Episode 54

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0:00:02 > 0:00:08Home is where the heart is, they say, but is your heart in making money from property?

0:00:08 > 0:00:13On today's programme we'll be finding out who's willing to put their heart and soul

0:00:13 > 0:00:16into buying property under the hammer.

0:00:41 > 0:00:45Buying property at auction can be a road to success,

0:00:45 > 0:00:50but there are some pitfalls, so it's important to tread carefully.

0:00:50 > 0:00:54Even experienced developers can make wrong moves,

0:00:54 > 0:00:58so let's see what tempted our buyers on today's show.

0:00:58 > 0:01:05In Whitehaven, Cumbria, there was a property at a decent price and in sound condition.

0:01:05 > 0:01:07All in all, a big tick.

0:01:08 > 0:01:13In Mitcham, Surrey, I discover what really goes on behind closed doors.

0:01:15 > 0:01:18Of course! It's the bathroom!

0:01:20 > 0:01:25And will the refurbishment of this terraced, three-storey Derby house be a piece of cake?

0:01:27 > 0:01:29Toasted tea cake?

0:01:29 > 0:01:35All of these properties have been sold at auction. We'll find out who bought them and what they paid

0:01:35 > 0:01:37when they went under the hammer.

0:01:40 > 0:01:47Today I'm in Whitehaven, a small town and port on the coast of Cumbria.

0:01:47 > 0:01:50And this is its magnificent harbour.

0:01:50 > 0:01:57But it's been through ups and downs over the years, losing out to bigger ports such as Liverpool and Bristol.

0:01:57 > 0:02:02But thanks to the Millennium Project and £1.3 million of cash,

0:02:02 > 0:02:06it's looking jolly spiffing these days.

0:02:06 > 0:02:10# So lead me to the harbour... #

0:02:10 > 0:02:15In its heyday, Whitehaven was a grand, bustling port

0:02:15 > 0:02:19so it's great to see it getting back on its feet.

0:02:19 > 0:02:21# ..and float me on the way... #

0:02:23 > 0:02:28But will the property I'm here to see be just as impressive?

0:02:28 > 0:02:32Not far from the centre of Whitehaven is the property.

0:02:32 > 0:02:39This is it. A three-bed ex-council property. And the guide price? 20,000 quid.

0:02:39 > 0:02:41Definitely worth a look!

0:02:41 > 0:02:45'OK, it's not quite as grand as the townhouses in the port,

0:02:45 > 0:02:49'but at that price it's got to be worth checking out.'

0:02:49 > 0:02:53So what have we got? Stairs up the bedrooms there

0:02:53 > 0:02:58and through into the lounge. Not a bad size. And the carpet's in decent condition.

0:02:58 > 0:03:02That's always a good sign. It's been hoovered.

0:03:02 > 0:03:07The room itself, well, clearly in need of a bit of modernisation.

0:03:07 > 0:03:12The fireplace, for sure. But not a bad size. Similarly, the kitchen.

0:03:12 > 0:03:19It obviously would really benefit from some money spent, new units, but it's a nice size.

0:03:19 > 0:03:23Big enough for a kitchen table or a dining table there.

0:03:23 > 0:03:29And a few... Good news. That's a reasonable size boiler, reasonably new.

0:03:29 > 0:03:35And behind here, not a cupboard, but a downstairs loo. Well, that's great.

0:03:35 > 0:03:40You can never have too many loos. All in all, bit of a big tick.

0:03:40 > 0:03:44'It's great to have that loo in addition to the one upstairs,

0:03:44 > 0:03:50'but that's housed in a rather odd flying side extension above the drive.

0:03:50 > 0:03:54'And the pink suite and wooden finish give it a really dated look.'

0:03:54 > 0:04:01# It's understood They got hardboard I got solid wood... #

0:04:07 > 0:04:11This is really unusual. It's almost like a flying bathroom.

0:04:11 > 0:04:16It's actually constructed above the driveway below.

0:04:16 > 0:04:21It's a very odd little room. I'm not sure I like it, but it is upstairs.

0:04:21 > 0:04:26Then onto this second landing area you've got three bedrooms - one at the front, two at the back.

0:04:26 > 0:04:32Not bad sizes. It feels like it definitely needs just smartening up.

0:04:32 > 0:04:35But in terms of space, you can't knock it.

0:04:35 > 0:04:42A perfectly fine little property here and it gets even more tempting when you go out the back.

0:04:42 > 0:04:46At the rear of the property, a really good-sized garden.

0:04:46 > 0:04:51Much more exciting for me, I think, is the potential to extend.

0:04:51 > 0:04:55Look what's happening next door. They have a single-storey extension

0:04:55 > 0:04:59and the property next door looks like it's having something similar.

0:04:59 > 0:05:05So the planners are up for that. I don't think you'd even need planning permission.

0:05:05 > 0:05:08It's something this property would benefit from enormously.

0:05:08 > 0:05:15So potential to build out the back, but getting rid of that floating toilet could be trickier.

0:05:15 > 0:05:21On closer inspection, it looks like there's evidence of the dreaded A word in its construction -

0:05:21 > 0:05:26asbestos. You'd need to get expert advice before doing any major work here,

0:05:26 > 0:05:32but this place could have a lot of potential at that £20,000 guide price.

0:05:32 > 0:05:34But what does a local expert think?

0:05:34 > 0:05:38We asked along the auctioneer to give us his thoughts.

0:05:40 > 0:05:46The property's in need of modernisation and would benefit from new kitchen, new bathroom,

0:05:46 > 0:05:50floor coverings, heating etc, and decorated throughout.

0:05:50 > 0:05:58The negatives to this property might be the amount of money you'd need to spend on it

0:05:58 > 0:06:00to get it to a resale standard.

0:06:00 > 0:06:05There is a ceiling to resale values of properties of this nature in this area.

0:06:05 > 0:06:11So the cost of improvements doesn't always equal increased value.

0:06:11 > 0:06:17With a ceiling on the resale value, it's important to keep costs under control,

0:06:17 > 0:06:22but once the renovation's done, what could it sell for?

0:06:22 > 0:06:26Once this property has been refurbished to a high standard,

0:06:27 > 0:06:32you would probably achieve between £55,000 and £60,000.

0:06:32 > 0:06:37What if the buyer decided to let it?

0:06:37 > 0:06:43I think once this property has been refurbished, it would achieve £375 per calendar month.

0:06:45 > 0:06:51So not a bad property at all. And it's good news that there's building of new houses nearby.

0:06:51 > 0:06:57Always a good sign. So let's see who fancied it when it went under the hammer.

0:06:57 > 0:06:59Lot 29. Right, £20,000.

0:06:59 > 0:07:0220 I've got. £20,000.

0:07:02 > 0:07:0622 I've got. 24, sir. 26. 28, sir.

0:07:06 > 0:07:09It's against you. 28 I've got.

0:07:09 > 0:07:12- 29.- 29. 30. 31.

0:07:12 > 0:07:1631 and a half. 32. 33?

0:07:16 > 0:07:2132,000. You're out on the phone. It's with you at 32,000.

0:07:21 > 0:07:25At £32,000 for the first time. 32 and a half.

0:07:25 > 0:07:2733. And a half.

0:07:27 > 0:07:32It's against you on the phone. You're out, you're out, you're out. Not wanting you back in.

0:07:32 > 0:07:35At £33,000 for the first time.

0:07:36 > 0:07:39At £33,000 for the second time.

0:07:39 > 0:07:43At £33,000, third and final time. Well done.

0:07:45 > 0:07:52Persistence finally paid off and the property sold for £33,000 to father and son, Rob and Daniel.

