Episode 54 Homes Under the Hammer


Episode 54

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Home is where the heart is, they say, but is your heart in making money from property?

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On today's programme we'll be finding out who's willing to put their heart and soul

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into buying property under the hammer.

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Buying property at auction can be a road to success,

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but there are some pitfalls, so it's important to tread carefully.

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Even experienced developers can make wrong moves,

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so let's see what tempted our buyers on today's show.

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In Whitehaven, Cumbria, there was a property at a decent price and in sound condition.

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All in all, a big tick.

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In Mitcham, Surrey, I discover what really goes on behind closed doors.

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Of course! It's the bathroom!

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And will the refurbishment of this terraced, three-storey Derby house be a piece of cake?

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Toasted tea cake?

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All of these properties have been sold at auction. We'll find out who bought them and what they paid

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when they went under the hammer.

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Today I'm in Whitehaven, a small town and port on the coast of Cumbria.

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And this is its magnificent harbour.

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But it's been through ups and downs over the years, losing out to bigger ports such as Liverpool and Bristol.

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But thanks to the Millennium Project and £1.3 million of cash,

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it's looking jolly spiffing these days.

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# So lead me to the harbour... #

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In its heyday, Whitehaven was a grand, bustling port

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so it's great to see it getting back on its feet.

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# ..and float me on the way... #

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But will the property I'm here to see be just as impressive?

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Not far from the centre of Whitehaven is the property.

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This is it. A three-bed ex-council property. And the guide price? 20,000 quid.

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Definitely worth a look!

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'OK, it's not quite as grand as the townhouses in the port,

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'but at that price it's got to be worth checking out.'

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So what have we got? Stairs up the bedrooms there

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and through into the lounge. Not a bad size. And the carpet's in decent condition.

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That's always a good sign. It's been hoovered.

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The room itself, well, clearly in need of a bit of modernisation.

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The fireplace, for sure. But not a bad size. Similarly, the kitchen.

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It obviously would really benefit from some money spent, new units, but it's a nice size.

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Big enough for a kitchen table or a dining table there.

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And a few... Good news. That's a reasonable size boiler, reasonably new.

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And behind here, not a cupboard, but a downstairs loo. Well, that's great.

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You can never have too many loos. All in all, bit of a big tick.

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'It's great to have that loo in addition to the one upstairs,

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'but that's housed in a rather odd flying side extension above the drive.

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'And the pink suite and wooden finish give it a really dated look.'

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# It's understood They got hardboard I got solid wood... #

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This is really unusual. It's almost like a flying bathroom.

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It's actually constructed above the driveway below.

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It's a very odd little room. I'm not sure I like it, but it is upstairs.

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Then onto this second landing area you've got three bedrooms - one at the front, two at the back.

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Not bad sizes. It feels like it definitely needs just smartening up.

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But in terms of space, you can't knock it.

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A perfectly fine little property here and it gets even more tempting when you go out the back.

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At the rear of the property, a really good-sized garden.

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Much more exciting for me, I think, is the potential to extend.

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Look what's happening next door. They have a single-storey extension

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and the property next door looks like it's having something similar.

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So the planners are up for that. I don't think you'd even need planning permission.

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It's something this property would benefit from enormously.

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So potential to build out the back, but getting rid of that floating toilet could be trickier.

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On closer inspection, it looks like there's evidence of the dreaded A word in its construction -

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asbestos. You'd need to get expert advice before doing any major work here,

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but this place could have a lot of potential at that £20,000 guide price.

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But what does a local expert think?

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We asked along the auctioneer to give us his thoughts.

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The property's in need of modernisation and would benefit from new kitchen, new bathroom,

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floor coverings, heating etc, and decorated throughout.

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The negatives to this property might be the amount of money you'd need to spend on it

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to get it to a resale standard.

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There is a ceiling to resale values of properties of this nature in this area.

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So the cost of improvements doesn't always equal increased value.

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With a ceiling on the resale value, it's important to keep costs under control,

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but once the renovation's done, what could it sell for?

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Once this property has been refurbished to a high standard,

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you would probably achieve between £55,000 and £60,000.

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What if the buyer decided to let it?

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I think once this property has been refurbished, it would achieve £375 per calendar month.

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So not a bad property at all. And it's good news that there's building of new houses nearby.

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Always a good sign. So let's see who fancied it when it went under the hammer.

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Lot 29. Right, £20,000.

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20 I've got. £20,000.

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22 I've got. 24, sir. 26. 28, sir.

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It's against you. 28 I've got.

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-29.

-29. 30. 31.

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31 and a half. 32. 33?

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32,000. You're out on the phone. It's with you at 32,000.

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At £32,000 for the first time. 32 and a half.

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33. And a half.

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It's against you on the phone. You're out, you're out, you're out. Not wanting you back in.

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At £33,000 for the first time.

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At £33,000 for the second time.

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At £33,000, third and final time. Well done.

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Persistence finally paid off and the property sold for £33,000 to father and son, Rob and Daniel.

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Dad Rob is a quantity surveyor and this is his first property venture with his son, Daniel.

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I caught up with them back at the house to hear about their plans.

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# Follow me I've found somewhere to go

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# Follow me We'll be happy there I know... #

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-Rob, Daniel, good to meet you both. Congratulations.

-Thank you.

-A lot of house for the money.

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We thought that. Obviously, being a semi-detached and three bedrooms,

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-£33,000, can't go wrong.

-Tell me why you've bought it.

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Daniel, is this to do with you?

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It's my first renovation project. My dad's done a couple before,

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but it's me getting on the market with him. A joint investment.

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-A joint investment?

-Yeah.

-Fantastic. And what will your involvement be?

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-Learning how to do up places?

-He knows a lot of trades and I just want to learn a couple.

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So what are you doing at the moment?

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-I'm an apprentice fitter.

-OK.

-So I'm just learning my trade so I might as well invest my money.

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Daniel's just 18, but it seems as though he's got a wise head on his shoulders.

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There aren't many teenagers who put their savings into property.

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So now they've bought the house, what work are they planning to do?

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It basically needs a full modernisation.

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-Kitchen, bathroom...

