Episode 35 Homes Under the Hammer

-Welcome to the programme.

-We're told to save for the future.

And that's even more true these days when people are looking

to supplement their pensions and invest their savings.

Well, property is an attractive option

and you'll find plenty of those in the auction rooms.

If, like us, you're hoping that property will be

a fruitful investment, you need to buy wisely.

And that means doing your research

and knowing exactly what you're taking on.

-So, what inspired the buyers on today's show?

-Let's take a look.

In Mousehole, Cornwall this cottage needs some work.

But what you're working with is somewhere

that's a great place for the money.

This terraced house in London may be in a sorry state

but don't be put off.

It wouldn't take an awful lot to bring this place up to standard.

And is there no end to the accommodation

in this place in Howdon, near Newcastle?

It's a terraced house, for goodness sake

and it just keeps going on and on.

All these properties went to auction.

20,000 bid.

We'll find out who bought them

and what they paid, when they went under the hammer.

It's sold.

Apparently Dylan Thomas once described Mousehole

on the south coast of Cornwall as,

"The loveliest village in Britain."

I'm not going to argue with him.

Fishing used to be the main industry,

but now it's tourism with thousands of holidaymakers

flocking here to this picture postcard perfect place.

MUSIC: "Postcard" by Eddi Reader

# You sent a pretty postcard

# From a far and lonely sea. #

It really is a perfect seaside village.

And probably hasn't changed much

over the past 100 or so years.

It's a beautiful, fresh spring afternoon now,

but I imagine that during the summer it's teeming with visitors.

So, let's find out

if the place I'm here to see lives up to its gorgeous surroundings.

Well, location is the key to any investment.

So, just 30 seconds' walk from the harbour

and the property I'm here to see has got to be worth a look.

And this is it. It's a two-bedroomed cottage.

As you can see, stone built.

Had a guide price of 135,000 quid and I am very excited.

So, what have we got? Basically it is a two up, two down.

On this side you've got your living-room area.

Nice to have the open fire. That would be lovely in the winter,

because actually this place is quite popular throughout the year.

Lots of character.

These thick walls means you've got these lovely window seats

and get all this stripped back, it'll be glorious.

Do something with the ceiling to give it a bit more character.

I'm getting the feeling there's stuff hidden away here

that you could unearth.

You've got storage radiators at the moment which isn't ideal.

So possibly look to put central heating in.

And to be fair you haven't got a lot of depth,

in the whole property.

Over this side is your kitchen.

And again, I think you could create such character here

if you put in a lovely rustic country,

or maybe seaside-feel kitchen.

Enough space for some good units here

and then maybe a table where you could just chill out.

All in all - work to be done,

but what you're working with is somewhere

that's a great place for the money.

It's an old fisherman's cottage, so there isn't loads of room.

But the layout is simple and works well.

There's no garden but what does upstairs have to offer?

So, upstairs and I think pretty good news really.

You've got a good-sized double bedroom on that side.

Bit of a landing.

A small, but at least it's in the right place, bathroom and loo.

And then through to your second double bedroom.

So, either if you're thinking about living here or renting it

out for a family, it's got everything you need.

And again, it needs a bit of tarting up,

but not that much in the whole scheme of things.

It would be lovely to think

that this will become someone's seaside home,

but something tells me this will be destined to be a holiday let.

For an investor it could be a smart move.

The potential in such a picturesque village could be huge.

So, let's talk about holiday lets.

Well, you haven't got sea views or any outdoor space.

However, you are centrally located,

so I reckon you could still get around £700 a week.

Obviously that's in the peak season. Less at other times of the year.

But it's not just about the money. It's about void periods.

You want to make sure that you've got people in the property

as much as possible. I've been checking on the internet

and some of the accommodation around here is literally

booked up months, if not years in advance.

And...it's full most of the time.

Wow, that's got to be good news.

Turns out, Mousehole, yes, is pretty, but it's also small.

So accommodation is at a premium.

This fisherman's cottage could end up netting you some good returns.

# I'm getting better

# All the time. #

I think this little property in this beautiful setting

has bags of potential.

But what does a local property expert reckon?

We asked one along to give us his opinion.

It's very popular as a holiday destination.

You have a good pub in the village.

Several really good restaurants,

plenty of character with all the cobbled streets.

History and heritage.

This property is one that's in need of some updating,

especially within the kitchen.

But it has bags of character.

I feel it's a property that will have appeal

to people looking for a pied a terre, holiday escape

and also there is the possibility

of a retirement home for a couple

or maybe even for the short-term assured-tenancy letting market.

The estate agent reckons this could be worth

in the region of £225,000 once refurbished.

But where does its best value lie?

The best way to make money on this particular property

would certainly be to holiday let.

In the high season I feel one could expect

a rental income in the region of £700 per week.

Well, it's an oft-used phrase

but it's certainly very valid in this instance.

Chances like this don't come up very often.

It's a delightful cottage in a lovely location

in this picturesque setting.

I'm sure there was a lot of demand for this

when it went under the hammer.

Lot 16 in Mousehole.

I have a telephone bidder, ladies and gentlemen, for this lot.

So, where should we start - £135,000.

I don't want to start too far from there.

130,000. 140.

145?