0:07:53 > 0:08:00Dad Rob is a quantity surveyor and this is his first property venture with his son, Daniel.

0:08:00 > 0:08:04I caught up with them back at the house to hear about their plans.

0:08:04 > 0:08:08# Follow me I've found somewhere to go

0:08:08 > 0:08:13# Follow me We'll be happy there I know... #

0:08:13 > 0:08:19- Rob, Daniel, good to meet you both. Congratulations.- Thank you. - A lot of house for the money.

0:08:19 > 0:08:26We thought that. Obviously, being a semi-detached and three bedrooms,

0:08:26 > 0:08:31- £33,000, can't go wrong. - Tell me why you've bought it.

0:08:31 > 0:08:34Daniel, is this to do with you?

0:08:34 > 0:08:38It's my first renovation project. My dad's done a couple before,

0:08:38 > 0:08:42but it's me getting on the market with him. A joint investment.

0:08:42 > 0:08:47- A joint investment?- Yeah.- Fantastic. And what will your involvement be?

0:08:47 > 0:08:54- Learning how to do up places? - He knows a lot of trades and I just want to learn a couple.

0:08:54 > 0:08:57So what are you doing at the moment?

0:08:57 > 0:09:05- I'm an apprentice fitter.- OK. - So I'm just learning my trade so I might as well invest my money.

0:09:05 > 0:09:11Daniel's just 18, but it seems as though he's got a wise head on his shoulders.

0:09:11 > 0:09:16There aren't many teenagers who put their savings into property.

0:09:16 > 0:09:21So now they've bought the house, what work are they planning to do?

0:09:21 > 0:09:25It basically needs a full modernisation.

0:09:25 > 0:09:28- Kitchen, bathroom...- Oh, yeah.

0:09:28 > 0:09:33What about the infrastructure of the house itself? Major changes?

0:09:33 > 0:09:38Well, that little lean-to thing on the outside looks a bit odd.

0:09:38 > 0:09:43I don't know who has designed that, but I think that was added on at some point.

0:09:43 > 0:09:50- The flying toilet?- Someone had a bad day at the design office when they added that on.

0:09:50 > 0:09:56It obviously joins the two properties and a lot of them have actually been taken down.

0:09:56 > 0:10:01But unfortunately this one, because it's a council property next door,

0:10:01 > 0:10:07- I don't think we can take it down. - Right. So it's going to have to stay.- Yeah, unfortunately.

0:10:07 > 0:10:12- Looks like asbestos as well. - I met with the site manager and spoke to him about it.

0:10:12 > 0:10:19He says it's definitely asbestos. You can basically cover over it, but personally I'd like rid of it.

0:10:19 > 0:10:22There's a stigma to asbestos.

0:10:22 > 0:10:28Rob is right to identify asbestos as a potential problem if it's disturbed.

0:10:28 > 0:10:34The inhalation of asbestos fibres can cause serious lung conditions, even cancer. To render it safe,

0:10:34 > 0:10:38he could have it sealed up or removed totally by a specialist.

0:10:38 > 0:10:44- What's the budget for the work you're planning? - Well, having been round today,

0:10:44 > 0:10:49I'd like to spend, between us, ten grand, but it might stretch to 15.

0:10:49 > 0:10:55With the guide price and the money we bought it for reflects the amount of work that needs done.

0:10:55 > 0:11:01So I think if we're in it for 50 grand, we should be able to make 10, 15 grand off it.

0:11:01 > 0:11:07- What about timescale for the work? - Think of a number - six months, nine months.

0:11:07 > 0:11:13That sounds a lot, but if we get a lot of tradesmen in to do it, we'll do it in six months.

0:11:13 > 0:11:18If we do a lot of work ourselves, it'll be longer, probably 9 months.

0:11:18 > 0:11:23It's an elastic timeframe, but they don't seem stressed about it.

0:11:23 > 0:11:27They were fairly relaxed before the auction, too,

0:11:27 > 0:11:32as they hadn't even looked around the property. Tut tut!

0:11:32 > 0:11:34Why didn't you look at it?

0:11:34 > 0:11:40Well, I actually know the area a little bit. I work round the corner and I thought

0:11:40 > 0:11:47I know the houses, I know they're solid. Front garden, off-street parking.

0:11:47 > 0:11:55The rear garden is quite reasonable. We've got three bedrooms. I thought it had to be one to go for.

0:11:55 > 0:12:00It was one of those things where you think, "It's cheap."

0:12:00 > 0:12:06- And were you happy to throw your money in?- Otherwise, it would just burn a hole in my pocket!

0:12:06 > 0:12:08I'd spend it on nothing!

0:12:08 > 0:12:14Well, if you're going to take a punt on property, go for something fairly cheap with lots of potential.

0:12:14 > 0:12:17And this place ticks both boxes.

0:12:18 > 0:12:24- We look forward to seeing how you get on.- Yep.- And we'll be back in a few months to see.- Hopefully!

0:12:24 > 0:12:28- Congratulations.- Cheers, Martin.

0:12:28 > 0:12:35It seems the flying bathroom will have to stay, but for Rob and Daniel a great first joint project.

0:12:35 > 0:12:39How are they going to get on? Find out later in the show.

0:12:41 > 0:12:47This is Mitcham in Surrey. It has fantastic transport links into the city

0:12:47 > 0:12:51and from here you can be in London Victoria in just 20 minutes.

0:12:51 > 0:12:58It also boasts lots of lovely green spaces, Mitcham Common being a fantastic example.

0:12:58 > 0:13:02Still it's hard to believe it was once famous for its lavender fields.

0:13:02 > 0:13:08It became known for its soothing air and Londoners trying to escape the plague moved here in droves.

0:13:08 > 0:13:15Amazingly, the area was the global leader in lavender production until the end of the Victorian era,

0:13:15 > 0:13:21which is incredible. Hopefully, the auction property I'm here to see will be sweet-smelling,

0:13:21 > 0:13:26but if it's not I've come armed with a bunch of lavender, just in case.

0:13:26 > 0:13:30# Sweet smell of success... #

0:13:30 > 0:13:37So having checked out the locality, it's time to have a nosey at the property itself.

0:13:37 > 0:13:42And here it is! It's a leasehold, purpose-built flat with four rooms.

0:13:42 > 0:13:48It's on the first floor with a guide price of £85,000.

0:13:48 > 0:13:53Built in 1954, the building certainly looks like it's bearing up well.

0:13:53 > 0:13:57The roof appears sound, which is good news. It's double-glazed,

0:13:57 > 0:14:00has its own front door and off-road parking,

0:14:00 > 0:14:05plus it comes with a healthy 999-year lease.

0:14:05 > 0:14:11It's always nice to have your own front door, but you've got a few hefty stairs to climb

0:14:11 > 0:14:15to get up to the flat and it's quite an unusual shape.

0:14:15 > 0:14:21Bedroom one through here, a little lounge through here. It's quite hexagonal, isn't it?

0:14:21 > 0:14:27I say bedroom and lounge, but the auction catalogue describes the flat as having "four rooms"

0:14:27 > 0:14:33as well as a kitchen, bathroom and WC. Maybe that's because the layout is pretty odd.

0:14:33 > 0:14:37The end of this little corridor is the kitchen!

0:14:37 > 0:14:42It's small, peeling wallpaper, there's a fridge sticking out.

0:14:42 > 0:14:44And what's behind here?

0:14:45 > 0:14:48Of course! It's the bathroom!

0:14:48 > 0:14:52This flat needs some clever reconfiguration.

0:14:52 > 0:14:55Hold on. Where's the toilet?