-Oh, yeah.

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What about the infrastructure of the house itself? Major changes?

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Well, that little lean-to thing on the outside looks a bit odd.

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I don't know who has designed that, but I think that was added on at some point.

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-The flying toilet?

-Someone had a bad day at the design office when they added that on.

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It obviously joins the two properties and a lot of them have actually been taken down.

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But unfortunately this one, because it's a council property next door,

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-I don't think we can take it down.

-Right. So it's going to have to stay.

-Yeah, unfortunately.

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-Looks like asbestos as well.

-I met with the site manager and spoke to him about it.

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He says it's definitely asbestos. You can basically cover over it, but personally I'd like rid of it.

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There's a stigma to asbestos.

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Rob is right to identify asbestos as a potential problem if it's disturbed.

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The inhalation of asbestos fibres can cause serious lung conditions, even cancer. To render it safe,

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he could have it sealed up or removed totally by a specialist.

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-What's the budget for the work you're planning?

-Well, having been round today,

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I'd like to spend, between us, ten grand, but it might stretch to 15.

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With the guide price and the money we bought it for reflects the amount of work that needs done.

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So I think if we're in it for 50 grand, we should be able to make 10, 15 grand off it.

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-What about timescale for the work?

-Think of a number - six months, nine months.

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That sounds a lot, but if we get a lot of tradesmen in to do it, we'll do it in six months.

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If we do a lot of work ourselves, it'll be longer, probably 9 months.

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It's an elastic timeframe, but they don't seem stressed about it.

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They were fairly relaxed before the auction, too,

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as they hadn't even looked around the property. Tut tut!

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Why didn't you look at it?

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Well, I actually know the area a little bit. I work round the corner and I thought

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I know the houses, I know they're solid. Front garden, off-street parking.

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The rear garden is quite reasonable. We've got three bedrooms. I thought it had to be one to go for.

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It was one of those things where you think, "It's cheap."

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-And were you happy to throw your money in?

-Otherwise, it would just burn a hole in my pocket!

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I'd spend it on nothing!

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Well, if you're going to take a punt on property, go for something fairly cheap with lots of potential.

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And this place ticks both boxes.

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-We look forward to seeing how you get on.

-Yep.

-And we'll be back in a few months to see.

-Hopefully!

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-Congratulations.

-Cheers, Martin.

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It seems the flying bathroom will have to stay, but for Rob and Daniel a great first joint project.

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How are they going to get on? Find out later in the show.

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This is Mitcham in Surrey. It has fantastic transport links into the city

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and from here you can be in London Victoria in just 20 minutes.

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It also boasts lots of lovely green spaces, Mitcham Common being a fantastic example.

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Still it's hard to believe it was once famous for its lavender fields.

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It became known for its soothing air and Londoners trying to escape the plague moved here in droves.

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Amazingly, the area was the global leader in lavender production until the end of the Victorian era,

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which is incredible. Hopefully, the auction property I'm here to see will be sweet-smelling,

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but if it's not I've come armed with a bunch of lavender, just in case.

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# Sweet smell of success... #

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So having checked out the locality, it's time to have a nosey at the property itself.

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And here it is! It's a leasehold, purpose-built flat with four rooms.

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It's on the first floor with a guide price of £85,000.

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Built in 1954, the building certainly looks like it's bearing up well.

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The roof appears sound, which is good news. It's double-glazed,

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has its own front door and off-road parking,

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plus it comes with a healthy 999-year lease.

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It's always nice to have your own front door, but you've got a few hefty stairs to climb

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to get up to the flat and it's quite an unusual shape.

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Bedroom one through here, a little lounge through here. It's quite hexagonal, isn't it?

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I say bedroom and lounge, but the auction catalogue describes the flat as having "four rooms"

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as well as a kitchen, bathroom and WC. Maybe that's because the layout is pretty odd.

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The end of this little corridor is the kitchen!

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It's small, peeling wallpaper, there's a fridge sticking out.

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And what's behind here?

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Of course! It's the bathroom!

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This flat needs some clever reconfiguration.

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Hold on. Where's the toilet?

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# No particular place to go... #

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Here it is!

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In the lean-to!

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# All by myself

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# Don't wanna be all by myself... #

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No, this loo can't be left all on its own. It needs to be integrated with the bathroom

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in one of the four rooms, then the kitchen can be opened up.

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By making one of the other rooms into a lounge, you could have a much-improved two-bedroom flat.

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And check this outside space out. I call it an added bonus.

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This flat comes with its own garden, a feature that makes any property incredibly desirable.

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It might need to be tidied, but this is a bonus worth having

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and the outlook for the, er, outlook could also be looking up.

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It may not look exciting now, but that old gasworks that backs onto this property

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could be redeveloped. Outline planning has been granted by the council

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and if it goes ahead, it can only mean good things for this part of Mitcham.

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# It's all right

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# Jumpin' Jack Flash is a gas, gas, yeah... #

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Redevelopment nearby might initially mean disruption, but overall it generally enhances an area.

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But that's in the future. What does a local estate agent make of what's currently on offer here?

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First impressions: compact property, with four rooms.

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Slightly odd layout. Needs reconfigured to be user-friendly.

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But the flat was guided at £85,000, so could the work involved in updating it be worth it

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on both the resale and rental markets?

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Once the property is refurbished, we could market it at £160,000.

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This property would rent on the open rental market at approximately £850-£900 per calendar month.

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Those figures talk for themselves, don't they?

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Once you've reconfigured the space, that little flat packs a powerful financial punch.

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Let's see who fought for this one when it went under the hammer.

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Lot 70. A four-room flat, it's got a garden,

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it's convenient for Mitcham. 90,000?

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90,000 down here. 91 anywhere?

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91. 92, madam?

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92. 93, sir? 94? 95?

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96? 97? 98?

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99? 100?

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101? 102?

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102. 103?

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104? 105?

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106? 107?

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108? 109?

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109. 110?

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£109,000.

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First time. Second time.

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Third and last time. Can't quite sell it at that. You're close.

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So it didn't initially sell, but one bidder, Anne, negotiated afterwards

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and bought this four-room flat in Surrey for £108,000.