145 I have then.

150 on the phone. 155 now? 155. 160?

160 on the phone. 165 now?

Back against you at the back on the right.

If there's nobody else coming in. Two and a half. 162 and a half.

165 now, please, on the phone. 165.

166 now in the room.

At £166,000 then it's with you, sir.

Yes, £166,000 for the first time.

Those immortal words, "Get on with it, auctioneer."

For the second time.

Third and final time

at £166,000.

In the room. I am selling it.

It's sold to you - 166.

Thank you very much.

It was Martin who made that successful bid of £166,000.

# Take a look at that deep blue sea

# Don't you think it looks great? #

Martin's a head teacher and is married to Yvonne.

They live in Croydon and own a holiday home in Cornwall.

# Gotta go

# Get away... #

Now, they've snapped up this one as well.

I met Martin back at the property to find out more.

# I know a little place not far from town

# Gotta go

# A kinda pretty place

# Three up, two down. #

-Martin, congratulations.

-Thank you very much.

-Lovely to meet you.

Tell me why you wanted to buy this place?

I was just searching on the internet for property in Cornwall

and in particular just happened to punch in Mousehole

and this popped up as just coming up for auction.

So, what is the affinity with Cornwall?

My partner is a Cornish girl and I've always loved Cornwall

and eventually we would like to move down to this part of the world.

So, is this the first property you've got around here?

-No, I have another property down on the Lizard in fact.

-Holiday home?

It's a holiday home bought ten years ago

in worse condition than this actually.

So, I've done that up and it's now let out.

And is the plan to do something similar with this?

Similar with this, yes.

To do it up and then probably decide which one to keep

because probably won't be able to keep both.

And what do you think about the general condition?

Actually, I've got to say I'm very pleased with the condition.

It's not showing any damp,

even though it's been empty for about nine months.

I walked in here the day before the auction to have a look at it

and just thought, "Actually nothing major structural needs doing to it."

It's a "refreshment" is the estate agent's term.

So apart from decoration and a new kitchen and sorting out the bathroom,

there does not appear to be anything majorly structurally wrong with it.

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

One of the features I'd like to keep is in the windows,

because they have got this secondary glazing in them

which I think is the first thing I would like to rip out.

Behind them, especially the downstairs windows,

there are some shutters.

It would be really nice just to open those again

and see if they do actually work.

Apart from that, fairly minimalist and put wood flooring throughout

on the downstairs and I've been looking at the bathroom

and probably will take out the bath and will replace that

with a shower to create more room in there, because it is quite small.

So that actually somebody could get in there and do their make-up,

which you couldn't do at the moment.

# Lipstick, powder and paint

# Lipstick, powder and paint. #

And a touch of lipstick isn't the only makeover

that's going to be applied here then.

Good news and even better news for Martin

is that there is no major structural work to be done.

He's given himself a £15,000 budget

which should be more than enough for the job

and he's saving money on labour too.

I have done lots of DIY over the years in various houses

so I can do most things,

apart from things you're not supposed to do like electrics and such.

And plastering, I can't plaster. But plumbing and everything else, yes.

-But you'll be doing that kind of stuff in here?

-I will, yes.

I really enjoy that.

Martin is waiting until he retires

before he and Yvonne move permanently to the area,

but will use this property a few weeks of the year

as their holiday home.

Rest of the time they'll let it.

What kind of price per week if you were to rent it out you would get?

I've been looking around.

I think during the summer holiday, the school summer holidays,

we're probably looking about £650-700 a week.

-That's a reasonable return.

-Yes.

-Congratulations.

There are lots of people who are watching are very jealous

that you got this place.

Thank you very much indeed. You must come back and see us.

-Good luck with it.

-Thank you.

Well, you'll agree, Martin's got himself a great property

here in a beautiful location.

And somewhere to use in the run up to his retirement

and make some money from holiday rentals at the same time.

Can't go wrong. Let's see how he gets on, later in the show.

I'm in Edmonton, North London.

Once home to famous factories and famous faces,

such as Bruce Forsyth and David Jason.

It's not always had the best of reputations,

but there are ongoing efforts to improve the shopping centre area.

Investment-wise, house prices are still comparatively low here

and it's a popular rental area.

So, I can't wait to check out the potential of this lot.

# London, can you wait? #

Even though it's just 20 minutes by train

to the heart of the city at Liverpool Street,

property around here certainly isn't priced to tax a banker's wallet.

Whole houses around here sell for less than a studio flat

just a few miles into London.

And it's a whole house I'm here to see.

It's got two bedrooms and it had a guide price of £150,000.

From the outside, it looks a tad dated.

With its fake flowers and flimsy porch.

But it's really not too bad

and the road is certainly pleasant and quiet.

Very...yellow.

But it's clean as a whistle in here.

Wow, what a lovely surprise. It almost smells of air freshener.

I mean it really is in good condition - OK, a little bit dated.

You can see this was probably done a long while ago.

They've knocked through to open the space up.

Now, come round here because the jury is out on this one.

Would you want to get rid of this?

You could open this space up and go into the hallway.

Take this bit of wall out.

Do you think you could fit a three-piece suite in here?

I'm not necessarily sure you would need to do that.

But of course the option is there.

You've got another really good-size room here.