0:14:55 > 0:14:57# No particular place to go... #

0:14:57 > 0:14:59Here it is!

0:14:59 > 0:15:01In the lean-to!

0:15:01 > 0:15:06# All by myself

0:15:06 > 0:15:12# Don't wanna be all by myself... #

0:15:12 > 0:15:19No, this loo can't be left all on its own. It needs to be integrated with the bathroom

0:15:19 > 0:15:22in one of the four rooms, then the kitchen can be opened up.

0:15:22 > 0:15:29By making one of the other rooms into a lounge, you could have a much-improved two-bedroom flat.

0:15:31 > 0:15:36And check this outside space out. I call it an added bonus.

0:15:36 > 0:15:43This flat comes with its own garden, a feature that makes any property incredibly desirable.

0:15:43 > 0:15:48It might need to be tidied, but this is a bonus worth having

0:15:48 > 0:15:51and the outlook for the, er, outlook could also be looking up.

0:15:51 > 0:15:57It may not look exciting now, but that old gasworks that backs onto this property

0:15:57 > 0:16:03could be redeveloped. Outline planning has been granted by the council

0:16:03 > 0:16:08and if it goes ahead, it can only mean good things for this part of Mitcham.

0:16:08 > 0:16:11# It's all right

0:16:11 > 0:16:16# Jumpin' Jack Flash is a gas, gas, yeah... #

0:16:16 > 0:16:24Redevelopment nearby might initially mean disruption, but overall it generally enhances an area.

0:16:24 > 0:16:30But that's in the future. What does a local estate agent make of what's currently on offer here?

0:16:33 > 0:16:38First impressions: compact property, with four rooms.

0:16:38 > 0:16:42Slightly odd layout. Needs reconfigured to be user-friendly.

0:16:42 > 0:16:50But the flat was guided at £85,000, so could the work involved in updating it be worth it

0:16:50 > 0:16:53on both the resale and rental markets?

0:16:53 > 0:16:57Once the property is refurbished, we could market it at £160,000.

0:16:58 > 0:17:05This property would rent on the open rental market at approximately £850-£900 per calendar month.

0:17:09 > 0:17:13Those figures talk for themselves, don't they?

0:17:13 > 0:17:19Once you've reconfigured the space, that little flat packs a powerful financial punch.

0:17:19 > 0:17:23Let's see who fought for this one when it went under the hammer.

0:17:27 > 0:17:32Lot 70. A four-room flat, it's got a garden,

0:17:32 > 0:17:35it's convenient for Mitcham. 90,000?

0:17:35 > 0:17:3790,000 down here. 91 anywhere?

0:17:37 > 0:17:4091. 92, madam?

0:17:40 > 0:17:4492. 93, sir? 94? 95?

0:17:44 > 0:17:4796? 97? 98?

0:17:47 > 0:17:5099? 100?

0:17:50 > 0:17:53101? 102?

0:17:53 > 0:17:55102. 103?

0:17:55 > 0:17:58104? 105?

0:17:58 > 0:18:00106? 107?

0:18:00 > 0:18:02108? 109?

0:18:02 > 0:18:05109. 110?

0:18:05 > 0:18:08£109,000.

0:18:08 > 0:18:11First time. Second time.

0:18:11 > 0:18:17Third and last time. Can't quite sell it at that. You're close.

0:18:17 > 0:18:22So it didn't initially sell, but one bidder, Anne, negotiated afterwards

0:18:22 > 0:18:28and bought this four-room flat in Surrey for £108,000.

0:18:28 > 0:18:34Anne works as a project manager in the education sector. It's a joint project with her husband, Tony,

0:18:34 > 0:18:38who's an HR specialist. I met up with them both at the property

0:18:38 > 0:18:42to find out why they made this purchase.

0:18:42 > 0:18:45What I want to know is the story behind buying this flat.

0:18:45 > 0:18:50Well, I think we wanted something different to do.

0:18:50 > 0:18:57We started to look at auction properties. We went for one in London. I couldn't be at the auction

0:18:57 > 0:19:00so Anne went on her own. And Anne did the bidding!

0:19:00 > 0:19:06So you left this lady all to her own devices, to spend all that money!

0:19:06 > 0:19:10Anne, what was it like for you on your own spending all that?

0:19:10 > 0:19:13It's quite exciting, actually.

0:19:13 > 0:19:18I sat and listened very carefully for how it all worked.

0:19:18 > 0:19:23Then I tried to look professional by scribbling notes, but I wasn't writing anything!

0:19:23 > 0:19:27I got to the limit and I had to stop.

0:19:27 > 0:19:32And that was... I just thought, "Never mind." But then it was withdrawn.

0:19:32 > 0:19:38They said to see the auctioneer. He said, "What did you want to pay?" So I said £108,000.

0:19:38 > 0:19:43So he said, "Wait there." And he came back and said, "It's yours."

0:19:43 > 0:19:49- Could you believe it? Were you so excited?- I was in a bit of a panic mode at that moment.

0:19:49 > 0:19:51"Oh, what have I done?"

0:19:51 > 0:19:55- So, Tony, how did you feel? - Yeah, pretty excited.

0:19:55 > 0:19:59I actually got a text message that just said, "Got it."

0:19:59 > 0:20:04# Now that you got it What you gonna do with it? #

0:20:05 > 0:20:12So now that they have got it, what's the plan for this flat that needs more than a lick of paint?

0:20:13 > 0:20:17How will you turn this into a good, saleable flat?

0:20:17 > 0:20:22The bathroom's in a cupboard in the kitchen, as we describe it.

0:20:22 > 0:20:27So one of the bedrooms will go into a bathroom. It'll be two bedrooms in the end.

0:20:27 > 0:20:33But I don't think you can do anything else. The toilet's outside on the little landing

0:20:33 > 0:20:38- down to the garden.- Excuse me. I like to call it the lean-to.

0:20:38 > 0:20:42- OK. We called it the upper terrace! - You're so posh!

0:20:42 > 0:20:48So when you move the toilet from the upper terrace, what will you do with that space?

0:20:48 > 0:20:52That particular bit of space we'll transform to a utility area.

0:20:52 > 0:20:56We'll put a washing machine in there with a tumble dryer on top.

0:20:56 > 0:21:03- What's your budget for the work? - Our budget is £10,000. We'll do 80% of the work ourselves.

0:21:03 > 0:21:10The other 20%, moving the bathroom and plumbing and electrics, we have a builder

0:21:10 > 0:21:16- who'll do some work for us. - Are you dead set on selling it or would you rent it out?

0:21:16 > 0:21:22I think we'd prefer not to rent. We've looked at the rental market and it's quite good.

0:21:22 > 0:21:27But I think if we could, we would prefer to do it up and sell it?

0:21:27 > 0:21:33Plan B might be to just flip it out. If somebody came with a good offer, then we'd consider it.

0:21:33 > 0:21:38But really we'd like to do it up and make a nice home for somebody.

0:21:38 > 0:21:46They hope to do the work to make that nice home in just 10 weeks, so they'll be busy.

0:21:46 > 0:21:51- How much experience have you got with buying houses?- None! - This is...

0:21:51 > 0:21:56I love the way you're laughing. You're so honest.

0:21:56 > 0:22:03- Until 4 years ago, I'd never owned a house. My children owned houses before me.- What do the kids think?

0:22:03 > 0:22:10Well, we told Daniel and his wife Louisa first and they just were totally gobsmacked.

0:22:10 > 0:22:14They couldn't believe. "Mother, what have you done?"

0:22:14 > 0:22:18And my daughter is in Australia. She's another Lucy.