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Anne works as a project manager in the education sector. It's a joint project with her husband, Tony,

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who's an HR specialist. I met up with them both at the property

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to find out why they made this purchase.

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What I want to know is the story behind buying this flat.

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Well, I think we wanted something different to do.

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We started to look at auction properties. We went for one in London. I couldn't be at the auction

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so Anne went on her own. And Anne did the bidding!

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So you left this lady all to her own devices, to spend all that money!

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Anne, what was it like for you on your own spending all that?

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It's quite exciting, actually.

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I sat and listened very carefully for how it all worked.

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Then I tried to look professional by scribbling notes, but I wasn't writing anything!

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I got to the limit and I had to stop.

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And that was... I just thought, "Never mind." But then it was withdrawn.

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They said to see the auctioneer. He said, "What did you want to pay?" So I said £108,000.

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So he said, "Wait there." And he came back and said, "It's yours."

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-Could you believe it? Were you so excited?

-I was in a bit of a panic mode at that moment.

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"Oh, what have I done?"

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-So, Tony, how did you feel?

-Yeah, pretty excited.

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I actually got a text message that just said, "Got it."

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# Now that you got it What you gonna do with it? #

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

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How will you turn this into a good, saleable flat?

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The bathroom's in a cupboard in the kitchen, as we describe it.

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So one of the bedrooms will go into a bathroom. It'll be two bedrooms in the end.

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But I don't think you can do anything else. The toilet's outside on the little landing

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-down to the garden.

-Excuse me. I like to call it the lean-to.

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-OK. We called it the upper terrace!

-You're so posh!

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So when you move the toilet from the upper terrace, what will you do with that space?

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That particular bit of space we'll transform to a utility area.

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We'll put a washing machine in there with a tumble dryer on top.

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-What's your budget for the work?

-Our budget is £10,000. We'll do 80% of the work ourselves.

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The other 20%, moving the bathroom and plumbing and electrics, we have a builder

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-who'll do some work for us.

-Are you dead set on selling it or would you rent it out?

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I think we'd prefer not to rent. We've looked at the rental market and it's quite good.

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But I think if we could, we would prefer to do it up and sell it?

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Plan B might be to just flip it out. If somebody came with a good offer, then we'd consider it.

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But really we'd like to do it up and make a nice home for somebody.

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They hope to do the work to make that nice home in just 10 weeks, so they'll be busy.

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-How much experience have you got with buying houses?

-None!

-This is...

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I love the way you're laughing. You're so honest.

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-Until 4 years ago, I'd never owned a house. My children owned houses before me.

-What do the kids think?

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Well, we told Daniel and his wife Louisa first and they just were totally gobsmacked.

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They couldn't believe. "Mother, what have you done?"

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And my daughter is in Australia. She's another Lucy.

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And, em...she was just, "I can't believe it. Why, Mother? What have you done?" You know.

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And Tony's son is all keen to come and help. He lives local, so that's quite handy.

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Guys, it's been fantastic meeting you today. This is one where I'm looking forward to the outcome.

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-Thanks.

-Thank you.

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Tony and Anne can only improve this quirky little flat

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and once they do there's certainly a healthy return coming their way.

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But will they do all the work for just ten grand?

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Join me later in the programme and you can find out if they do.

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Coming up. In Derby, there's more to this property than meets the eye.

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As you can see, it's one of those properties that's a bit of a state.

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Back in Mitcham, Surrey, Tony and Anne have taken to property developing like ducks to water.

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Yeah. Good all round. Thoroughly enjoyed ourselves.

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But first, in Cumbria, how has Daniel coped with working with Dad as his boss?

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Stressful at times. We can get on each other's nerves!

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In the Cumbrian town of Whitehaven, a three-bedroom semi-detached property went to auction.

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Although it was a little tired and dated, and had a slightly odd side extension,

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it wasn't in bad shape. So it seemed an ideal development project.

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It was snapped up for £33,000 by local quantity surveyor Rob and his 18-year-old son Daniel.

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-Tell me why you've bought it. Is this something to do with you?

-It's so I get my first project.

0:23:580:24:05

-My dad's done a couple of them before. It's me getting in with him.

-Great.

-A joint investment.

0:24:050:24:11

-A joint investment?

-Yeah.

-Fantastic. And what will your involvement be? Learning how to do up places?

0:24:110:24:18

-He knows a lot of trades. I just want to learn a couple as I go, really.

-Right.

0:24:180:24:24

Daniel's doing an apprenticeship in mechanical engineering so was not only hoping to learn new skills

0:24:240:24:31

but had invested some of his own money into the house. Armed with a £10,000-£15,000 budget

0:24:310:24:36

and a 6-9 month timescale, Daniel started his part-time apprenticeship in property development.

0:24:360:24:42

Now, one year later, we're back and...

0:24:420:24:46

What a difference.

0:24:470:24:49

The exterior's been re-rendered.

0:24:490:24:52

And the front area has been completely tidied up.

0:24:540:24:58

This is looking like a textbook refurbishment.

0:24:580:25:02

# I can tell you now There ain't a problem can't be solved

0:25:020:25:09

# And it's not hard to tell I've learned my lesson well... #

0:25:090:25:13

It certainly seems like Daniel's work experience has gone well.

0:25:130:25:17

In here we started by stripping everything back,

0:25:170:25:21

taking away the carpets and the plaster on the walls.

0:25:210:25:25

Then we pushed the fireplace back. There were bricks round the fireplace. We took all them away

0:25:250:25:31

and opened the floorspace. And we started by painting the walls and put laminate floor down.

0:25:310:25:37

Basically, just sprucing the place up.

0:25:370:25:40

So the front reception room is looking good, but what about the kitchen?

0:25:450:25:50

Wow! Rob and Daniel have completely transformed it.

0:25:520:25:57

It was quite an old and outdated kitchen,

0:25:570:26:01

so we've basically stripped everything back. So it's nice and modern.

0:26:010:26:06

It's plain white, black tiles. I think the result speaks volumes. It looks really nice.