You could call this your dining room.

A little bit dated. You've got polystyrene tiles to think about.

But, it wouldn't take an awful lot to bring this place up to standard.

So potentially not much to alter at the front of this house

that went to auction guided at 150,000,

but at the back I've got a puzzle for you.

So, are you paying attention?

Here's a little test. Where am I?

Yes, that's a shower. Am I in the bathroom?

No, in the kitchen, of course.

Only on Homes Under The Hammer.

# How bizarre

# How bizarre

# How bizarre. #

Well, I thought I'd seen it all, but a shower in the kitchen?

That is pretty bizarre.

Not to mention awkward if you get up late and fancy a shower

when your other half is right next to you cooking bacon and eggs.

Space-wise, there's a little lean-to area at the side of the kitchen.

Which is incorporated with what once would have been the outside loo.

But in terms of a bathroom. this sad but functional WC

and the shower in the kitchen is your lot, I'm afraid.

That definitely needs to be sorted out.

But this place does have some major plus points.

Inside, yes, it's clean and tidy

but it's out here that's been really loved.

MUSIC: "The Universal" by Blur

This really is a gorgeous garden.

You can see how much care and attention

have gone into cultivating it.

It will certainly be a big selling point.

Which could be vital if I can't find a new location for the bathroom.

Now, I'm just hoping in this solid little house

there is enough room to house a bathroom up here.

Otherwise, it's just not really going to work for me.

Bedroom number one - not a bad size.

Good-size double here. I'm just wondering

if there's a little bit more space or depth in that cupboard.

No, not really. That's quite shallow.

Oh, no. It's obvious.

There's no room to locate the bathroom upstairs.

You don't hear me say this very often on Homes Under The Hammer,

but I think you're going to have to build a bathroom downstairs.

Now, you've got a couple of options. You could extend.

You could even think about putting the bathroom into the lean-to.

Perhaps making that into a permanent structure.

But whoever buys this at auction

has got to factor in the extra cash they need to spend here.

You could try to squeeze a bathroom in between the two bedrooms,

but I think you'd end up with a pretty small second bedroom,

far from ideal and there's no plumbing here.

So I think that would also impact heavily on your budget.

We asked a local estate agent

to come and look over the property, guided at 150,000.

First impression of the property is that it needs some work.

In my opinion, the bathroom needs to be upstairs between the two bedrooms.

Have the main bedroom at the front of the house

and the second bedroom towards the back of the house.

OK, but that's a big job that could cost big bucks.

So, would it be worth it?

How much rental income could the property generate?

In my opinion, this property would rent for £1,000 per calendar month.

And it would rent very quickly.

So once the house has had a refurbishment

and got a bathroom installed, how much could it potentially be worth

if it was then put back up for sale?

Once the work has been done to the property, in my opinion,

the property's going to sell for between £195-200,000

with the bathroom being downstairs.

And with it being upstairs, something in the region of £205-210,000.

So, squeezing the bathroom in upstairs may be more lucrative.

Well, upstairs or downstairs, even with the cost of the bathroom,

there could be money to be made here.

If bought close to that £150,000 guide price.

To find a whole house for this guide price in London is a rarity.

OK, so it isn't the most desirable postcode,

but if you were after a straightforward freehold investment

that would rent extremely well, I think you could definitely do worse.

Let's see who agreed at the auction.

This is lot 53 - good potential. Lot 53.

House, Edmonton. Must be cheap.

Not going to go below 150.

150 in the aisle.

151? 151 on my right.

151. 152.

153. 154.

155. 156.

-157.

-With interest in this lot high,

we rejoin the auction at £175,000.

175. 176.

177. 178.

179. 180.

181. 182.

183. 184.

185. 186.

187.

If not, 186.

First time, second time.

Third and last time if you're all done?

Sold - 186. Well done, sir.

He was in there from the start

and it was Ray who paid £186,000 for the property -

36 grand over the guide price.

He and his wife, Diana, live in Buckinghamshire

and bought the house as a joint investment

with their builder friend, Victor.

He will do most of the work in return

for a 50/50 split of any profits.

Diana runs a fancy dress shop

and Ray used to work in communications for the police,

but now runs a fireworks business.

# Baby you're a firework

# Come on let your colours burst. #

-Ray and Diana, lovely to meet you.

-And you.

Why did you want to buy this property at auction?

We were looking for a property to buy

and to turn over and make good.

This one said it, "Needed decoration and refurbishment"

and it came within budget and so we bought it.

So Diana, what did you think on the viewing?

As you viewed this property, what were you thinking?

I thought, "That looks a very nice little house."

I wished I could get in to see it,

but we didn't...weren't here on the right moment.

But it looked very nice. I noticed it had a new roof.

So I thought, "Let's go for it."

So you bought this on how it looked from the outside?

-Yes.

-You didn't come inside?

-I didn't come inside.

But been to the area, speaking to neighbours,

checking with agents about other houses in the area.

So you did take a bit of a risk, a huge risk in fact.

-Yes.

-Especially as we looked at the brochure

and it didn't mention a bathroom.

-Right, so.

-I thought it must be a typo.

But it wasn't.

I really should give these two a rocket.

# Fireworks shooting off in her head

# In her head. #

The lesson here is never assume anything.

