Episode 55 Homes Under the Hammer

Hello and welcome to the show.

Now, they say every house tells a story

and we've certainly found that to be true.

Oh, yes, there are tales to tell and secrets to uncover

when you buy your home under the hammer.

At auction, properties are bought on a buyer beware basis,

so it's up to you to check everything out before you bid.

Yes, or you could be in for some nasty surprises.

So, did today's buyers get lucky? Here's what they bought.

In Tonypandy South Wales,

I see a property with a very competitive guide price.

£15,000, that is 15, not 50.

This house in Manchester gets top marks for it later appearance, so...

I really hope I don't have to downgrade it when I go inside.

And, in the Crewe, Cheshire, things are looking down,

when I start looking up.

How did I miss that?

All these properties have been sold at auction.

We will find out who bought them, and what they paid for them,

-when they went under the hammer.

-Yours, sir.

Today, I am on the outskirts of Tonypandy in South Wales,

a former mining community in the valleys of South Wales.

# Valley low, valley so low

# Valley high, valley high... #

With good transport links to Cardiff, this place is on the up

and the focus of my visit?

Well, 15 minutes walk from the town centre of Tonypandy,

with the backdrop of the beautiful hills,

is the property I'm here to see.

It's a mid-terrace, two bedroomed,

with a with a guide price of £15,000.

That 15, not 50! let's see what it's like inside.

This may win the prize for the steepest street

ever to appear on Homes Under The Hammer,

but that £15,000 guide price is far from steep.

Nice to have a little porch area as you're

straight off the street into the property, but...

..before I tell you about the place, it's one of those times that

I am so pleased that you're at home and not here because...

..what can I say? The smell is not pleasant.

Anyway, what have we got?

The house is actually a really nice design.

Downstairs, here, one big room.

You've got a gas fire in there, if that was a real fire it would be lovely.

The stairs are really discreetly out the way and basically

down here it is just one big room and then through to the kitchen.

It is a bit of a TARDIS in lots of ways,

because once you get inside it seems to go on quite a lot.

The kitchen, though, like the rest of the property,

is in a derelict state.

It is one of those ones where, no question, it is rip it out

and start again.

But in terms of the structure, I think it is pretty good.

Just bring your air freshener!

# Ooh-oh, that smell

# Can't you smell that smell? #

The main offender here appears to be damp,

but I don't think it is structural.

It seems as though there may have been a serious leak

when the radiators were unceremoniously yanked out.

And what looks like evidence of years of heavy smoking here

doesn't help.

Well, up here it doesn't get any better.

However, let's stop looking at the actual state of the place

and look at the actual layout.

I like it.

This staircase here works really well, a little landing,

two bedrooms, one small and one reasonable sized.

And then, a really nice surprise, the bathroom.

I mean, it's not exactly somewhere you would necessarily get your kit off,

but it is in the right place, it is upstairs

and it is half-decent sized.

If you can see through the mess, it is actually really good.

One thing's for sure though -

you're not going to put the property on a pedestal, are you?

Now, at the moment the house is more inclined to make your heart sink.

However, with some hard work and hard cash I think it could be put on a pedestal.

# I put you on a pedestal... #

At the back there is a small terrace and the good news is that there is off-street parking,

or space for a skip or two, or three when you start work here.

Now, a bit of a note of caution.

The legal pack indicated that an environmental report had been

done and they had found questionable levels of radon in the area.

Radon is a naturally occurring radioactive gas.

It is to do with the geology of an area

and some areas have more of it than others.

It is a health hazard and it is important to know

whether particular property has high levels of radon.

It is easy to actually find out,

you need to seek professional advice, but either way you

definitely need to check out whether it is going to be a problem or not.

So there is some homework and a fair bit of hard work to do here.

What does a local estate agent make of this place

with its £15,000 guide price?

It is a fair sized property, the layout is fairly good.

The bathroom is upstairs, so that is a bonus.

Obviously, it needs quite a lot of work, and there is some

off-road parking at the back of the property, so that is quite good.

It is a nice little house.