0:26:060:26:12

Along with the kitchen being transformed, the downstairs toilet has had a makeover

0:26:120:26:18

to complete an impressive refurbishment downstairs,

0:26:180:26:22

while upstairs the family bathroom is now less Swedish sauna and more swish and stylish.

0:26:220:26:28

There are also signs that this house is now a home.

0:26:320:26:36

Just after we bought the property, people approached us and asked what we were going to do with it.

0:26:360:26:42

We said we were going to renovate it and they said could they have first refusal on renting it.

0:26:420:26:48

So we agreed a rent straight away. Obviously, they could see we were doing a full modernisation

0:26:480:26:54

so they basically moved in.

0:26:540:26:56

So the three bedrooms haven't just been refurbished. They're now fully furnished with the tenants

0:26:590:27:05

putting their own stamp on the work done by this father and son team.

0:27:050:27:09

How much of the end result was down to Daniel?

0:27:090:27:13

Basically, the painting was left down to me in the end. So I painted most of the walls, different coats,

0:27:130:27:20

plasterboarding and skirting boards. Just where I came in handy. I've been learning a lot.

0:27:200:27:26

Of course, for Rob and Daniel this isn't their full-time job.

0:27:260:27:30

They had to work in the evenings and at weekends to complete it. Daniel not only put the hours in,

0:27:300:27:37

he also invested £3,000 of his own money towards refurbishment.

0:27:370:27:41

But what was it like working together on a project where they both invested time and money?

0:27:410:27:47

I've enjoyed a little bit of time with my son. It's something to do together, father and son bonding.

0:27:470:27:54

-It's not often we spend that much time together.

-It's stressful at times.

0:27:540:27:59

-But all in all we got on well.

-Yeah.

0:27:590:28:02

It turned out their togetherness was slightly better than the house's structural togetherness.

0:28:020:28:07

As the front ground-floor window didn't have a sufficiently-strong lintel, it was reinforced.

0:28:070:28:13

The front exterior had to be rebuilt and they did substantial work on the garden.

0:28:130:28:18

Rob decided against removing the asbestos in the flying extension

0:28:180:28:22

and opted to have it enclosed with a plastic membrane.

0:28:220:28:27

Apart from being safe, this is a neat cosmetic solution.

0:28:270:28:31

But even with all their input, their £10,000-£15,000 budget was always tight.

0:28:310:28:36

We spent 17,400 in the end,

0:28:360:28:38

but I think what we spent extra,

0:28:380:28:41

doing the re-rendering, the fascias and the guttering

0:28:410:28:45

and making the envelope of the building maintenance-free for five to ten years has been worth it.

0:28:450:28:51

Rob might think a £17,400 spend on top of their £33,000 purchase price

0:28:510:28:56

might be worth it, but it takes their total investment to £50,400 without costs and fees.

0:28:560:29:03

Although they've already got a tenant, have they maximised the potential here?

0:29:030:29:08

What do two local estate agents think?

0:29:080:29:11

It's obviously been improved to an extremely high standard.

0:29:110:29:15

The attention to detail has surprised me and it's in excellent decorative order.

0:29:150:29:20

What I particularly like about this property

0:29:200:29:23

is the quality of the fixtures and fittings that they've used,

0:29:230:29:27

a nice, modern fitted kitchen, a white three-piece bathroom upstairs,

0:29:270:29:31

and a large garden at the back with...laid to lawn.

0:29:310:29:35

The owners have thought long and hard about the layout

0:29:350:29:39

and they've now created a light and open space for living accommodation which works very well in the kitchen

0:29:390:29:45

The house may already be working as a rental vehicle,

0:29:450:29:48

but have they invested their £50,400 wisely?

0:29:480:29:52

Now that the property has been refurbished to this sort of standard I would aim to achieve £70,000.

0:29:520:29:59

If I was putting this property on the market for sale,

0:29:590:30:03

I would put it on at £65,000.

0:30:030:30:05

So, a potential pre-tax profit of between £15,000 and £20,000.

0:30:050:30:10

What do Rob and Daniel make of that?

0:30:100:30:13

-I'm quite happy with that.

-Yeah.

-It represents a reasonable profit.

0:30:130:30:17

Obviously, in this climate, you know, I think that's fine.

0:30:170:30:22

They're certainly encouraging resale values, but have they achieved the best possible rental returns?

0:30:220:30:28

If I offered this property for rent in the current market, I'd expect to achieve £375 per calendar month.

0:30:280:30:34

Exposing this property to the rental market, I would expect to achieve £375 per calendar month.

0:30:340:30:41

We're actually getting a little bit more than that - £400 a month.

0:30:410:30:45

That's fantastic.

0:30:450:30:47

With a £400 per calendar month income, equating to an annual yield of above 9%,

0:30:470:30:53

this has been a very successful project.

0:30:530:30:56

Is it to be the first of many for this father-and-son team?

0:30:560:31:00

My 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.

0:31:020:31:08

But maybe, yeah.

0:31:080:31:10

I think in the future, but we need a little bit of a rest.

0:31:100:31:14

But it's worked out OK, so definitely do it again.

0:31:140:31:17

Derby is home to Britain's first ever factory,

0:31:280:31:32

so it could quite legitimately lay claim to being the birthplace of the Industrial Revolution.

0:31:320:31:37

But times have changed and the once booming railway and cotton trade

0:31:370:31:42

have been replaced by the shopping and commerce trade, keeping Derby buoyant and prosperous.

0:31:420:31:47

Well, parts of it anyway.

0:31:470:31:50

Just a hop, skip and a jump from Derby city centre,

0:31:500:31:53

and it's easy to understand why this street used to be highly desirable.

0:31:530:31:57

It's still very popular, but it has been slightly blighted

0:31:570:32:01

because of this rather unfinished development plot opposite.

0:32:010:32:05

Still, nice-sized properties and the one I'm here to see,

0:32:050:32:08

the guide price was 65,000 quid, three-bedroomed, three-storey... Let's take a look.

0:32:080:32:13

There's a lovely, old front door

0:32:130:32:16

and I like that the property is set back from the road, but it looks like it has become a bit of a tip

0:32:160:32:22

and living opposite a derelict building site, that's not ideal.