If they had viewed the property prior to the auction,

they would have seen just what they were buying.

It means the budget of 15,000 they'd originally set

is likely to increase to around 20 as they try to find somewhere

to locate the bathroom.

We need to do something with the bathroom situation.

But we've come up with a couple of ideas, looking at it.

One is what I call, "The utility room," which is the lean-to.

Turn that into a bathroom.

And then Ray's idea is to take down the wall

that goes round the toilet.

Take the toilet and put it somewhere else

and then make the kitchen squarer.

That would be the cheaper option.

The more expensive option would be to build an extension.

But I think that is probably cost-prohibitive.

So, has it changed things now? Now that you've actually come inside?

And do you think if you'd have had a chance to view this property,

you might not have bid for it on the day?

No, I think it's still got lots of plusses. I think this is a nice house.

But my only worry with that is, it's still incredibly dated.

-So, you've got to start from scratch with this property.

-Yes.

We expected to do a complete decoration job anyway,

so it's not going to be a great deal more.

A little bit of structural work which is something new to me.

But I'm sure that the chap I do it with - he is a builder

and so I'm sure he can build me a wall

and we can knock down a wall and put in some windows.

The couple have some experience of renovating

and then either selling or letting the properties.

And they have a small portfolio.

Their builder friend and business partner, Victor,

will do most of the labour.

Diana will need to work around her fancy dress business,

but perhaps Ray will be able to help out.

What about you Ray?

I run a firework company and so sometimes busy at weekends

but there's not so many firework displays in the week.

-Are you going to have time to do what you need to do here?

-Yes.

My original estimate was three months.

If we go for an extension it may be slightly longer.

Guys, good luck.

This is going to be an exciting if not trying time for both of you.

-But I'm sure you are going to do a fantastic job.

-Thank you.

Diana, lovely to meet you. Ray, thank you very much.

From fireworks and fancy dress to property,

this pair certainly like to keep things interesting.

But on a serious note, will they stick to their budget

and where is that bathroom going to go?

Find out if Diana and Ray's development project goes with a bang

or turns out to be a party pooper later on in the programme.

Coming up.

With so many rooms,

compromises may be needed in this flat near Newcastle.

I think this could end up being a bit of a corridor room.

In East London, rocket man Ray's learnt some sure-fire lessons.

I have learnt with this one not to be quite so far away.

But first we return to Cornwall, where Martin has the end in sight.

Few small things left to do but about 90/95% done.

So, back to Cornwall

and the beautiful fishing village of Mousehole,

where earlier we met Martin, a head teacher from Croydon, South London.

He'd bought this little two-bed cottage for £166,000.

His wife, Yvonne, was born in this part of the country

and they both plan to return here later in life.

They've bought this as a holiday let,

but already have an important foothold

in the property market here.

So, is this the first property you've got around here?

No, I have got another property down on the Lizard in fact.

So I've done that up and it's now let out.

And is the plan to do something similar with this?

Similar with this, yes -

to do it up and then probably decide which one to keep.

Because probably won't be able to keep both.

But before this place is ready for those first holiday-makers,

Martin had a budget of £15,000 to freshen the place up

and add a new kitchen and bathroom.

So, we've returned one year later

to see if he's managed to give the holiday-makers what they want.

Well, talk about kerb appeal - this cottage has now got it in spades.

With a newly painted front door and some horticultural set dressing.

And the appeal continues inside with the lounge

now a far more comfortable place that's also easier on the eye.

The overhauled kitchen looks good too,

with soft warm tones and new units.

But as Martin explains, getting the lighting right

is just as important as picking the right look.

Well, in the kitchen we've had to take out absolutely everything.

The first thing I did was the lighting

because it was just a horrible fluorescent tube

with a huge old-fashioned globe.

So it was a complete rewire of the lighting in here.

And then obviously an entire new kitchen.

An entire new wooden floor and it is as you see it is now.

Martin's done a good job upstairs, as well as down.

A new shower unit has been installed and the bedrooms

have been redecorated, carpeted and furnished.

And apart from the electrics and some re-plastering,

it's all been down to Martin's own fair hands.

In this room, apart from the complete redecoration,

and the insertion of new storage heating throughout the house,

a new wooden floor has gone in.

And when I took out the Yorkstone fireplace,

I uncovered this old, Victorian, black-fire surround,

which I then put a wooden surround around it

and was able to recycle the slate hearth that was incorporated into it.

I'm very pleased with this room. Especially when the suite arrived.

It seemed to pull it all together.

It's now a nice, cosy, little room and we enjoy sitting in here.

# Everything's rosy, oh yeah

# Comfy and cosy. #

Well, don't get too comfortable, Martin.

Although it seems ready for the summer season,

there are still some loose ends.

A few small things left to do.

I haven't done the skirting in the room we're in for a moment.

And the banisters haven't yet been painted

and a few other little things.

But about 90-95% done.

Martin's role as a head teacher

meant he wasn't able to start work on the renovation

until five months after we first saw him.

In total, it's taken him four months to get it into this condition.

So, how did his £15,000 budget cope over that period?

When this is finished,

I think it'll probably work out about 10-11,000, so well within budget.

I'm very pleased, actually.

Well, that is good going.