0:22:18 > 0:22:26And, em...she was just, "I can't believe it. Why, Mother? What have you done?" You know.

0:22:26 > 0:22:32And Tony's son is all keen to come and help. He lives local, so that's quite handy.

0:22:32 > 0:22:38Guys, it's been fantastic meeting you today. This is one where I'm looking forward to the outcome.

0:22:38 > 0:22:40- Thanks.- Thank you.

0:22:41 > 0:22:46Tony and Anne can only improve this quirky little flat

0:22:46 > 0:22:51and once they do there's certainly a healthy return coming their way.

0:22:51 > 0:22:54But will they do all the work for just ten grand?

0:22:54 > 0:22:59Join me later in the programme and you can find out if they do.

0:23:00 > 0:23:04Coming up. In Derby, there's more to this property than meets the eye.

0:23:04 > 0:23:09As you can see, it's one of those properties that's a bit of a state.

0:23:10 > 0:23:17Back in Mitcham, Surrey, Tony and Anne have taken to property developing like ducks to water.

0:23:17 > 0:23:21Yeah. Good all round. Thoroughly enjoyed ourselves.

0:23:21 > 0:23:26But first, in Cumbria, how has Daniel coped with working with Dad as his boss?

0:23:26 > 0:23:32Stressful at times. We can get on each other's nerves!

0:23:33 > 0:23:39In the Cumbrian town of Whitehaven, a three-bedroom semi-detached property went to auction.

0:23:39 > 0:23:45Although it was a little tired and dated, and had a slightly odd side extension,

0:23:45 > 0:23:50it wasn't in bad shape. So it seemed an ideal development project.

0:23:50 > 0:23:57It was snapped up for £33,000 by local quantity surveyor Rob and his 18-year-old son Daniel.

0:23:58 > 0:24:05- Tell me why you've bought it. Is this something to do with you? - It's so I get my first project.

0:24:05 > 0:24:11- My dad's done a couple of them before. It's me getting in with him. - Great.- A joint investment.

0:24:11 > 0:24:18- A joint investment?- Yeah.- Fantastic. And what will your involvement be? Learning how to do up places?

0:24:18 > 0:24:24- He knows a lot of trades. I just want to learn a couple as I go, really.- Right.

0:24:24 > 0:24:31Daniel's doing an apprenticeship in mechanical engineering so was not only hoping to learn new skills

0:24:31 > 0:24:36but had invested some of his own money into the house. Armed with a £10,000-£15,000 budget

0:24:36 > 0:24:42and a 6-9 month timescale, Daniel started his part-time apprenticeship in property development.

0:24:42 > 0:24:46Now, one year later, we're back and...

0:24:47 > 0:24:49What a difference.

0:24:49 > 0:24:52The exterior's been re-rendered.

0:24:54 > 0:24:58And the front area has been completely tidied up.

0:24:58 > 0:25:02This is looking like a textbook refurbishment.

0:25:02 > 0:25:09# I can tell you now There ain't a problem can't be solved

0:25:09 > 0:25:13# And it's not hard to tell I've learned my lesson well... #

0:25:13 > 0:25:17It certainly seems like Daniel's work experience has gone well.

0:25:17 > 0:25:21In here we started by stripping everything back,

0:25:21 > 0:25:25taking away the carpets and the plaster on the walls.

0:25:25 > 0:25:31Then we pushed the fireplace back. There were bricks round the fireplace. We took all them away

0:25:31 > 0:25:37and opened the floorspace. And we started by painting the walls and put laminate floor down.

0:25:37 > 0:25:40Basically, just sprucing the place up.

0:25:45 > 0:25:50So the front reception room is looking good, but what about the kitchen?

0:25:52 > 0:25:57Wow! Rob and Daniel have completely transformed it.

0:25:57 > 0:26:01It was quite an old and outdated kitchen,

0:26:01 > 0:26:06so we've basically stripped everything back. So it's nice and modern.

0:26:06 > 0:26:12It's plain white, black tiles. I think the result speaks volumes. It looks really nice.

0:26:12 > 0:26:18Along with the kitchen being transformed, the downstairs toilet has had a makeover

0:26:18 > 0:26:22to complete an impressive refurbishment downstairs,

0:26:22 > 0:26:28while upstairs the family bathroom is now less Swedish sauna and more swish and stylish.

0:26:32 > 0:26:36There are also signs that this house is now a home.

0:26:36 > 0:26:42Just after we bought the property, people approached us and asked what we were going to do with it.

0:26:42 > 0:26:48We said we were going to renovate it and they said could they have first refusal on renting it.

0:26:48 > 0:26:54So we agreed a rent straight away. Obviously, they could see we were doing a full modernisation

0:26:54 > 0:26:56so they basically moved in.

0:26:59 > 0:27:05So the three bedrooms haven't just been refurbished. They're now fully furnished with the tenants

0:27:05 > 0:27:09putting their own stamp on the work done by this father and son team.

0:27:09 > 0:27:13How much of the end result was down to Daniel?

0:27:13 > 0:27:20Basically, the painting was left down to me in the end. So I painted most of the walls, different coats,

0:27:20 > 0:27:26plasterboarding and skirting boards. Just where I came in handy. I've been learning a lot.

0:27:26 > 0:27:30Of course, for Rob and Daniel this isn't their full-time job.

0:27:30 > 0:27:37They had to work in the evenings and at weekends to complete it. Daniel not only put the hours in,

0:27:37 > 0:27:41he also invested £3,000 of his own money towards refurbishment.

0:27:41 > 0:27:47But what was it like working together on a project where they both invested time and money?

0:27:47 > 0:27:54I've enjoyed a little bit of time with my son. It's something to do together, father and son bonding.

0:27:54 > 0:27:59- It's not often we spend that much time together. - It's stressful at times.

0:27:59 > 0:28:02- But all in all we got on well.- Yeah.

0:28:02 > 0:28:07It turned out their togetherness was slightly better than the house's structural togetherness.

0:28:07 > 0:28:13As the front ground-floor window didn't have a sufficiently-strong lintel, it was reinforced.

0:28:13 > 0:28:18The front exterior had to be rebuilt and they did substantial work on the garden.

0:28:18 > 0:28:22Rob decided against removing the asbestos in the flying extension

0:28:22 > 0:28:27and opted to have it enclosed with a plastic membrane.

0:28:27 > 0:28:31Apart from being safe, this is a neat cosmetic solution.

0:28:31 > 0:28:36But even with all their input, their £10,000-£15,000 budget was always tight.

0:28:36 > 0:28:38We spent 17,400 in the end,

0:28:38 > 0:28:41but I think what we spent extra,

0:28:41 > 0:28:45doing the re-rendering, the fascias and the guttering

0:28:45 > 0:28:51and making the envelope of the building maintenance-free for five to ten years has been worth it.

0:28:51 > 0:28:56Rob might think a £17,400 spend on top of their £33,000 purchase price

0:28:56 > 0:29:03might be worth it, but it takes their total investment to £50,400 without costs and fees.

0:29:03 > 0:29:08Although they've already got a tenant, have they maximised the potential here?

0:29:08 > 0:29:11What do two local estate agents think?

0:29:11 > 0:29:15It's obviously been improved to an extremely high standard.

0:29:15 > 0:29:20The attention to detail has surprised me and it's in excellent decorative order.

0:29:20 > 0:29:23What I particularly like about this property

0:29:23 > 0:29:27is the quality of the fixtures and fittings that they've used,

0:29:27 > 0:29:31a nice, modern fitted kitchen, a white three-piece bathroom upstairs,

0:29:31 > 0:29:35and a large garden at the back with...laid to lawn.