What make the property fetch on the rental market?

A property like this, once it has been refurbished, would look

to achieve between £350 per calendar month, maybe £390 per calendar month.

What about resale?

If this property was refurbished to a good standard,

I think it could achieve between £35-£40,000.

Well, that £15,000 guide price may seem a bit of a bargain,

and in this case, I think it could well be.

Yes, it needs a bit of work to sort it out,

but a good solid little property and we like that.

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

Lot one in the catalogue, it is a two bedroom house renovation,

let's get things moving pretty quickly,

I've got a proxy bid for 15,000, I'm looking for 16.

15,000 I have, 16. 16, thank you, 16 is bid. My proxy bids 17,000.

I'm at the reserve. 17,000? Any advance on 17,000? 18, thank you.

My proxy is out, it's on you, madam, at 18,000.

Any advance, I'll take them in halves. 18, half?

Madam, I'll take 19 off you. Thank you. 19? 19, thank you.

Looking for half. Half I have. 20? Thank you, 20. 20,000 I have.

Looking for half.

20 and a half, thank you. On you, sir. 20,500 on you.

I'm going to sell it to him, are you sure, madam? Any advance?

Be quick, quick.

No? Yours, sir, at 20,500.

That successful bid of £20,500 was made by John, A project manager

who lives in London.

He is looking to take a bit of time out of his day job to get

back into property development after a five-year break.

# Now I need a break from the old routine

# What do you mean you need a break from the old routine?

# We need a break from the old routine

# What do you mean we need a break from the old routine? #

I met up with John at the property to find out what he has planned for it.

-John, good to meet you.

-Thank you.

-Congratulations.

-Thank you.

You have a house in the valleys. Tell me why you wanted to buy it?

Er, purely for the returns you get in South Wales on the property,

plus if you buy it at auction

you get the capital gain and the rental returns are pretty good also.

-And that's it, are you a property investor then?

-Yes.

-Normally around here or other places?

-South Wales, yes.

-OK.

So, how many properties have you bought in South Wales?

Previously we had a small portfolio of six which we sold in 2007.

Oh, wow.

Now just seems to be the right time for us to get back into the market.

-So, in 2007 you sold just before things went a bit pear shaped?

-Yes.

Psychic.

That was lucky!

Did you ever work out how much it would have dropped by

had you sold it, say, a year later?

-About £100,000.

-Wow! Just for picking your timings.

# Here I am again, perfect time... #

That's the thing about the property market it's all about timing,

with some luck and a sprinkle of good judgement thrown in too.

John hopes his instinct will be right on this purchase

as he only viewed the outside before the auction.

He sent a friend to check out the inside.

What did you think when you walked through the door?

Pretty much what you thought, I'd imagine!

It was a bit of a shock, but it looks a lot worse than it is.

There was some issue about radon mentioned in the legal pack. What do you know about that?

That shows the importance of reading the legal pack.

There was an environmental survey,

and it did show that there was a presence of radon in the area.

However, there have been remedies taken to prevent the radon

actually having any effect.

That has a guarantee with it,

so I am quite happy that the property is safe.

Good to see that John is across that one.

He has got a budget of £8,000, plus a £1,600 contingency and a six-week

timescale to get the mid-terrace ready for the rental market.

That includes a new central heating system,

but with his day job in London, he won't be on-site the whole time.

How does it work being based in London

and having a portfolio in South Wales?

It is quite easy, I know the contractors who are going

to be working on the house so I am quite happy to leave them

the keys to crack on with it and come down once a week.

So, what are you going to do to sort out?

The guys come in tomorrow and start ripping out all the carpets,

stripping the walls, knocking the plaster off the walls,

so the plaster will be done on a week on Monday.

Then the heating and bathroom, kitchen

and the electrics will be done.

Are you keeping a layout as it is?

Keeping a layout exactly as it is, there would be no

value in changing the layout.

And do you have plans for the near future, more properties?

Yes, I hope to buy six properties a year for the next three years,

but things could always change.

-Well, listen, congratulations. Good luck with it.

