus.

You might want to think about dividing

the space into a separate living room and bedroom.

At the back of the ground floor flat the former kitchen has been

stripped right out and again there a lots of structural issues.

At least the bathroom still has the fixtures in place,

but you'd probably want to update them.

Outside there's a small but serviceable yard.

Next door there's a social club.

It's not the greatest view but you could shield it with some

trellising and plants and it could be nice out here.

I wonder what the second flat will be like up on the first floor.

What a lovely surprise. It's like somebody's rushed up here

and pulled open all the blinds and opened the curtains and let all the light flood through.

Complete stark contrast to the flat downstairs.

It really is like a different place altogether.

Lovely proportions in here, you've got the high ceilings,

certain amount of period character - these beautiful spindles.

Nice kitchen that's quite large at the end of the property.

A bathroom with a little loo, I suppose you could knock the two together.

It's got a great feel to it. You could imagine with a bit of careful planning

and a bit of money spending on it,

this would be a really nice flat to live in.

Such a contrast to the one downstairs.

What's been achieved up here shows the potential

that's on offer on the ground floor.

But interestingly, the auction catalogue states that indicative plans have been

drawn up to convert this back into a single four bedroom house.

This proposal which would still require full consent raises

a few questions in my mind.

I just can't see restoring it to a single dwelling as a good

investment option in the current market here.

With some doubt as to whether the property was ever officially

converted into flats in the first place,

unravelling its planning history COULD get complicated.

So a good reminder always to do thorough research before bidding.

What will a local estate agent think of this auction lot,

guided at 230,000?

The flats could be great.

They do need a bit of changing around,

especially downstairs with the big open-plan room

but it gives the owners potential to change it in many different ways.

So , what's the estate agent's view of turning this

back into a four-bedroomed house?

I wouldn't recommend turning it back into a four-bedroom house.

I don't think the road could support it or the area would either.

Sounds like it would work much better as flats, but does it make

financial sense to leave the property configured as two flats?

What could they be worth after a refurbishment?

You could put each flat on the market for £180,000.

If they were put on the market as two-bedroom flats, you could probably

put them on the market as something in the region of £230-£235,000.

And the rental figures stack up pretty well too.

The estate agent thinks a one-bed flat could achieve £850

per calendar month, and a two-bed £1,000 per calendar month.

How much could the property be worth

if it was converted back into a four-bed house?

I would think if it was converted into a four-bed house,

it'd probably be valued somewhere in the region of £350-360,000.

I am not so sure about converting these flats

into a four-bedroom house.

It sounds great on paper but it doesn't really stack up financially.

Plus, I don't think there's the demand for it in this area.

Let's see who fancied this property as we go to the auction.

Lot 28, mid-terraced house.

So, 300 anywhere?

You tell me, where do you want to start?

Two?!

OK, here bidding 200,000... 205, yes, standing up.

No, I take it here, 205, just beat you.

210. 210. 215. 220.

220. 225. 230. 235...

This lot was keenly contested.

We pick it up with the bidding at 305,000.

305.

306. 307. 308. 309.

310. 311. 312. 312 elsewhere?

311 down here.

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

Sold 311. Well bid, hard luck at the back.

That successful bid of 311,000 was made by Aggy.

He bought the property with his business partner James,

here on the left, who lives in America and wasn't at the auction.

Together they have big plans for the place, but intriguingly

they hadn't bought the property with themselves in mind.

I went to meet them to get to the bottom of this story.

Guys, congratulations, it's fantastic meeting you today.

-Aggy, you were there on auction day. James, you weren't.

-I wasn't, no.

-Where were you?

-I was 5,000 miles away.

-HE LAUGHS

Aggy, what's the story?

The story is we have an international investment fund.

They feel right now that England is a good place to spend some money in,

primarily London, and because this is my world, property is my world,

they've entrusted me with a sizeable amount of money to spend here,

wisely, carefully, and, hopefully, generate them a decent return.

-So, James, what part are you playing in this?

-Several parts.

First and foremost, I represent the group.

I'm also an interior designer. I started my career here in London.

And I went over to the States about 19 years ago.

-So you have bought this property as part of a company?

-Yes, indeed.

Basically, international investors who are my clients -

I've designed for them over the years -

they said, "You know the London market.

"We trust you to design and build and recreate properties.

"What do you think we should do?"

And Aggy and I sat down, we started talking and here we are.