Add that to his £166,000 purchase price

and Martin's total outlay is around £177,000.

So with all the work put in,

and the plan to move from Croydon to Cornwall in the future,

could he ever see it as a retirement pad for themselves?

No, this isn't the kind of property I'd like to live in.

It's not really big enough and there is no outside.

So no, I don't think this is suitable to live in.

But we do want to move to this area, yes.

With the house nearly ready for the holiday lettings market,

it was time to ask two local estate agents if they thought

Martin's new property would appeal to holiday makers.

Well, the whole property's been lightened, brightened.

There's a nice mix of contemporary and a lot of preserved character.

Well, I like the way they've done it.

They've used light colours which gives it an air of space

and they've kept things to a minimum.

It's a character cottage, but it's got that modern feel as well,

so it's going to appeal to a lot of people, I think.

I really like the wood flooring

and the kitchen is just about the right sort of kitchen

for the holiday market.

I think he's done a spot-on job.

It will attract the holiday market without a doubt

and I think people will spend some happy times here.

But will Martin be happy with the returns?

With the main holiday months being July and August,

what sort of rental income could he except for that eight-week period?

For the holiday letting season,

peak season, I would guesstimate, £850-£900 per week.

I think peak season for a place like this,

you've got to be looking around £800 a week for.

That's much more than I expected,

I'm very impressed with that, yes. That's excellent.

Those figures could give Martin an income of £6,400-£7,200,

for a fully booked, eight-week period.

The estate agents reckon that during the low season,

Martin could rent this out as a six-month tenancy

for £700-£750 per calendar month.

The returns make this an attractive business venture.

So, bearing in mind Martin's total spend of around £177,000,

what could a resale achieve?

I would project a valuation in the region of £235,000-£240,000.

Market value for something like this at the moment?

In today's climate,

I would imagine somewhere around the £235,000 to possibly £245,000.

Well, that's brilliant. I'm really surprised and pleased at that.

That's excellent, thank you, yes. That's good.

Well, that's a potential pre-tax profit

of between £58,000 and £68,000.

So this property looks like giving Martin a good return,

whether as a holiday let or as a resale.

Mousehole looks like it will be Martin and his wife's regular holiday destination

as they plan to sell off their other holiday let on the Lizard.

So they can enjoy, not only Cornwall,

but also their new cottage.

It has been a really enjoyable experience.

There have been some down days, but over all I've really enjoyed it

and I'm really pleased with the outcome.

I'm visiting Newcastle Upon Tyne.

MUSIC: "Fog On The Tyne" by Lindisfarne

Home of the Tyne bridge, and a well known brown ale,

and with a reputation for a lively nightlife.

# Fog on the Tyne is all mine, all mine

# Fog on the Tyne is all mine. #

I'm viewing a property just over a mile from the city centre.

Well, this area of Newcastle is called Howdon,

very popular with investors

and the property I'm here to see might just suit perfectly.

Guide price was £25,000.

It's a three-bedroom, first-floor flat, but 25,000?

What's it like?

The flat looks in good condition from the front,

it's already got UPVC double glazing,

and there's a long lease of 125 years, so no issues there.

It's hard to really figure out how you're going

to squeeze three bedrooms into a property like this,

because from the front it doesn't look that big.

But let's see how it has been down.

Decent-size landing area here.

Two bedrooms at the front, a good-size double and a single.

Through into this room here,

which I suppose is the transition room for the property,

from the front to the back.

And as such, lots of doors.

Another bedroom there.

I think this could end up being a bit of a corridor room,

I suppose intrinsically it is your living room area.

Certainly there's nothing else.

But it's down here into the kitchen.

I can't believe this, it's a terraced house, for goodness sake,

and it just keeps going on and on and on...

This is the kitchen...needs a good clean up.

Whether it needs replacing or not I don't know.

A few hours of spit and polish on there might sort it out.

A new cooker would certainly help.

And then through to the bathroom at the back.

Again it's just on that fringe

of whether or not it needs to be replaced.

Some stairs down there.

So I mean, all in all,

what a surprise!

# Well, surprise, surprise

# Yeah, surprise Surprise, surprise... #

Well this flat that was guided at £25,000,

may be a great size for the money, but it's not completely perfect.

There are signs of water damage on some of the ceilings,

and there are a few dangerous sockets

which will need to be checked out.

Down the stairs at the rear of the flat there's access to the back yard

that's shared with the downstairs flat.

And with access from this rear alley.

So I reckon this property was a pretty good buy.

# Surprise, surprise, surprise. #

This place really does throw up

a few basic principles of property investment.

Let's say you bought this for the guide price of £25,000

and you got say £300 a month rent from it, that's £3,600 a year.

That's around about a 14.5% yield.

That's fantastic in its own right.

It doesn't extrapolate up though.

If you were to buy a house for ten times as much - £250,000,

you're not going to get ten times as much rent.

So you'd be much better off buying ten of these,

getting yourself £36,000 a year in rent, I mean that's good news.

You can see why people do it.

# The best things in life are free

# You can give that to the birds and bees

# But give me money

# That's what I want

# That's what I want. #

Of course, properties often sell for more than their guide price,

and I haven't included the cost of the renovation.