-Thank you.

-I look forward to seeing how you get on.

-Thank you.

Well, John has certainly proved himself to be a shrewd operator in the past,

selling his property portfolio just before the credit crunch.

He has also seen through the state of this place to what it might become.

How will he get on sorting it out

and has he made the right decision this time?

You can find out later in the show.

I have travelled to Manchester today,

and I am in an area called Fallowfield.

It is three miles from the city centre and so it's a popular destination

for people who want to live in close proximity to the bright lights.

It's also very close to the city's university,

so it is a hit with students too.

The question is, will today's property

be first-class or third rate?

Only one way to find out.

Here's hoping it is not a textbook auction property.

I really don't want to have to lecture the new owners

if they haven't given it the third degree and done thorough research.

And here it is in all its 1920s glory.

Now, the guide price for this semi-detached property was

set at £115,000.

From the outside things are off to a positive start, I like it.

I know it is a little early to say,

but I think this one could receive fairly high marks from me today.

I hope I don't have to downgrade it when I go inside.

You'd think I'd learned my lesson by now,

never judge a book by its cover.

But, I can't help thinking positive about this place.

Well, the house is behaving itself so far.

Look at this lovely front door. There is so much character!

Lots of little features in 1920s houses,

I mean, look at the stained-glass absolutely gorgeous.

OK, you can see that there is wallpaper falling down,

it needs a complete overhaul, but you have a lovely reception room

to the front there, a really good space at the back of the property, so you have two reception rooms.

A tiny kitchen, which is disappointing, but you could

easily change that by knocking this wall down and opening up the space.

I think that would work well for modern living.

What I would like to do would be to replace that window with some

French doors so you got immediate access out into the garden.

It would change this dreary room into something a lot more contemporary.

It is the usual story

a layout that doesn't work for modern day living.

But, remove that dividing wall, and hey presto,

you create a whole new look down here.

Upstairs it is a standard three-bedroom layout.

Two are a good size and the others are singles.

There is a bathroom that definitely needs updating. Let's consider the options available.

With a sizeable student population on your doorstep, you could

convert the second reception room into a fourth bedroom,

so turning it into a student let seems like the most obvious

and lucrative choice.

But before we go down that route, there are some issues to consider.

Renting this property to three or more people would make this an HMO,

which is a house of multiple occupancy.

Now, you will have to adhere to numerous safety rules

and regulations before you can even think about putting this

on the rental market.

You'll have to do your sums carefully -

remember that students pay only full rent from the end of September

to the end of June, so you cannot count on a full 12 months' rent.

And lastly, an HMO requires far more in terms of management,

time and effort.

Are you really up for that?

You've got to ask yourself that question

before taking something like this on.

Of course, this house doesn't just have student letting as an option.

It's also a well-proportioned family home,

and with a few modernising touches it could definitely

combine '20s elegance with a contemporary lifestyle.

And to top it all off, the property

comes with this fabulous south-facing garden.

It's a little bit triangular in shape,

so it does tail off towards the end down there.

It's a bit narrow, but the good news is you get the sunshine

throughout the day, and that is a big bonus and selling point.

Now, it's nice to see the neighbour has put in some sliding doors

to really get the most out of that room,

so let's hope the new owners copy that idea.

If you do decide to turn this into a student let,

you may want to think about putting a little patio area here

to create some low-maintenance outside space.

Time to find out what a local estate agent

thinks of this three-bed house that was guided at 115,000.

It's a great property, yeah. Offers a lot of potential.

Definitely needs some renovation, though.

This place really needs some cash splashed on it,

but what about its location as a prime rental?

This is a great spot here.

You're minutes away from the town centre, close to the university,

right next to the motorway as well, so really good connections.

Let's talk figures. What could a resale achieve?

I would expect this property to go for around £170,000

when it's fully renovated.

How would it do as a three-bed rental?

If we were going to rent this property out

I would expect it to go for around £800 per calendar month.

And how would the student let figures work?

Around this area, I'd expect the students would look to pay

around £70 per person per week.