We are very lucky to have this sum of money to spend on developments,

because it's not easy getting money from anywhere nowadays.

And the resources are cash, so we're not reliant on borrowings.

Something like this is not mortgageable normally,

so it's purely a cash purchase.

Lucky for them.

And it's probably why they managed to pick this up for such a good price -

the key to making this a success.

Aggy is very much at the business end of the partnership.

I've been in property 33 years or so.

Wow.

So I started off refurbishing my first house in 1981,

or whatever it was.

You have seen how many recessions?

I've seen three recessions.

As a result of which, I've had my fair share of pain in property.

I know this property came with indicative plans to convert

this back into a four-bed house.

What do you think of that?

I think if I were looking at a single residence here,

it's probably the wrong location.

I just feel this lends itself to more intensive use

than a single residence.

Has this property legally been converted into two flats?

The way that it works at the moment is it is presently arranged as two flats.

Clearly, it was converted many, many years ago

and so if you can sway them it's been used like that

for several years, they will grant you this existing use.

But, as a back-up plan, we are going for formal planning,

expecting to achieve that anyway, but in anticipation

if we satisfy them we've got this existing-use consent,

then we'll just withdraw our planning application

and get on with the development.

So, James, how are you going to make these flats

the best they can possibly be?

I think, first and foremost, when I did walk in,

the house on the outside doesn't present itself very well.

But, as Aggy said, wait until you get inside.

When you get inside, there's great potential

in the sense of space that allows us to rearrange some of the rooms.

I'm going to add some touches to maybe bring it up a few notches.

Currently, they are one-bed flats,

but are you planning to reconfigure in any way?

The volumetric layout lends itself beautifully to converting each floor

into two-bedroom flats.

So who do I ask about the budget?

-Don't ask me!

-THEY LAUGH

-Aggy?

-It should be round about 25,000 a unit.

So £25,000 for this flat and 25,000 for that.

I reckon. If James wants to spend more money,

because he really wants to give you a good show, it's down to him.

Guys, I'm so excited to see the outcome. I'm sure you going to do an amazing job.

Aggy has survived three recessions,

but he's the first to admit it's not always been easy for him.

Will this property pose any problems?

Something tells me Aggy and James will get on just fine here.

But, as we know well, houses can throw up also issues.

Will they need to obtain planning permission,

or will they be able to start work straight away?

You can find out how this project pans out later in the programme.

Still to come, in Salford it's not a small room,

'it's not even a box room, so just what is it?'

It's just a bit daft.

In Harlesden, Aggy was going through the alphabet of property developing.

Plan A is what you would prefer, plan B is a close second.

But you need "C" and "D".

But first, in Jarrow, did Ross and Rachel face any problems

on this project?

I found the biggest challenge was not to splash the cash.

We're returning now to the historic town of Jarrow in the North East.

Here, property-developing brother and sister Ross and Rachel

purchased this two-bed semi-detached property

with stunning views for £54,000 at auction.

# Right on

# Brothers and sisters

# Right on... #

They were not going to waste any time getting stuck into the work.

I reckon it'll take round about four to six weeks to turn around.

It has to, because we've got the tenant wanting to move in.

And we bought another one on Friday.

-You bought another one?

-Yeah, in the auction.

-Right.

-In a different auction.

And we've got that let out, as well, so, it's all systems go.

Well, they certainly weren't afraid of a challenge,

but had they bitten off more than they can chew?

We've come to see them six weeks to the day after we first met

to see if all systems did go or if they ground to a halt.

I'm impressed. The house has certainly enjoyed an overhaul.

Gone are the dodgy bathroom, green living room

and awkward archway.

All have been replaced with a much more modern and neutral decor,

downstairs as well as up.

OK, when we first came into this room all the walls were stripped

and then we painted it. It's a nice, airy room.

Light, big size, there's a nice cupboard there for storage.

We've got a lovely view out of the window, so overall, we're quite happy with this room.

The oddest thing about this property

was definitely the archway-door combo into the kitchen.

But that's now consigned to the past.

OK, so here we are in the kitchen.

What I've done in here is we've blocked up

the wall from the sitting room into the dining-room area.

We've ripped out all of the old kitchen and put in a new one,

which I think is really, really good. It didn't cost the Earth, to be honest with you.

We sourced the stuff independently. We got really good deals on it.

To top it off, matching the kick boards

in with the worktop and then popping down the worktop to the floor,

I think gives it a modern twist and I'm really happy with the results.