0:32:220:32:26

# It could be better than the way it is

0:32:260:32:28

# It could be better than the way it is

0:32:280:32:31

# It could be better... #

0:32:310:32:34

# Ba, ba-ba, ba-ba... #

0:32:340:32:36

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

0:32:360:32:42

Nice bit of an entrance porch there.

0:32:420:32:45

The doors, well, might be salvageable,

0:32:450:32:48

but you come down this corridor and then through this door into the main living part of the house, I guess.

0:32:480:32:54

It's been sub-divided off at some point. You've got these doors leading into the lounge.

0:32:540:33:00

Quite a nice-looking fireplace.

0:33:000:33:02

The rear area here, big space where you could have a fireplace, so that's quite nice,

0:33:020:33:07

and the actual space itself is good.

0:33:070:33:09

But it is one of those properties that is in a bit of a state.

0:33:090:33:13

You've got to try and see through that to what it might become.

0:33:130:33:17

I quite like the layout. There's lots of space, a room there, and then through here into the kitchen.

0:33:170:33:23

Let's focus on the positives first.

0:33:230:33:26

The roof light is nice, shedding lots of natural light in here.

0:33:260:33:30

The space isn't bad, but it's a room that needs a bit of tender, loving care. Oh, boy!

0:33:300:33:35

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

0:33:350:33:41

# You're gonna mess up a good thing, you're gonna mess up a good thing... #

0:33:410:33:46

The state of the house means it looks a long way from being the toast of the town.

0:33:460:33:51

But I think that underneath all this mess is a pretty decent property with some lovely period features.

0:33:510:33:57

So, upstairs and the general state of the place doesn't really get much better, but what have we got?

0:33:570:34:03

We've got a little bathroom and loo. I say "little", it's actually a fairly decent size.

0:34:030:34:08

Bedroom here, another bedroom there, then stairs to the top floor.

0:34:080:34:12

So let's talk about what you might be able to do with this place.

0:34:120:34:16

You could just restore it and keep it as it is as one house.

0:34:160:34:20

You could convert it into individual rooms and let them out on a room-by-room basis.

0:34:200:34:26

That is a good way to go and, financially, it might be quite interesting.

0:34:260:34:30

But there's lots of rules and regulations regarding houses of multiple occupation to adhere to -

0:34:300:34:37

fire escapes, fire doors,

0:34:370:34:39

and depending on the number of people and floors, licensing may be applicable.

0:34:390:34:44

But in terms of financial opportunity, it's certainly an interesting way to go,

0:34:440:34:49

and in a nutshell, what it says is this house has lots of potential.

0:34:490:34:53

# A good thing, yeah, baby... #

0:34:530:34:56

And potential is definitely a good thing, no more so than with the space on the top floor.

0:34:560:35:02

I'm slightly worried about whether the stairs meet modern building regulations, but apart from that,

0:35:020:35:08

it's pretty promising, as are the other two bedrooms,

0:35:080:35:11

and that huge bathroom.

0:35:110:35:13

There's even a decent-sized garden at the back.

0:35:130:35:17

What does the auctioneer who sold it

0:35:180:35:20

think of this two-bedroomed, terraced house?

0:35:200:35:24

The house is a little untidy, but if you're looking beyond the untidiness

0:35:270:35:32

it's a sound house, it isn't going to need a lot of mone

0:35:320:35:36

to retrieve the situation.

0:35:360:35:38

This was previously a rental, but is it best suited to being a single let, a room-by-room let,

0:35:380:35:44

or divided into flats?

0:35:440:35:46

With current rules and regulations,

0:35:460:35:49

if you divide it into flats,

0:35:490:35:51

you've got to throw so much money at it to meet the criteria that it really isn't economic,

0:35:510:35:57

so it's almost inevitable it will become a shared house.

0:35:570:36:01

Bearing in mind it had a £65,000-plus guide price,

0:36:010:36:05

what sort of resale and rental values could it achieve once tidied up and renovated?

0:36:050:36:10

When it's renovated, certainly 100,000, possibly a shade more,

0:36:100:36:14

but that will be geared to some extent by how much it earns if it's going to be rented.

0:36:140:36:20

I think if you were to rent this out as a single house,

0:36:200:36:23

it would have a rental value of probably around £500 a calendar month.

0:36:230:36:28

However, if you make it into a share house and let it out as rooms,

0:36:280:36:32

bearing in mind you've got much greater maintenance,

0:36:320:36:35

I think your income could probably b as much as £700, £750 a month.

0:36:350:36:39

Despite the number of hoops you'd have to jump through

0:36:390:36:43

to make this a house of multiple occupancy, the numbers appear to add up to taking that route.

0:36:430:36:48

This is one of those properties where an experienced developer would see through the current state

0:36:480:36:54

to what this place could become and if you want to become an investor, that's what you need to do.

0:36:540:36:59

It's in a mess, but it has great potential. Who saw the opportunity when it went under the hammer?

0:36:590:37:05

Lot number 13 is a three-bedroomed townhouse

0:37:060:37:10

that's got three-floor accommodation but needs upgrading and improvement.

0:37:100:37:16

Start me at 60,000 for it? 58?

0:37:160:37:18

Thank you, 58 I've got. At £58,000. 58,000.

0:37:180:37:23

59 somewhere? At £58,000, the opening bid.

0:37:230:37:27

59 on the left. At 59. At 60?

0:37:270:37:31

60,000. At 60. And 1.

0:37:310:37:33

61. 61 is bid.

0:37:330:37:36

62? 62, thank you.

0:37:360:37:38

63? 63.

0:37:380:37:41

63. 64.

0:37:410:37:43

One more? 65? 65.

0:37:430:37:46

66.

0:37:460:37:48

67. A half help you?

0:37:480:37:50

No. A half. 67 and a half.

0:37:500:37:54

Stick with it? 68?

0:37:540:37:56

68. 500?

0:37:560:37:58

500. 69...? Thank you.

0:38:000:38:02

69. 500?

0:38:020:38:05

Have another bid, it doesn't hurt. 69 and a half.

0:38:050:38:08

70,000.

0:38:080:38:10

70,000. And a half again?