Well, convert that rear reception room to a fourth bedroom,

and you could be looking at £280 per week over a nine-month student term.

That would add up to a rental income of around 11,000.

We all know by now that location

is key to any successful property purchase.

And in this part of Manchester,

well, it's a real hot spot for investors.

That house could work in so many different ways

and that's what set it apart.

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

Lot one. What's it going to be worth today? Somebody start me off.

90,000, and we're away. I'll take your bid at 90. £90,000.

90. Thank you. At £90,000. Do we see 95?

90, I have on my right. 95, 92 anywhere? 92,000.

Back again, sir, 94. At 94, 96.

96,000. 98.

At 98. Round it to 100.

£100,000.

£100,000. 102, 102,000 now.

104,000.

Do we see 106? 106 I have now on my right. Do we see 108?

At 108,000, then. At £108,000, it's your bid at £108,000. 110?

112. There's two more in it, there's three of you in it.

110 at the back. 111. 112?

112. 113? 13.

14? 15.

16. 17.

18. 19.

20. 21.

122. 23. 24.

25. 26. 27.

128. At 128,000, then. 128,500?

128,500 now, then. 129, may I say? 129.

129,500, 130, may I say?

129,500 then, for the first time, seated.

For the second time. The third and final time at 129,500.

There we go, sir.

The successful bidders who got the lot for £129,500

are husband and wife Tim and Audrey.

They are both retired and this is their first-ever renovation project.

The house is not for them, but for their son,

who has been looking for a new home.

Tim and Audrey, congratulations.

So why did you want to buy this house at auction?

We were looking for a house for ourselves and spotted this,

and my son was also looking for a house and spotted this one,

and suggested he might like it.

What happened when you phoned him and told him you'd got the property?

What was his reaction?

We couldn't phone him.

He wasn't quite an important meeting! So he sent a text.

He went "Wow".

He sent a text, W-O-W?

-Yeah.

-Was that it?

No, another text - "how much?"

# I've just gotta get a message to you

# Hold on, hold on... #

Well, it seems the message did get through.

Audrey and Tim have been acting on behalf of their son,

who has been away a lot with work.

He hasn't even managed to see inside the house yet

so it was a big responsibility for his patents.

I think it will be my project, my hobby for the next few months.

I think we are under instruction, though.

Our son is going to choose things. He's got some very firm ideas

about what he wants to do with the house.

So for example, he wants a black kitchen.

-A black...?

-A black gloss kitchen.

So he's adamant that he's going to have that.

And he wants to make this room open plan,

he wants to have the wall knocked down

so that it's open with the kitchen, which is a bit too small.

And he wants to have a sitting area / kitchen

and be able to look out onto the garden.

Well, I completely agree with him,

because I think that's exactly what you need to do here.

So are you happy to install a black gloss kitchen them, Tim?

I probably can find a man who will be.

I'm interviewing builders tomorrow.

-So has he left a lot of this down to you guys?

-All of it, really.

Apart from creating an open-plan kitchen,

they're going to put a new loo under the stairs,

a new bathroom suite upstairs,

and re-site the central heating boiler,

all, hopefully, in three months and for £15,000.

And although their son does plan to live here,

they do have a Plan B in mind.

I know it's quite popular around here for HMOs -

lots of student lets. Is that something

that you've thought about for the future, with this property maybe?

I think potentially, if our son moves away with work,

he might choose to hang onto this house and rent it out.

But that's an option, isn't it?

So have you helped out financially with this?

We're the bankers for the time being,

but no, eventually he will be paying for it.

He will buy it. But hopefully the uplifting value

will provide a good chunk of his deposit.

It's been great meeting you today.

Good luck, and I can't wait to see what you do. Audrey, thank you.

-Tim, lovely to meet you.

-Thank you.

The bank of mum and dad comes to the rescue,

and both Audrey and Tim, well, they're delighted

they've been able to secure this property for their son - lucky him.

Now, the hard work doesn't stop here for them, though,

because they've got to interview builders,

knock a wall down and install a black kitchen.