0:29:35 > 0:29:39The owners have thought long and hard about the layout

0:29:39 > 0:29:45and they've now created a light and open space for living accommodation which works very well in the kitchen

0:29:45 > 0:29:48The house may already be working as a rental vehicle,

0:29:48 > 0:29:52but have they invested their £50,400 wisely?

0:29:52 > 0:29:59Now that the property has been refurbished to this sort of standard I would aim to achieve £70,000.

0:29:59 > 0:30:03If I was putting this property on the market for sale,

0:30:03 > 0:30:05I would put it on at £65,000.

0:30:05 > 0:30:10So, a potential pre-tax profit of between £15,000 and £20,000.

0:30:10 > 0:30:13What do Rob and Daniel make of that?

0:30:13 > 0:30:17- I'm quite happy with that.- Yeah. - It represents a reasonable profit.

0:30:17 > 0:30:22Obviously, in this climate, you know, I think that's fine.

0:30:22 > 0:30:28They're certainly encouraging resale values, but have they achieved the best possible rental returns?

0:30:28 > 0:30:34If I offered this property for rent in the current market, I'd expect to achieve £375 per calendar month.

0:30:34 > 0:30:41Exposing this property to the rental market, I would expect to achieve £375 per calendar month.

0:30:41 > 0:30:45We're actually getting a little bit more than that - £400 a month.

0:30:45 > 0:30:47That's fantastic.

0:30:47 > 0:30:53With a £400 per calendar month income, equating to an annual yield of above 9%,

0:30:53 > 0:30:56this has been a very successful project.

0:30:56 > 0:31:00Is it to be the first of many for this father-and-son team?

0:31:02 > 0:31:08My wife's got a list of jobs to do a home, so I think we're going to have to have a little bit of a break.

0:31:08 > 0:31:10But maybe, yeah.

0:31:10 > 0:31:14I think in the future, but we need a little bit of a rest.

0:31:14 > 0:31:17But it's worked out OK, so definitely do it again.

0:31:28 > 0:31:32Derby is home to Britain's first ever factory,

0:31:32 > 0:31:37so it could quite legitimately lay claim to being the birthplace of the Industrial Revolution.

0:31:37 > 0:31:42But times have changed and the once booming railway and cotton trade

0:31:42 > 0:31:47have been replaced by the shopping and commerce trade, keeping Derby buoyant and prosperous.

0:31:47 > 0:31:50Well, parts of it anyway.

0:31:50 > 0:31:53Just a hop, skip and a jump from Derby city centre,

0:31:53 > 0:31:57and it's easy to understand why this street used to be highly desirable.

0:31:57 > 0:32:01It's still very popular, but it has been slightly blighted

0:32:01 > 0:32:05because of this rather unfinished development plot opposite.

0:32:05 > 0:32:08Still, nice-sized properties and the one I'm here to see,

0:32:08 > 0:32:13the guide price was 65,000 quid, three-bedroomed, three-storey... Let's take a look.

0:32:13 > 0:32:16There's a lovely, old front door

0:32:16 > 0:32:22and I like that the property is set back from the road, but it looks like it has become a bit of a tip

0:32:22 > 0:32:26and living opposite a derelict building site, that's not ideal.

0:32:26 > 0:32:28# It could be better than the way it is

0:32:28 > 0:32:31# It could be better than the way it is

0:32:31 > 0:32:34# It could be better... #

0:32:34 > 0:32:36# Ba, ba-ba, ba-ba... #

0:32:36 > 0:32:42Ah! It looks to be in a bit of a state on the inside as well, but let's look at the positives.

0:32:42 > 0:32:45Nice bit of an entrance porch there.

0:32:45 > 0:32:48The doors, well, might be salvageable,

0:32:48 > 0:32:54but you come down this corridor and then through this door into the main living part of the house, I guess.

0:32:54 > 0:33:00It's been sub-divided off at some point. You've got these doors leading into the lounge.

0:33:00 > 0:33:02Quite a nice-looking fireplace.

0:33:02 > 0:33:07The rear area here, big space where you could have a fireplace, so that's quite nice,

0:33:07 > 0:33:09and the actual space itself is good.

0:33:09 > 0:33:13But it is one of those properties that is in a bit of a state.

0:33:13 > 0:33:17You've got to try and see through that to what it might become.

0:33:17 > 0:33:23I quite like the layout. There's lots of space, a room there, and then through here into the kitchen.

0:33:23 > 0:33:26Let's focus on the positives first.

0:33:26 > 0:33:30The roof light is nice, shedding lots of natural light in here.

0:33:30 > 0:33:35The space isn't bad, but it's a room that needs a bit of tender, loving care. Oh, boy!

0:33:35 > 0:33:41It doesn't look like the cooker's been cleaned for a while either. Eugh! Toasted tea cake, anybody?

0:33:41 > 0:33:46# You're gonna mess up a good thing, you're gonna mess up a good thing... #

0:33:46 > 0:33:51The state of the house means it looks a long way from being the toast of the town.

0:33:51 > 0:33:57But I think that underneath all this mess is a pretty decent property with some lovely period features.

0:33:57 > 0:34:03So, upstairs and the general state of the place doesn't really get much better, but what have we got?

0:34:03 > 0:34:08We've got a little bathroom and loo. I say "little", it's actually a fairly decent size.

0:34:08 > 0:34:12Bedroom here, another bedroom there, then stairs to the top floor.

0:34:12 > 0:34:16So let's talk about what you might be able to do with this place.

0:34:16 > 0:34:20You could just restore it and keep it as it is as one house.

0:34:20 > 0:34:26You could convert it into individual rooms and let them out on a room-by-room basis.

0:34:26 > 0:34:30That is a good way to go and, financially, it might be quite interesting.

0:34:30 > 0:34:37But there's lots of rules and regulations regarding houses of multiple occupation to adhere to -

0:34:37 > 0:34:39fire escapes, fire doors,

0:34:39 > 0:34:44and depending on the number of people and floors, licensing may be applicable.

0:34:44 > 0:34:49But in terms of financial opportunity, it's certainly an interesting way to go,

0:34:49 > 0:34:53and in a nutshell, what it says is this house has lots of potential.

0:34:53 > 0:34:56# A good thing, yeah, baby... #

0:34:56 > 0:35:02And potential is definitely a good thing, no more so than with the space on the top floor.

0:35:02 > 0:35:08I'm slightly worried about whether the stairs meet modern building regulations, but apart from that,

0:35:08 > 0:35:11it's pretty promising, as are the other two bedrooms,

0:35:11 > 0:35:13and that huge bathroom.

0:35:13 > 0:35:17There's even a decent-sized garden at the back.

0:35:18 > 0:35:20What does the auctioneer who sold it

0:35:20 > 0:35:24think of this two-bedroomed, terraced house?

0:35:27 > 0:35:32The house is a little untidy, but if you're looking beyond the untidiness

0:35:32 > 0:35:36it's a sound house, it isn't going to need a lot of mone

0:35:36 > 0:35:38to retrieve the situation.

0:35:38 > 0:35:44This was previously a rental, but is it best suited to being a single let, a room-by-room let,

0:35:44 > 0:35:46or divided into flats?

0:35:46 > 0:35:49With current rules and regulations,

0:35:49 > 0:35:51if you divide it into flats,

0:35:51 > 0:35:57you've got to throw so much money at it to meet the criteria that it really isn't economic,

0:35:57 > 0:36:01so it's almost inevitable it will become a shared house.