That wouldn't be much in this case,

but even so I reckon this is a nugget of a buy to let.

Time to get a second opinion about the potential profits here,

and ask a local estate agent what he thinks of the place.

It's a fairly standard layout for an upper flat in the area.

It does need some renovation, I think.

There's a combination boiler, it's fully double glazed,

so I would have said a lot of the fundamental jobs

have already been done, it just needs tidying up.

But what is the flat worth in terms of rental return?

I would expect that the landlord would be able to realise

something in the region of £400 per calendar month for this property.

Well, that's even better than I thought.

So you could be quids in on the rental market.

But what's the lie of the land on the resale market?

Depending on the quality of the refurbishment,

I think that the vendor could expect

something in the region of £40,000 as a resale value.

Well, this really is a truly spectacular flat for the money.

And for anything like the guide price

this really is a fantastic investment.

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

Lot number seven.

It's a three-bedroom, first-floor flat.

Should provide a good rental opportunity.

We've got it advertised in the price guide at £25,000.

How about 23 to start?

19?

19,000? Left-hand side - 19,000 bid.

Can I have 20,000 anywhere else?

20,000 bid.

21? 21?

21 bid. 22?

23? 23 bid.

24.

23 and a half, 24?

24 bid. 24 and a half?

25? 25 and a half?

It's the gentleman sitting at 25,250.

25,250. 25 and a half?

You're going to lose for 250.

£25,250, it's your last chance.

I'm going to sell. At 25,250.

Selling it once, I'm selling it for the second time at 25,250.

Sold, gentleman on the left-hand side, at £25,250.

That final bid of £25,250

was made by Schweb,

who's based in Gateshead.

He's bought this Tyneside flat as an investment property

to add to the extensive portfolio side of his family business.

I met up with him to hear about the plans.

-Schweb! Good to meet you.

-Yes, very nice to see you.

Congratulations,

that's a great amount of money to pay for this, isn't it?

Yeah, I was really pleased with it.

I was expected to pay about £30,000 for a flat of this size in this area,

but we achieved it at 25,250, which was very good.

So, tell me about you, are you a property investor?

Or is this for yourself, or what?

I'm a property investor, I'm a chartered surveyor by profession.

I came into the family business and I'm in business with my two brothers.

We've got a wholesale business and a retail business,

but I mainly look after the property.

In the sense of the general management and the running of it.

Getting the works done,

getting the tenants in and whatever have you, but it's all overseen.

My brothers are older than me and they always have that upper hand

and obviously they've got to oversee everything that I'm doing.

Schweb actually became a chartered surveyor

on the advice of his brothers.

When he was 16, his older brothers developed a property

and suggested it would be a good business for him to get into,

with the long-term view of developing together

further done the line.

And that's what happened.

After 15 years of property purchasing,

they've now got a sizeable portfolio.

We used to invest quite a bit in commercial properties,

and we've got a decent-sized portfolio,

but we're not seeing the returns on the commercial side.

And I feel it's an ideal market for residential at the moment,

because property prices have come down a good 30-40%

on second-hand stuff since 2007.

And in the foreseeable future I don't see much increase in...

the capital values increasing.

But because you're now buying them at such a cheap rate,

the income return's a lot better.

And that's why we've changed tack.

What was it about this particular place that you liked?

-It was the price.

-Right.

-It was the price.

-That was it?

Very much so, yeah.

That was really it.

So, for Schweb and his brothers,

buying property is all about the numbers

and for the price they got this flat at,

the numbers look pretty healthy.

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

As soon as we've purchased it we've had roof repairs done,

because there was literally gaping holes in the roof.

So we've had the roof done.

There'll be a bit of re-plastering where required.

And then really it's cosmetic.

Redecorating, new flooring.

Schweb has already got ahead of the game

by doing the essential repairs to the roof

and also the chimney stack, as soon as he bought the property.

The work cost around £400.

What has he planned for the rest of the flat?

I was in two minds whether I would change the kitchen and the bathroom,

but having looked at it again, second time round,

I think it's all right to leave as it is.

Right, and it's not going to affect the rent price that much?

Not enough for the capital value that you've got to spend on that.

I don't think it'll make much difference on the rent.

So what's the budget for sorting this out?

I've bought it for 25,250,

and I think I'm going to get all of the works done within 4,750.

-Right.

-That's just a ballpark.

The total spend on this building will be circa £30,000.

So great return on your investment. And what about timescales?

Like I said, there's not an awful lot to do,

so I would have thought about two to three weeks

it should be in a let-able condition.

-Then get somebody in?

-Absolutely, as quick as possible.

That's the name of the game.

Well, congratulations. Good luck with it.

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

-Yeah, thanks.

So, not an emotional purchase for Schweb, it's all about the money.

And when it comes to that this place certainly stacks up.

How will he get on sorting it out?

You can find out later in the show.

Doing up property always takes longer than you think.

Yes, there are all sorts of reasons why delays happen.

So have our buyers on today's show raced ahead,

or have they got held up?

Let's find out.

Earlier in the programme, in Edmonton, north London,

firework salesman Ray and his wife, Diana,

who runs a fancy dress hire shop,

bought this two bed mid-terraced house for 186,000.

£36,000 over the guide price.