And will their son, with firm ideas, be happy with the end result?

You can find out how it goes later in the programme.

Coming up, in Crewe, Cheshire,

there's a property where its highs are its lows.

Upstairs, here, needs a lot more work than downstairs.

Back in Manchester,

not everyone is feeling the love for property development.

I don't really want to do it again.

So I'll have to be doing it on my own next time then!

But first, in South Wales,

which part of the refurbishment delighted John?

I was really pleased with that because it was a nice surprise.

It was in Tonypandy, South Wales,

where we saw a two-bed mid-terraced house. Positioned on a steep hill,

it had slid into considerable disrepair

with broken pipes causing damp.

The whole place was dilapidated and in a poor state.

But London-based project manager John thought it could be

a perfect rental property.

So for £20,500 he snapped it up.

But this wasn't his first purchase in the area.

So many properties have you bought in South Wales?

Previously we had a small portfolio of six, which we sold in 2007.

Oh, wow.

Now just seemed to be the right time for us to get back into the market.

-So, 2007, you sold just before things went a bit pear-shaped.

-Yeah.

Psychic!

The vision he had for this property was that with an £8,000 budget

and a six-week timescale, he would turn it into a rental machine.

Now just under three months later, we're back.

MUSIC: "One Vision" by Queen

# One man, one goal

# One mission

# One heart, one soul

# Just one solution... #

It all looks promising, with a complete refurbishment throughout.

It's been replastered, rewired and replumbed,

plus there's new double glazing and a transformed kitchen.

Basically we've refitted the kitchen, new floor,

we went for a higher spec kitchen than we normally would

basically because it came with a guarantee and it was stronger built.

We went for white to brighten up the room, we've got deeper counters,

and we went for a the ceramic hob

because it's easier to keep clean than a stainless steel or enamel.

# ..One world, one vision. #

So with a much-improved kitchen, it was onwards and upwards for John.

The two bedrooms were replastered, redecorated

and are just waiting to be carpeted.

# ..I had a dream... #

Then there was just the small matter of the bathroom to tackle.

Basically, we've done a lot of tenant-proofing in this room.

We've put waterproof panelling all round the walls,

tiled more than we normally would, used a higher-spec paint,

and we've double-sealed around the bath

because we're looking at a few years' time when we sell the property,

it is in a better state than when we bought it.

The property is now nearly ready to let.

But it's taken 12 weeks so far -

double the six weeks John had hoped for.

So why the extended timescale?

The major problem was we had a break-in

and they stole all the copper pipe.

Ruined newly plastered ceilings, so there's been

a lot of sort of remedial works and that added to the schedule,

and to the budget.

So with a burglar alarm fitted,

they were once again ready to crack on with the work.

And London-based John had to increase his involvement.

The original idea was not to be here too often

because obviously I've got to work as well,

but with the break-in and the delays in the schedule

then I had to roll up my sleeves.

I painted the back of the house

almost completely before the rain hit.

I've tiled the floors, I've tiled the bathroom

and any other little jobs like cleaning up after the tradesmen,

just to make the job move along a bit quicker.

But now, as the job nears its finish,

what is he most pleased with?

Is it maybe the kitchen? Or the bathroom?

Or...?

The bit I'm most happy with is the little ball on top of the banister

at the top of the stairs. There wasn't one there, it was cut off

and it looked really bad.

But the carpenter put a new one on and I was pleased

because it was a nice surprise.

# Like a rubber ball I'll come bouncing back to you... #

OK! Not quite what I expected him to say. Each to their own, John.

But having bounced back from the upset of the break-in,

how did his proposed £8,000 budget fare?

The budget has gone not too well at all. We are up to £12,000.

£12,000 spent on top of his £20,500 purchase price for the property

takes John's total outlay to £32,500 without costs and fees.

But this is to be the first rental property in his portfolio,

so will it give him a healthy return?

Well, there's been a lot of improvements.

It's been done to a very good standard,

it's got a nice fitted kitchen,

lots of workspace, nice white bathroom suite.