0:38:100:38:12

70 and a half.

0:38:140:38:16

71.

0:38:160:38:18

71... Are you sure?

0:38:180:38:20

At £71,000 then once,

0:38:200:38:23

twice, third time...

0:38:230:38:25

Sold at 71,000, thank you.

0:38:270:38:29

'Although he didn't actually bid himself,

0:38:290:38:32

'for £71,000, the new owner of the three-bed terraced house in Derby is Taj.

0:38:320:38:37

'He bought it for his property partnership,

0:38:370:38:40

'along with business partner Kevin.

0:38:400:38:43

'He also runs a property rental agency and has his own portfolio of properties that he lets out.

0:38:430:38:49

'Kevin, who is a qualified plumber, looks after their maintenance and refurbishment.'

0:38:490:38:55

Taj, Kevin, lovely to meet you both. Why did you want to buy this place?

0:38:550:38:59

Basically, to complement my portfolio. I want to turn this into an HMO, house of multiple occupation

0:38:590:39:06

-What kind of HMO are you going to go for?

-Basically, just to convert it into two one-bed flats

0:39:060:39:12

and two studio flats.

0:39:120:39:14

So, four flats? How are you going to do that?

0:39:140:39:17

This will be one. One room here.

0:39:170:39:20

Kitchen, bathroom.

0:39:200:39:23

Upstairs, two professional studios with a shared bathroom

0:39:230:39:29

and the top floor made into a single one-bed, self-contained unit again.

0:39:290:39:34

Wow!

0:39:340:39:35

-You're certainly squeezing everything you can out of this property in theory.

-Yeah.

0:39:350:39:41

# Bend me, shape me any way you want me

0:39:410:39:45

# You got the power to turn on the light... #

0:39:450:39:48

'That certainly does maximise the space.

0:39:480:39:51

'It's what they've done on other similar properties nearby, so they know it's possible,

0:39:510:39:56

'but they haven't ruled out room-by-room letting either.'

0:39:560:40:00

At what point will you decide what to do? That will decide your route in terms of renovation.

0:40:000:40:05

Once we've cleared the property and we take it back to the bare shell.

0:40:050:40:10

There's some improvements that need to be made to bring it up to the HMO licensing.

0:40:100:40:15

Once we deal with these issues, we'll then decide how we move forward.

0:40:150:40:20

So what will your involvement on a day-to-day basis be?

0:40:200:40:24

My involvement on a day-to-day basis is mainly project-managing it.

0:40:240:40:28

Swanning around and telling other people what to do?

0:40:280:40:31

Well, I mean, at the end of the day, Kevin does a great job.

0:40:310:40:35

He knows effectively what we want to achieve,

0:40:350:40:38

but I'm really here just to provide guidance when he's got some questions he wants to bounce off me,

0:40:380:40:44

-and checking to see if we're on schedule.

-Do you do some building works too?

0:40:440:40:49

I'm a qualified plumber and a time-served joiner,

0:40:490:40:53

so, basically, I like to get involved.

0:40:530:40:56

I think he's a bit modest there. He can do everything.

0:40:560:40:59

So what is the timescale?

0:40:590:41:01

KEVIN SIGHS

0:41:010:41:03

Lots of in-taking of breath there!

0:41:030:41:06

You know, we've talked about times.

0:41:060:41:09

-I think we can turn this round within four months.

-Yes.

-Yeah.

0:41:090:41:15

-And the total budget?

-Within 20K.

-Within 20K.

0:41:150:41:20

'£20,000 to create four flats seems pretty cheap,

0:41:200:41:24

'but having worked on and maintained so many properties over the years,

0:41:240:41:28

'not only do they know how to maximise the space, but also how to maximise their budget.'

0:41:280:41:33

-Then once this one's done, on to the next project perhaps?

-Correct, yeah.

0:41:330:41:38

-Where does it end?

-I'm very passionate about property. I have been for a number of years now.

0:41:380:41:43

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

0:41:430:41:49

-And do you still enjoy doing these things?

-Yes.

0:41:490:41:53

-It's my passion.

-Right.

0:41:530:41:55

This is my enjoyment, properties like this.

0:41:550:41:59

What is it that gives you that excitement?

0:41:590:42:01

-I know what the finished article will come in at.

-Which will be?

0:42:010:42:05

We'll wait and see.

0:42:050:42:07

-Congratulations. Good luck.

-Thank you.

0:42:070:42:10

-We look forward to seeing how you transform this place.

-Thank you.

-Thank you.

0:42:100:42:14

Well, Taj and Kevin have certainly got a lot of work ahead of them,

0:42:140:42:19

but they don't seem too fazed by what's in store.

0:42:190:42:23

The big question, of course, is will it be flats or will it be individual rooms for rent?

0:42:230:42:29

Find out what they decide later in the show.

0:42:290:42:32

Getting your property at the right price is the first step to success.

0:42:350:42:39

But the next step is equally important.

0:42:390:42:41

Sticking to timescales and budgets is the only way to maximise your profits.

0:42:410:42:47

So how are our purchasers progressing? Let's find out.

0:42:470:42:51

In Mitcham, Surrey, a four-room, first floor flat went up for auction.

0:42:540:43:00

This quirky property had a somewhat strange layout

0:43:000:43:03

with rooms off a central corridor,

0:43:030:43:05

then a small kitchen with a bathroom off it.

0:43:050:43:08

And if that wasn't odd enough, then the loo was all alone in a rickety old lean-to.

0:43:080:43:14

But none of this put off first-time property developers Anne and Tony.

0:43:140:43:20

They had bought the flat for 108,000

0:43:200:43:23

and armed with a ten-grand budget, hoped to turn it around in just ten weeks.

0:43:230:43:28

-So how much experience have you two got with buying houses?

-None.

0:43:290:43:33

I love the way you're laughing. "None at all." You're so honest.

0:43:330:43:37

-Yeah, well, until four years ago, I had never owned a house.

-Really?

0:43:370:43:42

My children both owned houses before me.

0:43:420:43:46

Now, just six weeks later,

0:43:460:43:49

we returned to see if these late starters had blossomed into successful property developers.