0:36:01 > 0:36:05Bearing in mind it had a £65,000-plus guide price,

0:36:05 > 0:36:10what sort of resale and rental values could it achieve once tidied up and renovated?

0:36:10 > 0:36:14When it's renovated, certainly 100,000, possibly a shade more,

0:36:14 > 0:36:20but that will be geared to some extent by how much it earns if it's going to be rented.

0:36:20 > 0:36:23I think if you were to rent this out as a single house,

0:36:23 > 0:36:28it would have a rental value of probably around £500 a calendar month.

0:36:28 > 0:36:32However, if you make it into a share house and let it out as rooms,

0:36:32 > 0:36:35bearing in mind you've got much greater maintenance,

0:36:35 > 0:36:39I think your income could probably b as much as £700, £750 a month.

0:36:39 > 0:36:43Despite the number of hoops you'd have to jump through

0:36:43 > 0:36:48to make this a house of multiple occupancy, the numbers appear to add up to taking that route.

0:36:48 > 0:36:54This is one of those properties where an experienced developer would see through the current state

0:36:54 > 0:36:59to what this place could become and if you want to become an investor, that's what you need to do.

0:36:59 > 0:37:05It's in a mess, but it has great potential. Who saw the opportunity when it went under the hammer?

0:37:06 > 0:37:10Lot number 13 is a three-bedroomed townhouse

0:37:10 > 0:37:16that's got three-floor accommodation but needs upgrading and improvement.

0:37:16 > 0:37:18Start me at 60,000 for it? 58?

0:37:18 > 0:37:23Thank you, 58 I've got. At £58,000. 58,000.

0:37:23 > 0:37:2759 somewhere? At £58,000, the opening bid.

0:37:27 > 0:37:3159 on the left. At 59. At 60?

0:37:31 > 0:37:3360,000. At 60. And 1.

0:37:33 > 0:37:3661. 61 is bid.

0:37:36 > 0:37:3862? 62, thank you.

0:37:38 > 0:37:4163? 63.

0:37:41 > 0:37:4363. 64.

0:37:43 > 0:37:46One more? 65? 65.

0:37:46 > 0:37:4866.

0:37:48 > 0:37:5067. A half help you?

0:37:50 > 0:37:54No. A half. 67 and a half.

0:37:54 > 0:37:56Stick with it? 68?

0:37:56 > 0:37:5868. 500?

0:38:00 > 0:38:02500. 69...? Thank you.

0:38:02 > 0:38:0569. 500?

0:38:05 > 0:38:08Have another bid, it doesn't hurt. 69 and a half.

0:38:08 > 0:38:1070,000.

0:38:10 > 0:38:1270,000. And a half again?

0:38:14 > 0:38:1670 and a half.

0:38:16 > 0:38:1871.

0:38:18 > 0:38:2071... Are you sure?

0:38:20 > 0:38:23At £71,000 then once,

0:38:23 > 0:38:25twice, third time...

0:38:27 > 0:38:29Sold at 71,000, thank you.

0:38:29 > 0:38:32'Although he didn't actually bid himself,

0:38:32 > 0:38:37'for £71,000, the new owner of the three-bed terraced house in Derby is Taj.

0:38:37 > 0:38:40'He bought it for his property partnership,

0:38:40 > 0:38:43'along with business partner Kevin.

0:38:43 > 0:38:49'He also runs a property rental agency and has his own portfolio of properties that he lets out.

0:38:49 > 0:38:55'Kevin, who is a qualified plumber, looks after their maintenance and refurbishment.'

0:38:55 > 0:38:59Taj, Kevin, lovely to meet you both. Why did you want to buy this place?

0:38:59 > 0:39:06Basically, to complement my portfolio. I want to turn this into an HMO, house of multiple occupation

0:39:06 > 0:39:12- What kind of HMO are you going to go for?- Basically, just to convert it into two one-bed flats

0:39:12 > 0:39:14and two studio flats.

0:39:14 > 0:39:17So, four flats? How are you going to do that?

0:39:17 > 0:39:20This will be one. One room here.

0:39:20 > 0:39:23Kitchen, bathroom.

0:39:23 > 0:39:29Upstairs, two professional studios with a shared bathroom

0:39:29 > 0:39:34and the top floor made into a single one-bed, self-contained unit again.

0:39:34 > 0:39:35Wow!

0:39:35 > 0:39:41- You're certainly squeezing everything you can out of this property in theory.- Yeah.

0:39:41 > 0:39:45# Bend me, shape me any way you want me

0:39:45 > 0:39:48# You got the power to turn on the light... #

0:39:48 > 0:39:51'That certainly does maximise the space.

0:39:51 > 0:39:56'It's what they've done on other similar properties nearby, so they know it's possible,

0:39:56 > 0:40:00'but they haven't ruled out room-by-room letting either.'

0:40:00 > 0:40:05At what point will you decide what to do? That will decide your route in terms of renovation.

0:40:05 > 0:40:10Once we've cleared the property and we take it back to the bare shell.

0:40:10 > 0:40:15There's some improvements that need to be made to bring it up to the HMO licensing.

0:40:15 > 0:40:20Once we deal with these issues, we'll then decide how we move forward.

0:40:20 > 0:40:24So what will your involvement on a day-to-day basis be?

0:40:24 > 0:40:28My involvement on a day-to-day basis is mainly project-managing it.

0:40:28 > 0:40:31Swanning around and telling other people what to do?

0:40:31 > 0:40:35Well, I mean, at the end of the day, Kevin does a great job.

0:40:35 > 0:40:38He knows effectively what we want to achieve,

0:40:38 > 0:40:44but I'm really here just to provide guidance when he's got some questions he wants to bounce off me,

0:40:44 > 0:40:49- and checking to see if we're on schedule. - Do you do some building works too?

0:40:49 > 0:40:53I'm a qualified plumber and a time-served joiner,

0:40:53 > 0:40:56so, basically, I like to get involved.

0:40:56 > 0:40:59I think he's a bit modest there. He can do everything.

0:40:59 > 0:41:01So what is the timescale?

0:41:01 > 0:41:03KEVIN SIGHS

0:41:03 > 0:41:06Lots of in-taking of breath there!

0:41:06 > 0:41:09You know, we've talked about times.

0:41:09 > 0:41:15- I think we can turn this round within four months.- Yes.- Yeah.

0:41:15 > 0:41:20- And the total budget? - Within 20K.- Within 20K.

0:41:20 > 0:41:24'£20,000 to create four flats seems pretty cheap,

0:41:24 > 0:41:28'but having worked on and maintained so many properties over the years,

0:41:28 > 0:41:33'not only do they know how to maximise the space, but also how to maximise their budget.'

0:41:33 > 0:41:38- Then once this one's done, on to the next project perhaps?- Correct, yeah.

0:41:38 > 0:41:43- Where does it end?- I'm very passionate about property. I have been for a number of years now.

0:41:43 > 0:41:49I've been a landlord over 20 years, so, you know, it's what gets me out of bed every morning.

0:41:49 > 0:41:53- And do you still enjoy doing these things?- Yes.

0:41:53 > 0:41:55- It's my passion.- Right.

0:41:55 > 0:41:59This is my enjoyment, properties like this.

0:41:59 > 0:42:01What is it that gives you that excitement?

0:42:01 > 0:42:05- I know what the finished article will come in at.- Which will be?

0:42:05 > 0:42:07We'll wait and see.

0:42:07 > 0:42:10- Congratulations. Good luck. - Thank you.

0:42:10 > 0:42:14- We look forward to seeing how you transform this place. - Thank you.- Thank you.