He's done quite a nice job on the property.

They've done a very good job on the refurbishment.

Ideal for letting purposes.

I like the size of the kitchen, I like the floor, the work units.

Bathroom is a good size as well.

And it has useful features such as the shower.

John has done this refurbishment

very much with the rental market in mind.

But how would his £13,000 investment fare if sold on?

Given the lack of demand for sales properties,

I would market the property at £55,000

with a view to achieving around £50,000.

If he chose to go down the selling option

he could possibly look to achieve £40,000.

The higher one was around what we have in mind,

but again we're intending to rent

so the valuation is nice to know

but it's the rental valuation we're after.

Potentially a pre-tax profit of between around £7,500 and £22,500.

But for John, rental's the name of the game.

I would market this property in the region of £360 per calendar month.

The rent on this property would be about £350 per calendar month.

That'd give us a decent return.

Obviously we'd like more because we've invested a little bit more

than we needed but that'll still give us a good return.

Yes, even with his expenditure higher than planned,

he could still get a healthy 12-13% annual rental yield.

Not a bad return to property developing, then. So what's next?

We've already got our eye on a house not far from here.

So we'll keep on increasing our portfolio

and we hope to do another five this year.

I'm now in Crewe, Cheshire.

Home to the largest railway station in the North West

and a major interchange for West Coast lines

so it's a good focal point for commuters.

Well, about half a mile from the train station right by the side

of this busy main road is the property and here to see.

The fact it's by a busy main road needn't necessarily be such a bad thing

especially when I tell you

that the university campus is a short wait just up there

and this house might be ideal for student lets.

At the moment it's divided into two flats.

The guide price was £68,000, let's take a look.

From the outside it looks like quite a handsome

bay-fronted Victorian house.

It's been divided into a two-bedroom flat on the ground floor

and a one-bed one upstairs.

So the original front door leads to what is now

the first of those two flats.

A nice first impression. Nice, high ceilings. Some original features which is good.

Living room area at the front, you've got a big open fireplace.

Obviously looks very, very tired and dated and nicotine stained

so definitely major bits of paint required there.

This is a bedroom and then continuing through to

a rear living room area.

-Look at this.

-SQUEAKING

Fantastic, my granny used to have one of these. A clothes dryer.

Now more likely to be seen in trendy houses with potpourri

and designer pans hanging from them. It'll probably go, but very sweet.

A good sized space anyway. Through to the rear of the property where you've got a kitchen

which definitely looks like it needs some work and a bathroom.

So flat number one, first impressions, not too bad actually...

Well, that was until... How did I miss that?

I think I was distracted by the clothes airer! Yeah, OK.

-Maybe some ceiling plastering required as well.

-HE CLEARS HIS THROAT

While I might fondly reminisce about clothes pulleys,

I won't be PINING if this cladding bites the dust.

This ground floor flat has definitely seen better days and needs a lot of modernisation.

One bonus is that there is access to a bit of a backyard.

It is shared with the upper flat and is looking rather run down

but could eventually be a pleasant little space.

Well, that was flat numero uno.

Up these stairs to flat numero deux, two, dos...

Well, you know what I mean.

Well, access is through these double doors and straight away

you're into the kitchen and equally straight away,

you realise upstairs here...

..needs a lot more work than downstairs.

Just off the corridor is the bathroom

and remember that hole in the ceiling downstairs?

That's below all this porcelain and tiling.

You wouldn't want all that crashing down on you.

# Ouch!

# Ooh!

# Ow!#

Ouch, ooh and a lot more besides.

So best get those floorboards and joists checked out.

And with a single bedroom and living room

both looking rather worse for wear, there's lots of work needed here.

So what are the bigger picture options for this place?

Currently obviously it is separated out as two flats

although the lease is only for one property.

So it looks like officially maybe, planning permission-wise, lease-wise, legally-wise

it isn't actually two flats.

It's not a massive job to get the lease split up into two properties.

Takes a bit of time and a good solicitor but the fact that

somebody's been living here - or two people or families living here

obviously for quite a while - has established a precedent

and maybe that's not too big an issue.