And so he should be.

He and Rachel have achieved all this within their six-week timescale,

despite both having full-time jobs.

How did they do it?

It has been challenging, because Ross has got his own business,

as well as working full-time.

But I think it's using the free time effectively,

like coming at night-time, working as a team, the support of friends and family.

Without them, this wouldn't have been done within the timescale.

It all sounds rosy family-wise. Well, except for one small detail.

Well, we're not actually speaking...

-We weren't speaking, because...

-For a short time.

Last night, we had a bit of an argument about the tidying up

before, er, obviously before you guys came,

but it was a quick make up this morning before you got here.

-So all's well.

-Yes.

# Trying to keep

# The family together... #

And thank goodness,

as Ross and Rachel are about to start on the next joint venture.

They purchased two properties

in order to pay their parents back as quickly as possible.

They had set a £10,000 budget for the work on this one,

and sticking to it turned out to be tricky.

I found the biggest challenge was not to splash the cash.

I think had I been moving in, I would've spend more money

but you've had to check us a couple of times,

because I would've spent the budget weeks ago!

Yeah, just on silly things, like...

I think we've had to rein it in

and make sure we haven't spent a fortune.

And rein it in they did.

Including expenses, the renovation cost them £8,000,

that's £2,000 under budget.

That takes their total outlay, including the purchase price,

to 58,000. So was it money well spent?

We invited two local estate agents to cast their expert eyes

over Ross and Rachel's handiwork to see if they approve.

I think they've done a very good job.

It's very plain and maybe not everybody likes plain,

but it's that blank canvas that anybody moving into it

can obviously put their stamp on it.

I like the finish of the property and I like the neutral decor,

particularly of the kitchen and bathroom.

They are of a high standard.

It's small, but perfectly formed. It has a utility room,

it has a dining area, it has everything that you would hope, but on a smaller scale.

So do big things come in small packages?

Let's get down to business.

The estate agents reckon this property could make

between £85,000 and £90,000 on the resale market.

Resulting in a healthy gross profit of between £27,000 and £32,000 before expenses.

But the siblings have secured a long-term tenant for rental,

so what should they be charging?

I would expect to achieve £495 per calendar month.

£495 per calendar month.

-Brilliant.

-That's really good.

We have already let the property out

and we have it for a little bit lower than that

with the aim of them taking a long-term rent.

-No, I'm really happy.

-I'm happy with that, yeah.

In fact, they've done a deal at £475 per month

in order to secure a long-term tenancy

for their long-term investment.

Not only that, but they are achieving

a very impressive rental yield of nearly 10%.

So fantastic figures, but has it been as good an experience?

BOTH: Yes.

It's been challenging, we've had our ups and downs,

but we love each other. And onwards and upwards!

THEY LAUGH

# Brothers and sisters

# Brothers and sisters... #

This is Salford Quays, in the city of Salford,

the largest broadcasting hub outside London.

It's an area benefiting from large-scale redevelopment,

so with a potential increase in the workforce

and money being ploughed into the area, Salford could prove

a happy hunting ground for hungry property investors.

I'm just ten minutes from the Quays

in an area of these traditional Victorian back-to-back terraced houses.

It's houses like this that became almost the role model

for shows like Coronation Street

and this is the one I'm here to see, it's a big terrace.

Two bedrooms and a guide price of 50,000 quid.

Let's find out how much it will take

to bring this place into the 21st century.

You're going to need a new door for a start!

Let's see what else. Well, a few hints of original features.

A few nice mouldings.

Entrance hall there, stairs up to your bedrooms and through to your lounge.

It's a very traditional layout for this kind of property.

High ceilings, which is good news.

-Obviously some work in the process of being completed.

-HE LAUGHS

They'll have to work on the central-heating system.

Through the archway into the rear living room area.

Again, it's not bad at all,

although whenever I see bits of half completed work,

I wonder what was the underlying problem and has that been sorted out?

You've got a half-decent... I was going to say half-decent fireplace.

There you go. Not much demolition required there.

I'd like to see something more spectacular in place of that.

It wouldn't cost too much to at least take it off.

Through to you what I think is possibly

the most disappointing part of the downstairs, the kitchen -

tacked on the back here, in a right old state.

It just feels too small for the property.

In terms of how much it is going to cost to bring it up to date,

um, the cost is going up.