MUSIC: "Come on and Dress Me" by Dr Seuss

# Come and dress me, dress me in my finest array. #

The couple live and work in Buckinghamshire.

It was a joint investment project with their builder friend, Victor,

who was going to do the majority of the work

for a 50/50 split of any profits.

But rocket man Ray got his fingers burnt

as he hadn't seen inside before he bought it.

-So you did take a bit of a risk, a huge rick in fact.

-Yes.

Especially as we looked at the brochure

and it didn't mention a bathroom.

I thought, "That must be a typo."

But it wasn't.

Well, seven and a half months have passed

and it's Ray we meet up with back at the house.

The first thing I want to know is, where did they put the bathroom?

And the answer..?

In the kitchen, at the back of the house.

It's been tiled from floor to ceiling, with a fresh-white suite.

And remember that shower in the kitchen?

Well, now there's a washing machine in the bathroom,

keeping some quirks alive and well in this property.

But what about the kitchen?

Well, that's been relocated to the former lean-to area,

where the outside loo was.

An interesting solution, but one that seems to work, as Ray explains.

Well, at the back of the house, this used to be a window.

We took the window out,

knocked down the wall, re-levelled the floor and tiled in there.

Knocked down the wall on the right-hand side,

and moved it back a metre, so we could then have a bigger kitchen,

and move the toilet into the next room, which is now the bathroom.

Because there wasn't one at all,

and so now we have the bathroom over here,

and we tiled two walls, put the heated towel rail.

We're very pleased with the bathroom.

Of course there wasn't one at all, so anything is better than nothing.

But I'm very pleased with what we've done and it looks very nice.

The new doors in the kitchen

have smartened up the appearance outside as well,

where the garden has also been tidied up.

Back inside - the large open plan living room

has seen the magnolia roller.

A feature wall has been added,

and the walls have been contrasted with a coffee-coloured carpet.

The house has new central heating,

and Ray and Victor have replaced the gas fire.

But Ray soon discovered the place needed a lot of attention

before any paint could be applied.

Once we stripped the property, we found that most of the walls

and most of the ceilings needed re-plastering.

My friend is a plasterer, and so he did all the plastering.

Upstairs the colour scheme continues in the two bedrooms.

The large fitted wardrobe in the master bedroom remains.

The work's taken almost eight months.

Ray's business partner, Victor, worked most days

and his wife, Diana, helped out at the weekends.

But Ray was taken ill, and ended up in hospital,

and has only been back in the last month.

Travelling from Buckinghamshire to Edmonton has been a problem.

I've learnt, with this one, not to be quite so far away.

It's just cost-prohibitive to make the journey back and forth.

The solution Ray came up with

for the lack of a bathroom certainly works.

But the kitchen does feel a little like it's in a temporary structure.

We did think of the idea of having an extension.

But it wouldn't have been cost-effective.

As so often, it comes down to money. How much has the work cost here?

I said I had a budget of £20,000,

and we've done it all for under eight.

Well, that's good news.

It's down to Ray and his building partner, Victor,

doing the majority of the work.

With the 186,000 that Ray paid at the auction,

it takes his total expenditure to about 194,000.

Time to see what two local estate agents think of the finished result.

The standard of work is good.

And it's been refurbished with colours which are very neutral.

Which makes the rooms look bigger than they actually are.

The location of the bathroom is good.

Ideally it would be better upstairs,

but it works well being next to the kitchen.

There are some buyers who will say from the offset

that they don't want a ground floor bathroom.

So obviously this will rule them out

of coming to have a look at this property.

Ray intends to sell the house, hopefully making a profit,

and move on to another project.

But just out of interest, how much rental income could it generate?

I would expect the property to achieve in rent,

around £1,000 per calendar month.

If I was to put the property up on the rental market,

it would go for £1,100 per calendar month.

Those rents would produce a yield of between six and seven per cent,

what does Ray think of that?

I'm not really looking into the rental market.

If it works out I do go then 1,100 a month would help to pay the bills.

What do the estate agents think the house is worth now?

Any more than the £194,000 Ray has invested?

I would expect the property to achieve a figure

in the region of £195,000 in the current market.

If I was to put the property up for sale,

I would put it on the market for £210,000.

Those valuations would generate a gross profit,

before the usual selling expenses, of between one and 16,000.

Quite a variation.

Ooh, that is quite different, yes.

I think that's slightly low, I'd like to get around 220,

although that's really pushing it, but I've had another agent

that I've spoken to and he thinks I could realise 215.

Well, although letting it may seem like a stronger option,

for this Edmonton property,

215,000 would give Ray and Diana a profit to split with Victor.

And considering they bought a house without a bathroom,

it's perhaps a better situation than he feared.

It's been a lot of hard work, more than I anticipated,

but I'm very pleased with the result,

and hopefully we will finish up making a profit.

And the lesson learned here, Ray?

Do your pre-checks and homework and definitely visit the property

and don't do what I did.

Which is just walk in and then find there's no bathroom.

Newcastle, an iconic city - famous for its people, nightlife,

and the river.

# Fog on the Tyne Is all mine, all mine... #

It's where, earlier in the programme,

we saw how this three-bed, first-floor flat

in the suburb of Howdon, was bought for £25,250 by Schweb.