0:43:490:43:54

# What a good year for the roses

0:43:540:43:58

# Many blooms still linger there

0:43:590:44:04

# The lawn could stand another mowin'

0:44:040:44:09

# Funny, I don't even care

0:44:090:44:13

# As you turn to walk away

0:44:140:44:19

# As the door behind you closes

0:44:190:44:24

# The only thing I have to say

0:44:250:44:30

# It's been a good year for the roses... #

0:44:300:44:36

So, apart from unearthing floral patterns on the wallpaper,

0:44:360:44:40

the flat hasn't changed fundamentally. What happened?

0:44:400:44:43

We put the flat on to the market straight away just to see if anybody wanted to buy it as it was.

0:44:430:44:50

And, um...we were quite amazed.

0:44:500:44:53

We had dozens of people come through the door to view it.

0:44:530:44:57

Some walked in and walked straight out again,

0:44:570:45:00

then somebody bought it, so we were very pleased. Somebody else wants to do it up!

0:45:000:45:06

# That's why I'm leaving it up to yo

0:45:060:45:10

# You decide

0:45:120:45:15

# What you're gonna do... #

0:45:150:45:17

I really wanted to do it up and make it look nice,

0:45:170:45:22

but at the same time it is a business venture,

0:45:220:45:26

so I'm afraid the head had to rule the heart on this occasion.

0:45:260:45:31

The offer they've accepted on the flat is for 128,000

0:45:310:45:35

and as if that wasn't good enough, they've found yet another way to generate income from their purchase.

0:45:350:45:41

Apart from stripping the walls in here,

0:45:410:45:44

the room was actually full of books and metal shelving.

0:45:440:45:47

And a friend of ours has a garage, so he was very keen on the metal shelving.

0:45:470:45:54

A huge amount of books went to the charity shop, but some we sold online as well,

0:45:540:45:59

which made a small profit of £50, which was great.

0:45:590:46:03

Well, £50 is definitely worth having and as a financial exercise,

0:46:030:46:08

it all seems positive.

0:46:080:46:10

There really hasn't been a budget.

0:46:150:46:18

Apart from all the seller's expenses and buyer's expenses, maybe £100 or less.

0:46:180:46:24

And then we got some money back on the books anyway.

0:46:240:46:27

Everything else, where it could be, was recycled,

0:46:270:46:31

so, yeah, good all round, thoroughly enjoyed ourselves.

0:46:310:46:35

So, really no budget to speak of,

0:46:350:46:38

but Anne does reckon that all their costs and fees came to around £6,200,

0:46:380:46:43

taking their total outlay here to £114,200.

0:46:430:46:47

As they sold it for 128,000,

0:46:470:46:50

that's a £13,800 pre-tax profit.

0:46:500:46:54

So have they maximised their purchase by selling it straight on

0:46:580:47:03

without refurbishing it? What do two local estate agents think?

0:47:030:47:07

It hasn't changed much since I last saw it.

0:47:110:47:13

I do believe the vendor has taken some wallpaper off the walls,

0:47:130:47:17

but apart from that, it's the same.

0:47:170:47:20

I look beyond what we see now.

0:47:230:47:25

I see potential for improvement,

0:47:250:47:27

I see a lovely home for a young family

0:47:270:47:30

and whoever gets this property can do a lot with it.

0:47:300:47:33

So did the couple make the right decision, flipping their £114,200 investment?

0:47:330:47:40

When fully refurbished, you'd be looking to sell this for around £175,000.

0:47:400:47:45

Once the property is refurbished, the property could be put on the market at £155,000.

0:47:450:47:51

I think the 155 is the more realistic amount.

0:47:510:47:54

And that was really the figure we were working to, had we completed the work.

0:47:540:48:00

So, if they had spent the proposed £10,000 on the flat

0:48:000:48:05

and then sold it for 155,000,

0:48:050:48:09

they could potentially have made a pre-tax profit of 30 grand,

0:48:090:48:12

but did they get a realistic resale price on their stripped-down purchase?

0:48:120:48:18

In its current condition, you'd look to sell the property for around £140,000.

0:48:190:48:24

In the locality, there's another property exactly the same on the market at 135.

0:48:240:48:29

Well, we thought 130

0:48:290:48:31

and were quite happy to take 128.

0:48:310:48:35

That £128,000 price did give them a £13,800 pre-tax profit,

0:48:350:48:41

although they could have more than doubled that if they had done the work.

0:48:410:48:46

As their first development project, I can understand

0:48:460:48:49

why they took the money and ran, but has it whetted their appetite for more?

0:48:490:48:54

Once this has finally sold and all the money has come through,

0:48:540:48:58

we'll go back to auction and have another go and see how we get on.

0:48:580:49:02

Close to Derby city centre, a large, three-bedroomed, terraced property went to auction.

0:49:080:49:13

On first sight, it was a real mess,

0:49:130:49:16

but a look beyond the chaos revealed a place with plenty of potential.

0:49:160:49:21

Or so developer and owner of a property rental agency Taj thought

0:49:210:49:26

when he bought it for £71,000.

0:49:260:49:29

He was hoping, with the help of his business partner Kevin, to unearth that potential.

0:49:290:49:35

I want to turn this into an HMO, a house of multiple occupation.

0:49:350:49:39

-What kind of HMO are you going to go for?

-Basically, just to convert it into two one-bed flats

0:49:390:49:45

and two studio flats.

0:49:450:49:48

-So, four flats?

-Ideally, yes.

0:49:480:49:51

On a budget of £20,000 and a four-month timescale,

0:49:510:49:56

the plan was for Kevin to project-manage the conversion to the four flats.

0:49:560:50:01

Now, over 11 months later, we're back.

0:50:010:50:04

It certainly looks very different from the front.

0:50:070:50:11

There are new windows and doors and clearing the hedge certainly improves its kerb appeal.

0:50:110:50:17

But what will we find inside?

0:50:170:50:19

Has Taj created four flats?

0:50:190:50:21

As we've got it structured at the moment, we've got a top flat on the second floor.

0:50:220:50:28

This one-bed top floor flat is complete and comes not only with a fully fitted kitchen...