With this dated kitchen and half-completed heating system,

it looks like some DIY love needs to be spread around here.

Oh, and those polystyrene tiles will have to go as well,

since they pose a fire risk.

In general, there don't appear to be any structural issues

and, from the outside, these turn-of-the-century houses do tend to be fairly solid.

Upstairs, there are two large bedrooms - a double at the front and a smaller one at the back.

'Then there is something really odd.'

So, as well as two half-decent-sized double bedrooms,

you've got this bathroom.

OK, all good so far.

And then, you discover this room.

My guess is this was built

whenever they built the extension on the back.

But what was it built for?

It's too small to be a bedroom, obviously,

it's not practical to be a study. Maybe it's just a storeroom.

Whatever, it's not very good

and I would obviously take out this wall

to create a nice-sized family bathroom.

Because, as it is, it's just a bit daft.

'And talking of small spaces, but definitely manageable,

'take a peek out of the kitchen window and there is a cute backyard,

'which we couldn't get access to.'

What's the best way forward for this place?

It's a strong rental area, so if it's the rental option you're after,

it's best to keep your renovation costs low.

Remembering it was guided at £50,000,

we asked a local estate agent for his thoughts

on this two-bedroom terraced house.

This house needs full modernisation -

new bathroom, new kitchen, possibly the windows and, of course,

we've got a problem with the polystyrene tiles on the ceiling.

But nothing that can't be solved.

How do the returns sound?

First, if sold on.

I'd put this property on the market for £75,000.

And how do rental figures stack up?

I'd value this property for rent about £475 per calendar month.

Well, not too much effort needed to turn this place

into a really nice home or rental opportunity.

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

Lot 37. This one worth 45,000 of anybody's money.

At £45,000?

£45,000. At 45,000. 46.

At 46,000. 46, 47.

At 47. Do I see 48?

At 48. 49. At 49,000.

Round it up to 50?

At 50,000, are we out? £50,000, are we all done?

51. At 51,000. 52.

52. 53? 53,000.

At 53,000 for the first time.

53,000 for the second time.

Third and final time at £53,000.

It's yours.

That successful bid of 53,000 was made by John.

He's an accountant

and lives in Hertfordshire with his fiancee Catherine, a nursery nurse.

They originally hail from this part of the country

and have headed back north to make their first property investment.

'I met up with them to find out more.'

-John, Catherine, great to meet you.

-Hi.

-Congratulations.

Tell me why you wanted to buy this place.

We'd been looking around for a while at properties to buy,

because this is such a regeneration area, and it came up in the auction.

We thought we'd have a go and see if it came up at the right price.

-And it obviously did.

-It did, yeah.

-We got it cheaper than we thought it was going to be.

-Great.

What did you think it might go for?

We had a look and the most we will be willing to pay was 60.

We thought it would go from mid-50s, 60.

In the auction, I even bid twice, because I wasn't sure.

I'm putting my hand up

and the auctioneer's, "Yes, that's you, yes!"

Me!

So we probably paid 1,000 more than we should have done!

-You weren't particularly playing it cool?

-No.

-Again!

Yeah, basically.

So why were you so enthusiastic to buy it?

Erm, generally with these terraced houses, there's properly nothing too bad

in terms of structure - if one of them is going to go, the whole row is going to go.

-Right.

-We knew... This is our first property in terms of investment,

so we didn't want anything that was too much work and effort.

Because between ourselves and friends and family, we'll be doing the work ourselves.

Catherine's dad viewed it and said there didn't seem to be a massive amount of work to do.

So that's why we went for it.

Is your dad a builder ?

No, but he was in double-glazing and stuff.

He's a bit of a jack of all trades,

which is good, so he gave us an idea of how much it would be cost.

In fact, this property is an investment by both sets of parents

to help the couple start up a future pension plan.

But before we go into their plans for this house,

I wanted to know more about them.

We've been together about six years.

We moved together down south about three years ago

and bought our first property to live in.

-We're getting married next year.

-Congratulations.

So between sorting the mortgage out for this

and arranging a wedding, we've been quite busy!

-And full-time jobs.

-Yeah, and working, yeah.

Are you getting married down south?

-Up here, we're getting married at Chester Zoo.

-Chester Zoo!

-In the big manor house.

-Not in a cage?

-THEY LAUGH

-With the lions - take a risk!