Two flats is one option.

Converting it back into one main property is another option,

that could be a family home or I think the most lucrative

thing to do is to think about student lets.

One house which had maybe four or five bedrooms let out to students.

As I said before, you've got the campus not too far away.

That is going to be your biggest return on your investment.

I know it would be great to see this restored to one grand family home

but it would take quite a bit of work to get it to that state

and quite a big budget.

On top of that £68,000 guide price, I reckon the student option

might be the best way forward for any developer.

Time to ask a local estate agent for his thoughts

on this Victorian house in Crewe.

There are pros and cons whichever way you let this property out.

I'd feel if it was let out to students,

then obviously the difficulty is going to be its high maintenance

and also you'll only be looking at termly lets

whereas if it was let out as one property,

you're looking at a minimum assured shorthold tenancy of six months.

Let's run through those rental figures.

If this property was kept as a large three-bedroom house then I would feel

a rental could be achieved in the region of £650 per calendar month.

If this property was retained as flats, I would feel that each

particular flat would achieve a rental in the region

of £400-450 per calendar month depending on the number of bedrooms.

That could be a possible total rental income

of between £800-900 per calendar month for the property

but how does a student let with five possible lettings sound?

As a bed-sit, a single room, I would envisage you'd achieve

somewhere in the region of £40 per week.

So for a student let, that's around £800 per calendar month.

What about the sale values?

Currently along this street,

single-use properties for families are selling, in very good condition

if this was renovated nicely, in the region of £120-130,000.

If this property was sold as individual flats,

then I'd expect each flat to achieve in the region of £65,000 per flat.

It's certainly a house with lots of options and we like that.

You could leave it pretty much as it is as two flats,

convert it into one house or, I think of course,

the most lucrative option, convert it into student lets.

It's all down to who bought it. Let's find out who that was when it went under the hammer.

Lot 66, we now move to Crewe in Cheshire.

Big property, split into flats. 60, can we say?

60 bid, thank you. At £60,000.

65, going to say now. Yep, 65.

At £65,000. 70?

At 65, new bidder. £70,000 on my left. At £70,000.

Going once, if it helps.

Back here, 71. 72. 73.

74? We do, 74 and a half. 75?

And a half?

New bidder, 75 and a half.

76, 76 and a half.

77, 77 and a half.

Back in, 78, 78 and a half.

79, 79 and a half.

Definite? 79 and a half with you in the doorway still.

At £79,500 for the first time.

At 79,500 for the second time.

Third and final time at 79 and a half...

-GAVEL BANGS

-Your lot, sir. Well done.

The successful bidder who got the lot for £79,500 is Derek.

Originally from Glasgow, he has lived and worked in Crewe

for over 15 years and currently

works as a chef and a kitchen manager.

To find out more about his plans for the new property I met him there

along with his friend Paul who'll be helping him with the renovations.

-Derek, Paul, good to meet you both.

-Thank you.

-Congratulations.

-Tell me why you wanted to buy this place.

-It was for investment originally

but I had different ideas of what to do with it so I'm still up in the air about that one.

You said "originally it was for investment".

Yeah, it was to change it from two flats to a house

for a family but now I've had some advice

-so I was maybe thinking about student lets.

-Oh, wow.

-So I'm not sure.

It seems to me that Derek's going to have to make a firm decision

about what he wants to do here and pretty fast.

# I can't make up my mind about you

# Oh, I can't make up my mind

# I can't make up my mind. #

'But at least he won't be on his own.

'Paul's dad was a brickie so he's grown up around the building trade

'and now he's set to help Derek.'

Paul, what's your involvement in all of this?

Just a bit of advice, stuff that needs to be done.

-For free, of course.

-Does he know that yet?

-Yeah, yeah, yeah.

So what do you do when you're not doing this?

-Have you got a normal job?

-I'm a chef.

-Oh, great.

So what tempted you into property investment?

It was something extra to do. It's a sort of hobby with me as well.