0:42:14 > 0:42:19Well, Taj and Kevin have certainly got a lot of work ahead of them,

0:42:19 > 0:42:23but they don't seem too fazed by what's in store.

0:42:23 > 0:42:29The big question, of course, is will it be flats or will it be individual rooms for rent?

0:42:29 > 0:42:32Find out what they decide later in the show.

0:42:35 > 0:42:39Getting your property at the right price is the first step to success.

0:42:39 > 0:42:41But the next step is equally important.

0:42:41 > 0:42:47Sticking to timescales and budgets is the only way to maximise your profits.

0:42:47 > 0:42:51So how are our purchasers progressing? Let's find out.

0:42:54 > 0:43:00In Mitcham, Surrey, a four-room, first floor flat went up for auction.

0:43:00 > 0:43:03This quirky property had a somewhat strange layout

0:43:03 > 0:43:05with rooms off a central corridor,

0:43:05 > 0:43:08then a small kitchen with a bathroom off it.

0:43:08 > 0:43:14And if that wasn't odd enough, then the loo was all alone in a rickety old lean-to.

0:43:14 > 0:43:20But none of this put off first-time property developers Anne and Tony.

0:43:20 > 0:43:23They had bought the flat for 108,000

0:43:23 > 0:43:28and armed with a ten-grand budget, hoped to turn it around in just ten weeks.

0:43:29 > 0:43:33- So how much experience have you two got with buying houses?- None.

0:43:33 > 0:43:37I love the way you're laughing. "None at all." You're so honest.

0:43:37 > 0:43:42- Yeah, well, until four years ago, I had never owned a house.- Really?

0:43:42 > 0:43:46My children both owned houses before me.

0:43:46 > 0:43:49Now, just six weeks later,

0:43:49 > 0:43:54we returned to see if these late starters had blossomed into successful property developers.

0:43:54 > 0:43:58# What a good year for the roses

0:43:59 > 0:44:04# Many blooms still linger there

0:44:04 > 0:44:09# The lawn could stand another mowin'

0:44:09 > 0:44:13# Funny, I don't even care

0:44:14 > 0:44:19# As you turn to walk away

0:44:19 > 0:44:24# As the door behind you closes

0:44:25 > 0:44:30# The only thing I have to say

0:44:30 > 0:44:36# It's been a good year for the roses... #

0:44:36 > 0:44:40So, apart from unearthing floral patterns on the wallpaper,

0:44:40 > 0:44:43the flat hasn't changed fundamentally. What happened?

0:44:43 > 0:44:50We put the flat on to the market straight away just to see if anybody wanted to buy it as it was.

0:44:50 > 0:44:53And, um...we were quite amazed.

0:44:53 > 0:44:57We had dozens of people come through the door to view it.

0:44:57 > 0:45:00Some walked in and walked straight out again,

0:45:00 > 0:45:06then somebody bought it, so we were very pleased. Somebody else wants to do it up!

0:45:06 > 0:45:10# That's why I'm leaving it up to yo

0:45:12 > 0:45:15# You decide

0:45:15 > 0:45:17# What you're gonna do... #

0:45:17 > 0:45:22I really wanted to do it up and make it look nice,

0:45:22 > 0:45:26but at the same time it is a business venture,

0:45:26 > 0:45:31so I'm afraid the head had to rule the heart on this occasion.

0:45:31 > 0:45:35The offer they've accepted on the flat is for 128,000

0:45:35 > 0:45:41and as if that wasn't good enough, they've found yet another way to generate income from their purchase.

0:45:41 > 0:45:44Apart from stripping the walls in here,

0:45:44 > 0:45:47the room was actually full of books and metal shelving.

0:45:47 > 0:45:54And a friend of ours has a garage, so he was very keen on the metal shelving.

0:45:54 > 0:45:59A huge amount of books went to the charity shop, but some we sold online as well,

0:45:59 > 0:46:03which made a small profit of £50, which was great.

0:46:03 > 0:46:08Well, £50 is definitely worth having and as a financial exercise,

0:46:08 > 0:46:10it all seems positive.

0:46:15 > 0:46:18There really hasn't been a budget.

0:46:18 > 0:46:24Apart from all the seller's expenses and buyer's expenses, maybe £100 or less.

0:46:24 > 0:46:27And then we got some money back on the books anyway.

0:46:27 > 0:46:31Everything else, where it could be, was recycled,

0:46:31 > 0:46:35so, yeah, good all round, thoroughly enjoyed ourselves.

0:46:35 > 0:46:38So, really no budget to speak of,

0:46:38 > 0:46:43but Anne does reckon that all their costs and fees came to around £6,200,

0:46:43 > 0:46:47taking their total outlay here to £114,200.

0:46:47 > 0:46:50As they sold it for 128,000,

0:46:50 > 0:46:54that's a £13,800 pre-tax profit.

0:46:58 > 0:47:03So have they maximised their purchase by selling it straight on

0:47:03 > 0:47:07without refurbishing it? What do two local estate agents think?

0:47:11 > 0:47:13It hasn't changed much since I last saw it.

0:47:13 > 0:47:17I do believe the vendor has taken some wallpaper off the walls,

0:47:17 > 0:47:20but apart from that, it's the same.

0:47:23 > 0:47:25I look beyond what we see now.

0:47:25 > 0:47:27I see potential for improvement,

0:47:27 > 0:47:30I see a lovely home for a young family

0:47:30 > 0:47:33and whoever gets this property can do a lot with it.

0:47:33 > 0:47:40So did the couple make the right decision, flipping their £114,200 investment?

0:47:40 > 0:47:45When fully refurbished, you'd be looking to sell this for around £175,000.

0:47:45 > 0:47:51Once the property is refurbished, the property could be put on the market at £155,000.

0:47:51 > 0:47:54I think the 155 is the more realistic amount.

0:47:54 > 0:48:00And that was really the figure we were working to, had we completed the work.

0:48:00 > 0:48:05So, if they had spent the proposed £10,000 on the flat

0:48:05 > 0:48:09and then sold it for 155,000,

0:48:09 > 0:48:12they could potentially have made a pre-tax profit of 30 grand,

0:48:12 > 0:48:18but did they get a realistic resale price on their stripped-down purchase?

0:48:19 > 0:48:24In its current condition, you'd look to sell the property for around £140,000.

0:48:24 > 0:48:29In the locality, there's another property exactly the same on the market at 135.

0:48:29 > 0:48:31Well, we thought 130

0:48:31 > 0:48:35and were quite happy to take 128.

0:48:35 > 0:48:41That £128,000 price did give them a £13,800 pre-tax profit,

0:48:41 > 0:48:46although they could have more than doubled that if they had done the work.

0:48:46 > 0:48:49As their first development project, I can understand

0:48:49 > 0:48:54why they took the money and ran, but has it whetted their appetite for more?

0:48:54 > 0:48:58Once this has finally sold and all the money has come through,

0:48:58 > 0:49:02we'll go back to auction and have another go and see how we get on.

0:49:08 > 0:49:13Close to Derby city centre, a large, three-bedroomed, terraced property went to auction.

0:49:13 > 0:49:16On first sight, it was a real mess,

0:49:16 > 0:49:21but a look beyond the chaos revealed a place with plenty of potential.

0:49:21 > 0:49:26Or so developer and owner of a property rental agency Taj thought

0:49:26 > 0:49:29when he bought it for £71,000.

0:49:29 > 0:49:35He was hoping, with the help of his business partner Kevin, to unearth that potential.

0:49:35 > 0:49:39I want to turn this into an HMO, a house of multiple occupation.