# We're going to the zoo, zoo, zoo

# How about you, you, you?

# You can come, too, too, too

# Going to the zoo, zoo, zoo. #

What a great idea, but before that

there's fun and games to be had here.

The couple plan to install a new kitchen and bathroom,

new flooring and get that central-heating system sorted out.

Then they hope to let the place out in two months' time.

So what sort of budget do they reckon will do the job here?

About five, 5½,

assuming we don't find any nasties anywhere, or major issues.

OK. That's tight, isn't it?

It is tight, but most the work will be done by us.

Doing a lot of the work ourselves, and by friends and family, will keep the labour costs down.

So with a bit of luck, we'll be around the £5,000 mark,

-but I wouldn't want to guarantee it just yet.

-SHE LAUGHS

'Doing the renovation for around five grand might prove tight,'

but as the couple are based down south,

they'll leave it to friends and family to do most of the refurbishment.

That's a good decision, because DIY isn't a strong point.

Personally I'm restricted to painting.

-I'm not going to have major part.

-No, we're not very handy.

Neither of you?

I can't put a shelf up.

-No, we live in a new-build so...

-For that reason.

Oh, wow.

So you really are DIY disasters, both of you?

-Yes.

-We are completely.

-I put a shelf up. The only bit of DIY I've ever done.

I put a shelf up in our flat, measured it,

drilled the hole, I didn't realise the bracket drops like that

so there was a gap.

At the minute, you've got the bracket and a pencil shoved in

and the shelf is sitting on a pencil, sitting on the bracket.

That's why our dads will be doing the work.

If you come back and it's fitted together with pencils

and other bits of stationery, you'll know I've done the work.

That's brilliant. Best stay down in Hertfordshire, I think.

-Yeah!

-That's pretty much the idea.

-I think they'll pay us to stay away!

-Yeah.

Well, congratulations. Work to be done. Not by you.

BOTH: No! LAUGHTER

-We look forward to seeing how you get on.

-BOTH: Thank you.

Well, I think John and Catherine and their respective families

have done well with this place.

Work to be done, but definitely not by them.

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

Time waits for no man and the weeks and months have passed.

So have our properties been subject to a real DIY effort?

Or have they remained exactly the same?

The moment of truth. Let's go back and find out.

'Earlier in the programme, we were in Harlesden, north-west London,'

where this terraced property, divided into two self-contained flats

was bought for 311,000 by Aggy.

He's a professional property developer

for a group of American investors represented by James,

who was a designer and had worked with Aggy before.

Although there were questions over consents for original flat conversion,

Aggy was confident there would be no problem getting agreement from the local planners.

If you can sway them it has been used like that

for several years, they will grant you this existing use.

But, as a back-up plan, we are going for formal planning,

expecting to achieve that anyway.

James, how are you going to make these flats

the best they can possibly be?

The house on the outside does not present itself very well.

But as Aggy said, wait will you get inside.

And when you get inside, there's great potential.

Well, nine months had passed when we met up again with Aggy and James.

The back of the house has been totally transformed.

There are new windows, roof and a new door

where the downstairs bathroom was now leads into the former kitchen.

That has been extended right to the back of the property.

I don't know if you remember,

but this was really quite a, I would say, derelict room.

It was quite awful. Very dingy.

And what we wanted to do here is achieve a really nice fresh look

and make it very open.

To the back end of this room was a very old, dingy bathroom.

What we did with that was open it up completely.

The amount of light coming in is what we were trying to achieve and that's happened.

We've put the cabinets on this side, which left this side nice and open.

Not only does it make it look nice and large, but it's practical.

It's come together incredibly. I'm really happy with this room.

At the front of the ground floor, that massive room has been divided

into two, with the new doorway from the hall and a bay window.

In the newly created smaller rear room,

the fire exit is now a door to the patio garden

and, in a new location, a bathroom has been installed.

But, actually, this is no longer the ground-floor flat

because, as Aggy explains, things didn't go as planned.

When we did our due diligence on the planning side,

there was no history to suggest

there was anything other than two flats,

created many, many decades ago.

So we expected to just get regularisation of use.

But we were declined.

They felt there was a greater need for a single family dwelling.

Initially, we resisted. We thought about whether we should go to appeal.

Ultimately, we thought, "Let's just change our complete thinking,"

and, in some ways, they've done as a favour.

It's good that Aggy is being so positive about this,

even though it wasn't the news they originally hoped for.