0:50:330:50:39

..and en-suite bedroom, but it's also got a tenant.

0:50:470:50:51

There's two rooms on the first floor

0:50:510:50:53

So, a slight change of plan with the first floor bedrooms converted into two bedsits.

0:50:530:50:59

The larger of the bedsits is en-suite.

0:51:050:51:08

The smaller second bedsit has access to a shared kitchen

0:51:180:51:22

and a shower room created from the old, over-large bathroom.

0:51:220:51:28

But what has he done on the ground floor?

0:51:290:51:32

The plan here was to create living space out of the original space we had,

0:51:320:51:39

so we had a living room and a front lounge.

0:51:390:51:42

What we've decided to do from the two rooms

0:51:420:51:46

is basically utilise the space from the front lounge,

0:51:460:51:50

make an en-suite,

0:51:500:51:52

and that then becomes the bedroom.

0:51:520:51:55

This existing space, we decided to put a partition

0:51:550:52:00

and make a corridor for the utility room on the other side,

0:52:000:52:05

so this is one self-contained area.

0:52:050:52:07

That's what we've achieved here, then it leads into the kitchen.

0:52:070:52:11

What will eventually be a fully fitted kitchen leads out

0:52:110:52:15

from this one-bedroom, self-contained flat into its own garden.

0:52:150:52:21

So Taj is certainly well on the way

0:52:210:52:23

to maximising the property's potential, but it's still not complete.

0:52:230:52:27

It's nearly a whole year into what he hoped would be a four-month project, so what's been happening?

0:52:270:52:33

Unfortunately, I've had my own hiccups since we started the project.

0:52:330:52:39

I've also been working on a communit church for my own community which kicked off in February,

0:52:390:52:45

which also coincided with my, um...partner Kevin

0:52:450:52:51

also deciding not to carry on with the project.

0:52:510:52:55

So that hasn't helped me

0:52:560:52:59

and I think it's delayed the project by about three months.

0:52:590:53:05

# You know, I dig you doing your thing

0:53:050:53:08

# And I'll turn you on when I do mine... #

0:53:080:53:10

So Taj ended up being much more hands-on with this very complex project than originally planned.

0:53:100:53:17

However, he has finally managed to turn this into a house of multiple occupancy

0:53:170:53:22

by creating that one-bedroom attic flat, two bedsits on the first floor and that one-bedroom garden flat,

0:53:220:53:28

but the setbacks have had repercussions for his ambitious £20,000 budget.

0:53:280:53:34

Because of the time and using more contractors and the delay,

0:53:340:53:38

I think we're spending close to about 35 and a half.

0:53:380:53:42

A £35,500 spend on top of Taj's £71,000 purchase price

0:53:460:53:50

takes his total outlay to £106,500 without costs or fees.

0:53:500:53:56

But has he found the key to maximising the property's potential?

0:53:560:54:00

What do two local estate agents think?

0:54:000:54:03

It's certainly different to what it was.

0:54:030:54:06

There's been an awful lot of renovation work gone on

0:54:060:54:10

which can only be to its credit.

0:54:100:54:12

It's probably had as much as necessary to make it feasible to be let or sold.

0:54:120:54:19

I'm quite impressed, strangely.

0:54:190:54:22

The property is a bit higgledy-piggledy,

0:54:220:54:24

but obviously he's done it with the pound signs in his eyes.

0:54:240:54:28

A lot of houses are done for the love of it,

0:54:280:54:31

but this one is a business, rather than a property for himself.

0:54:310:54:35

Well, it might be a bit higgledy-piggledy, but can it work out as a rental vehicle?

0:54:350:54:41

First of all, what about those one-bedroom flats? That's the one on the top floor and the garden flat.

0:54:410:54:47

With bills included, you could be looking at achieving a rent of around £500 per unit.

0:54:470:54:53

If we start with the garden flat, I would say maybe 450 a month.

0:54:530:54:57

On the top floor, I would say maybe 400 a month.

0:54:570:55:00

Those figures are pretty encouraging, but how about those two smaller bedsits?

0:55:000:55:05

How would they do on the all-important rental market?

0:55:050:55:09

Each room per month could be rented for just under approximately £300.

0:55:090:55:14

The ones with the en-suite, £300 per calendar month,

0:55:140:55:18

then for the last room which is the shared bathroom which is fairly decent,

0:55:180:55:23

I would say £280 per calendar month.

0:55:230:55:25

That means if all the rooms were occupied,

0:55:250:55:28

Taj could get a rental return of £1,430 to £1,600 per calendar month.

0:55:280:55:33

That's a whopping yield of between 16% and 18%,

0:55:330:55:37

but as the owner of a rental agency himself, what does he make of the estate agents' valuations?

0:55:370:55:43

I'm getting 495 for the top flat.

0:55:430:55:46

I'd be looking to get that at least for the ground floor flat

0:55:460:55:51

and the two rooms, 375 for the en-suite room

0:55:510:55:57

and between 325 and 350 for the other room.

0:55:570:56:01

Taj hopes for more rent than the estate agents estimate,

0:56:010:56:04

but the returns are impressive either way,

0:56:040:56:07

reflected by the potential resale value of the property that he's invested £106,500 in.

0:56:070:56:13

As a going concern with all rooms filled,

0:56:130:56:17

you could be looking to achieve around £200,000.

0:56:170:56:22

I think realistically it's going to be around £160,000.

0:56:220:56:25

So, a potential pre-tax profit of between £54,000 and £94,000

0:56:250:56:31

and a rental yield above 16%.

0:56:310:56:33

That does sound like a pretty successful development project to me,

0:56:330:56:38

but how does Taj reflect on this property purchase?

0:56:380:56:42

I'm feeling relieved, I'm feeling really good that we're coming to the end of it.

0:56:420:56:47

The end result is obviously rewarding.

0:56:470:56:51

Has that whetted your appetite to make a go of property development?

0:56:530:56:57

-If so, there will be more compelling stories for you next time.

-On Homes Under The Hammer.

-Goodbye.

-Goodbye.

0:56:570:57:03

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0:57:230:57:26

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