0:49:39 > 0:49:45- What kind of HMO are you going to go for?- Basically, just to convert it into two one-bed flats

0:49:45 > 0:49:48and two studio flats.

0:49:48 > 0:49:51- So, four flats?- Ideally, yes.

0:49:51 > 0:49:56On a budget of £20,000 and a four-month timescale,

0:49:56 > 0:50:01the plan was for Kevin to project-manage the conversion to the four flats.

0:50:01 > 0:50:04Now, over 11 months later, we're back.

0:50:07 > 0:50:11It certainly looks very different from the front.

0:50:11 > 0:50:17There are new windows and doors and clearing the hedge certainly improves its kerb appeal.

0:50:17 > 0:50:19But what will we find inside?

0:50:19 > 0:50:21Has Taj created four flats?

0:50:22 > 0:50:28As we've got it structured at the moment, we've got a top flat on the second floor.

0:50:33 > 0:50:39This one-bed top floor flat is complete and comes not only with a fully fitted kitchen...

0:50:47 > 0:50:51..and en-suite bedroom, but it's also got a tenant.

0:50:51 > 0:50:53There's two rooms on the first floor

0:50:53 > 0:50:59So, a slight change of plan with the first floor bedrooms converted into two bedsits.

0:51:05 > 0:51:08The larger of the bedsits is en-suite.

0:51:18 > 0:51:22The smaller second bedsit has access to a shared kitchen

0:51:22 > 0:51:28and a shower room created from the old, over-large bathroom.

0:51:29 > 0:51:32But what has he done on the ground floor?

0:51:32 > 0:51:39The plan here was to create living space out of the original space we had,

0:51:39 > 0:51:42so we had a living room and a front lounge.

0:51:42 > 0:51:46What we've decided to do from the two rooms

0:51:46 > 0:51:50is basically utilise the space from the front lounge,

0:51:50 > 0:51:52make an en-suite,

0:51:52 > 0:51:55and that then becomes the bedroom.

0:51:55 > 0:52:00This existing space, we decided to put a partition

0:52:00 > 0:52:05and make a corridor for the utility room on the other side,

0:52:05 > 0:52:07so this is one self-contained area.

0:52:07 > 0:52:11That's what we've achieved here, then it leads into the kitchen.

0:52:11 > 0:52:15What will eventually be a fully fitted kitchen leads out

0:52:15 > 0:52:21from this one-bedroom, self-contained flat into its own garden.

0:52:21 > 0:52:23So Taj is certainly well on the way

0:52:23 > 0:52:27to maximising the property's potential, but it's still not complete.

0:52:27 > 0:52:33It's nearly a whole year into what he hoped would be a four-month project, so what's been happening?

0:52:33 > 0:52:39Unfortunately, I've had my own hiccups since we started the project.

0:52:39 > 0:52:45I've also been working on a communit church for my own community which kicked off in February,

0:52:45 > 0:52:51which also coincided with my, um...partner Kevin

0:52:51 > 0:52:55also deciding not to carry on with the project.

0:52:56 > 0:52:59So that hasn't helped me

0:52:59 > 0:53:05and I think it's delayed the project by about three months.

0:53:05 > 0:53:08# You know, I dig you doing your thing

0:53:08 > 0:53:10# And I'll turn you on when I do mine... #

0:53:10 > 0:53:17So Taj ended up being much more hands-on with this very complex project than originally planned.

0:53:17 > 0:53:22However, he has finally managed to turn this into a house of multiple occupancy

0:53:22 > 0:53:28by creating that one-bedroom attic flat, two bedsits on the first floor and that one-bedroom garden flat,

0:53:28 > 0:53:34but the setbacks have had repercussions for his ambitious £20,000 budget.

0:53:34 > 0:53:38Because of the time and using more contractors and the delay,

0:53:38 > 0:53:42I think we're spending close to about 35 and a half.

0:53:46 > 0:53:50A £35,500 spend on top of Taj's £71,000 purchase price

0:53:50 > 0:53:56takes his total outlay to £106,500 without costs or fees.

0:53:56 > 0:54:00But has he found the key to maximising the property's potential?

0:54:00 > 0:54:03What do two local estate agents think?

0:54:03 > 0:54:06It's certainly different to what it was.

0:54:06 > 0:54:10There's been an awful lot of renovation work gone on

0:54:10 > 0:54:12which can only be to its credit.

0:54:12 > 0:54:19It's probably had as much as necessary to make it feasible to be let or sold.

0:54:19 > 0:54:22I'm quite impressed, strangely.

0:54:22 > 0:54:24The property is a bit higgledy-piggledy,

0:54:24 > 0:54:28but obviously he's done it with the pound signs in his eyes.

0:54:28 > 0:54:31A lot of houses are done for the love of it,

0:54:31 > 0:54:35but this one is a business, rather than a property for himself.

0:54:35 > 0:54:41Well, it might be a bit higgledy-piggledy, but can it work out as a rental vehicle?

0:54:41 > 0:54:47First of all, what about those one-bedroom flats? That's the one on the top floor and the garden flat.

0:54:47 > 0:54:53With bills included, you could be looking at achieving a rent of around £500 per unit.

0:54:53 > 0:54:57If we start with the garden flat, I would say maybe 450 a month.

0:54:57 > 0:55:00On the top floor, I would say maybe 400 a month.

0:55:00 > 0:55:05Those figures are pretty encouraging, but how about those two smaller bedsits?

0:55:05 > 0:55:09How would they do on the all-important rental market?

0:55:09 > 0:55:14Each room per month could be rented for just under approximately £300.

0:55:14 > 0:55:18The ones with the en-suite, £300 per calendar month,

0:55:18 > 0:55:23then for the last room which is the shared bathroom which is fairly decent,

0:55:23 > 0:55:25I would say £280 per calendar month.

0:55:25 > 0:55:28That means if all the rooms were occupied,

0:55:28 > 0:55:33Taj could get a rental return of £1,430 to £1,600 per calendar month.

0:55:33 > 0:55:37That's a whopping yield of between 16% and 18%,

0:55:37 > 0:55:43but as the owner of a rental agency himself, what does he make of the estate agents' valuations?

0:55:43 > 0:55:46I'm getting 495 for the top flat.

0:55:46 > 0:55:51I'd be looking to get that at least for the ground floor flat

0:55:51 > 0:55:57and the two rooms, 375 for the en-suite room

0:55:57 > 0:56:01and between 325 and 350 for the other room.

0:56:01 > 0:56:04Taj hopes for more rent than the estate agents estimate,

0:56:04 > 0:56:07but the returns are impressive either way,

0:56:07 > 0:56:13reflected by the potential resale value of the property that he's invested £106,500 in.

0:56:13 > 0:56:17As a going concern with all rooms filled,

0:56:17 > 0:56:22you could be looking to achieve around £200,000.

0:56:22 > 0:56:25I think realistically it's going to be around £160,000.

0:56:25 > 0:56:31So, a potential pre-tax profit of between £54,000 and £94,000

0:56:31 > 0:56:33and a rental yield above 16%.

0:56:33 > 0:56:38That does sound like a pretty successful development project to me,

0:56:38 > 0:56:42but how does Taj reflect on this property purchase?

0:56:42 > 0:56:47I'm feeling relieved, I'm feeling really good that we're coming to the end of it.

0:56:47 > 0:56:51The end result is obviously rewarding.

0:56:53 > 0:56:57Has that whetted your appetite to make a go of property development?

0:56:57 > 0:57:03- If so, there will be more compelling stories for you next time.- On Homes Under The Hammer.- Goodbye.- Goodbye.

0:57:23 > 0:57:26Subtitles by Red Bee Media Ltd