So the ground floor rooms now form

part of an impressive five-bedroom, two-bathroom house.

Up on the first floor is the original master bedroom.

Along the landing is bedroom two.

The separate loo has been opened up into the bathroom.

The former kitchen at the rear is now a new bedroom.

So what impact did the layout change have on the design plans

James had made for his American client?

Most of the challenge I had to face from a design point of view

was how to make it a cohesive house, as a one, stand-alone house.

Obviously you have to, being an investment,

and thinking about the investors,

it was important to make a design that was palatable

for a wide range of people.

To add extra accommodation, James and Aggy started to erect

a more spacious four-sided mansard extension in the loft.

They submitted paperwork for the consent under permitted development, but it was refused.

In the end, the solution was just to do a loft conversion,

which was accepted by the planners.

It sounds like all the to-ing and fro-ing has caused some major headaches.

So with over 30 years' property experience, how has Aggy managed?

You need to be flexible and elastic.

Ultimately plan A is what you would prefer,

plan B is a close second, but you need C and D,

where you come up with the best viable alternative that's going to work you.

And I think we did that.

Originally, Aggy had set a budget of £25,000 for each flat,

so how much is he had to spend converting the whole house?

25 grand a unit would have been appropriate and probably doable,

although because we threw away the roof -

-a couple of times, actually, with the mansard!

-HE LAUGHS

So we're quite content that we spent around 100 or so

bringing this up to an appropriate standard.

Along with the 311,000 he spent at auction,

that takes the total to 411,000.

So what's the plan now for the house?

We are going to rent it.

We've bought it, we fixed it, we are going to keep it,

then the plan is to do more with the resources we have available.

Time to hear what two local estate agents think of the place.

They've done a nice job of the refurb,

a nice finish throughout,

utilised the space well. It looks good.

Don't think it would be an issue to sell or rent.

The layout of the house is reasonably good.

It's fairly traditional.

There is a very small reception room, which I can't see

totally what they can use it for, but they've made the kitchen

a nice big room and the bedrooms are all of a reasonable size.

I like the way the loft's been done.

They've utilised the space well. All the bedroom sizes are good.

The kitchen is good, a good size, offers space for a dining table that looks out into the garden.

With £411,000 invested here, what valuation could property achieved?

If the property came on the market for sale,

I think you would be looking somewhere in the region of 400,000,

but we'd probably ask as high as 410 to 415.

In the current sales market, I'd expect achieve around £450,000.

£450,000 would generate £39,000 gross profit before expenses,

But 400 grand would produce a loss of 11,000.

450 is hopefully more accurate,

but there is only one time you know what to going to get,

when you actually sell it.

It starts with a four and that's quite nice.

And that's what we want to know!

How much rental income could be earned here?

If the property came on the market to rent,

I think it would achieve in the region of £2,000 per calendar month.

In the current market, I'd expect to achieve

somewhere in the region of £2,000 per calendar month.

Again, hopefully 2,100, something like that

but 2,000 is good. We'll take it.

They'll be getting a yield of around 6%, too,

so there's been a complete change of plan

as their proposed two-flat development was refused.

But they can see the positives.

I'm pleased we're hanging on to it rather than put it on the market -

are we going to sell it, aren't we going to sell it? Will we get the right price?

We'll benefit, hopefully, in the fullness of time,

whether it's five, ten, 15 years,

doesn't make much difference right now.

Will they be working together again?

-What do you think?

-What do you think?

-I reckon so.

-I reckon so.

I think we're blood brothers after this one!

We head back to the city of Salford, where soon-to-be-wed couple

Catherine and John bought this two-bed terraced house for 53,000.

They had a good idea to renovate the house as part of a pension plan.

'The problem was, when it came to DIY, they didn't have any idea at all.'

You really are DIY disasters?

-Yes.

-Yes, we are completely.

I put a shelf up, the only bit of DIY I've done.

I put a shelf up in our flat, measured it up, drilled the hole.

I didn't realise the bracket drops like that, so then there was a gap.

At the minute, you've got a bracket and a pencil shoved in

and the shelf is sitting on a pencil, which is sitting on a bracket.

-HE LAUGHS

-Uh-oh!

Fortunately for the house, the couple live in Hertfordshire

and are leaving it to their families who live in the area to do the renovation.

Wise move there.

Just over three months later,

we're back to see how Catherine and John,

or rather their family, have got on.

Well, this is much better.