He's a chartered surveyor, and the youngest of three brothers

who have a family property developing business.

The place needed some immediate attention.

As soon as we purchased it we've had roof repairs done

because there was literally gaping holes in the roof,

so we've had the roof done, and there'll probably be a bit

of re-plastering where required now, and then really it's cosmetic.

So, how's the renovation gone?

Just one month later we're back to meet Schweb and his son, Mahair,

who's getting some early insight into the family developing business.

Let's take a look inside.

The property has indeed had a full cosmetic makeover.

In the living room the walls are now hessian coloured,

complementing the brown carpet that's been laid.

It matches the one that was already in the small, front bedroom.

Up in the large master bedroom at the front,

Schweb has opted for a laminate wood floor.

So we decided to laminate the floors in the bedroom,

because we thought that it's easy to manage

when it comes to cleaning them when tenants leave.

Rather than having the whole place recarpeted or refloored.

And the rest of the room we just had decorated,

standard magnolia in the bedrooms to make it all look nice

and fresh for the new coming tenant.

The smaller third bedroom, off the living room,

has laminate flooring as well.

But what happened in the kitchen and bathroom?

I was in two minds whether we should renew the kitchen and the bathroom,

but it was borderline and we decided just to leave it as it was

and we've just had both them rooms just decorated.

Schweb and his brothers have years of buy-to-let experience,

so know how important it is to maximise the return they achieve.

So when a kitchen or bathroom doesn't need any work,

they're happy.

But the initial repairs to the roof highlighted some other problems,

which had a big impact on the project.

# There's a leak in this old building

# It's leaking all the time

# Every time it rains

# It about made me change my mind. #

The roof needed repairing before I could do any internal works,

because there was leaks coming through.

So we got that done, and then chimney stack needed repointing,

and it was just letting in a whole load of water in the party wall.

So I had that done by the roofers while they were up there.

The leaking roof was fixed,

but the damage it had caused to the party wall

meant Schweb's tradesmen had to re-plaster.

But that didn't go as smoothly as he'd hoped.

So this was the wall that we had to have re-plastered

because of the leak that we had through the chimney.

Because we were wanting to get it done as quickly as possible,

he ended up plastering it that little bit too early,

didn't let it dry out properly,

so we had to re-plaster little bits of it again.

But it wasn't too much of a problem.

Seeing how his dad handles problems like this

is giving Schweb's son, and young apprentice, Mahair,

valuable experience in the world of property.

It's know-how Schweb hopes will come in handy

if his son joins the family business in future.

# You don't learn that in school

# There ain't no doubt about it

# You don't learn that in school. #

At times, when Mahair is free, my son, I like to take him with me

because this is a family business that my father started

and I'm sure when he's older he'll be stepping into my shoes

and taking over the business, so I like to teach him at an early stage.

And lesson one is watch your budget.

# What did you learn in school today... #

How have the numbers stacked up here?

I'd budgeted about £1,750,

but it turned out that we actually came under budget,

even though there was a couple of little extra things to do.

The roof repairs along with the chimney stack, came to about £400.

The recarpeting was about £350,

and the laminate flooring was about £150.

The rest, to make it up to about £1,200 total costs,

was the decorating.

That £1,200 spend,

on top of the £25,250 purchase price,

takes the total outlay to 26,450 quid.

And there's more good news.

We've actually managed to get it let out today,

to a young gentleman,

and he's looking to move in at the beginning of the month.

We invited two local estate agents to come and look around

to hear their thoughts on this three-bedroom flat.

The property's been done up to a nice rentable standard.

I feel he could have taken a little bit more attention to detail

in the bathroom, but overall a good, rentable standard.

The property has been refurbished to a reasonable standard throughout,

with new carpets, fresh decorated,

and a well presented kitchen and bathroom.

Schweb has a tenant lined up,

but how much could he expect to achieve if he decided to sell?

More than the £26,450 invested here?

If I was looking to bring this property on the market for sale,

I would recommend an asking price of £50,000.

If I was going to market this property for sale,

I would recommend an initial asking price

of offers in the region of £45,000.

Those valuations would produce a gross profit,

before tax and expenses,

of between £18,550

and £23,550 in just four weeks.

I'm absolutely over the moon with that.

It's a considerable mark-up from what we've purchased it at,

and the money that we've spent on it.

That's absolutely excellent.

Schweb's got a tenant,

but how much rental income would the estate agents suggest he charges?

If I was going to rent this property,

I would expect to achieve £375 per calendar month.

If I was putting this property on the rental market,

I would expect to achieve

a figure in the region of £395 per calendar month.

That range of rental incomes from £375 a month,

which Schweb is actually charging, to £395 a month,

would generate a tremendous yield between 17 and 18%.

Again, I'm over the moon with that.

Absolutely excellent return on what we've paid.

I wouldn't get that in the bank these days, would we?

Most importantly we've actually got the property let,

which didn't take the agents long at all,

so there won't be much of a void

and I'll probably get a pat on my back from my brothers.

Well that's it for now, we'll have more thrills and spills

from the auction rooms for you next time.

So make sure you keep watching Homes Under The Hammer.

-We'll see you then.

-Goodbye.

-Bye.

Subtitles by Red Bee Media Ltd