No signs of pencils anywhere,

just two light, airy reception rooms.

At the rear, a new kitchen has been installed.

Over to John to explain about this part of the house.

We would have stripped it out completely.

There was a door that led through from the dining room through to the kitchen,

so we took that out because it opened into the kitchen,

which meant you lost an entire corner.

We changed the back door out into the yard,

just to get more light through with the glass in the window.

There was a water heater up on the wall here,

which wasn't being used,

so we took that out, bricked up the hole in the wall.

Then just took out the old kitchen,

put this new kitchen in and job done.

Upstairs, the bathroom has been turned around

with a new suite and tiling installed.

And the front bedroom has had the fitted cupboards removed,

been redecorated and re-carpeted.

The same colour schemes have been used in the rear bedroom.

And the box room? Well, it's still a box room.

So, all in all, no major changes,

because none were needed.

Structurally, it was sound, but it was a bit of a mess cosmetically.

We had a problem with the front door, which was also leaking.

It meant one of the joists had rotted where you first come in.

We had to replace the joists and front door.

A couple of the floorboards had gone.

I found out when I put my foot through them - nearly ended up in what we found was a cellar.

Well, that was a happy accident

to discover an extra level for the house.

Although they haven't turned it into a liveable space,

it did make repairing the joists easier from underneath.

But they did have a nagging problem with the rear window.

There were a few problems with this window when we first moved in.

So there was plaster missing from the corner of the room

and the window itself was leaking.

So what we did so we didn't have to keep coming back solving problems, we took the window out,

fitted a new window, opened it up and let the wall dry out,

re-plastered, wallpapered and now it's great.

The renovation has had several plastering jobs,

radiators reattached

and the whole house redecorated from top to bottom, wall to wall.

Were Catherine and John able to get involved at all?

Friends and family in various trades came along and helped out,

so without them, we wouldn't have been able to do anything.

We're so bad at DIY anyway, that we couldn't have done it ourselves.

As it's not held up by pencils,

you can see I clearly haven't done any of the work. Yes.

John was on hand to help out with the smaller jobs.

With the couple's friends and family, the project was completed

in three months, a month longer than predicted.

In general, it would be fair to say

the turnaround in this place was hassle-free.

So did the budget follow suit?

The original budget was around the five grand mark.

We thought we might have to go to 5½, depending on what we found.

In the end, we've come in under budget at just over 4,500.

Doing the renovation under budget was no doubt due to

the generosity of family and friends doing the work.

Add that £4,500 to the purchase price of 53,000

and their total outlay now is 57,500 quid.

Will it prove a hit with the two local estate agents

who came to give us their thoughts on the place?

Renovation work that's been carried out is very nice.

Bedrooms are a good size.

Two double bedrooms and they've got the third room as storage.

I think this is a good property.

They've done a reasonable refurb on it.

Upstairs is slightly unorthodox.

There's a small room which can only be suitable as a computer room,

but there are two good-sized bedrooms and a nice bathroom.

Originally, the house was bound for the rental market,

so what sort of income could Catherine and John expect?

If I was going to rent this property out,

I'd look at achieving between £500-£525 per calendar month.

I would market the property for £500 per calendar month.

-I'm really pleased.

-Yeah, that's a good price, that.

I didn't think it would go above 500 a month, so, for the area,

that's really good.

We've got it on for 500 now, so hopefully we'll get that.

If the couple managed to get that figure of £500 per calendar month,

they could reap a very healthy annual rental yield of 10.5%.

But bearing in mind the £57,500 outlay,

would they make any profit if they sold it?

If I put this property on the market today I'd market it at £80,000.

I would market the property for £80,000.

That's a great price. That's the price we were aiming for

and that's why we spent a little bit more on the finishes.

Hopefully, now it shows that it was well worth it.

That could land the couple a potential pre-tax profit

of £22,500 - not bad going for a first renovation

and one that's obviously got them thinking about their next move,

although it might not be that straightforward.

Definitely do it again.

I think it would be more family and friends who helped us out

that we'd have to talk into it again.

For us, it's great, we can just stay down south

and not have to do very much work.

So, yes, I'd definitely do it again.

I'm not sure they would be quite so willing

to do it at such cheap rates again.

That's it for today's show.

We'll more auction properties next time on Homes Under The Hammer.

Make sure you join us then for more about what happens when that hammer comes down.

-Bye for now.

-Bye.

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