Bit of a change from being stuck in a smoky, noisy kitchen?

It is, but it's just as smoky in this room I think!

# Hey, good lookin'

# What you got cookin'?

# How's about cooking something up with me? #

Well, this house has all the right ingredients but what recipe

will Derek use to make this place a tasty little earner?

If we decide on the student let, five bedrooms will be a tight squeeze.

If that's the case, we change the back kitchen-bathroom to a kitchen

and then the other room beside it will be a shared living room area.

-Uh-huh.

-And the two rooms and three bedrooms upstairs

-will become the five rooms.

-OK, and the main bathroom will be?

Upstairs. I know it's a bit...with one bathroom,

I may have to sacrifice one room to put two bathrooms in.

There are lots of options and many decisions to be made here.

If he chooses to convert the property back into one house,

he's going to have to get rid of that external staircase

and reinstate an internal one.

Whatever route he takes, there's certainly a lot of work to do.

What's the sort of timescale?

Timescale - maybe four to six months.

But we have to get it sooner for the student market coming in in September.

If need be, I'll employ people to come as well

to hurry things along but...

You definitely get it in there before the start of the student New Year, don't you?

Yeah, yeah, yeah but I change my mind quite often so you never know.

Fair enough. Listen, congratulations, both of you.

-Good luck and I look forward to seeing how you get on.

-Yep, thanks.

Well, clearly Derek and Paul have got a bit of work ahead of them

to sort this place out but first and foremost,

they've got to decide exactly what they're going to do with it

and I definitely think going down the student let route

is the way to go. What will they decide?

You can find out later in the show.

Transforming a property from a worn-out shell

into a home can be profitable and rewarding.

But did everything go to plan for the buyers on today's show?

Let's go back and find out.

We head back to Manchester now and the district of Fallowfield

where earlier we met retired husband and wife team, Tim and Audrey.

They bought this 1920s period house at auction for £129,500.

They were are going to splash the cash and bring the place up to date

adding a new kitchen, bathroom and downstairs loo.

All this work wasn't for themselves

but potentially to make a home for their son.

He wasn't able to attend the auction

so had no idea if Mum and Dad had actually bought it.

-What was his reaction?

-We couldn't phone him, he was in quite an important meeting.

-What?

So he sent a text, he went, "Wow."

-He sent a text, W-O-W.

-Yeah!

-Was that it?

No, another text. "How much?"

BOTH LAUGH

Well, let's hope it's got the wow factor

when the renovation's done.

Funded by the Bank of Mum and Dad, the whole work was expected

to cost £15,000 and take three months to complete.

We returned four months later to see

if they created their son's dream home

complete with that black kitchen.

There's not much change in the exterior of this traditional semi

except that the garden's been tidied

creating some immediate kerb appeal.

Inside, the front room's been replastered and is awaiting

the finishing touches but the kitchen's a different story.

That old-fashioned kitchen has gone and behold,

their son's choice of a sleek, black, glossy one.

I'm glad to see that just as I'd imagined when I first saw the house,

the new layout has made the space airy and contemporary.

What we were trying to do was to fix what was broken with the house

and put in a much bigger kitchen.

We've achieved this by knocking out the wall between the old dining room

and the kitchen which was here and we've blocked off the doorway

from the hallway into the kitchen which is behind the fridge freezer .

We've blocked up the back door

which was rotten and needed throwing away anyway

which was in the corner there.

What we've ended up with now is a workable kitchen

to my son's specifications.

It's black and shiny and I think it's worked out very well.

So the kitchen's very glossy and very black

while the new bathroom is very glossy and very white.

# The world is black The world is white

# It turns by day and then by night

# It turns by night. #

And like the downstairs living room, there are some finishing touches

to be done to the two bedrooms but Audrey and Tim really have

turned this '20s house into a sleek

-and modern home by maximising the space.

-The chimney breast

took up quite a lot of room in this room

and we wanted this room to be as large as possible.

We didn't like the chimney breast in the main bedroom

so we had it taken out.

We had to take out the ceiling in the bedroom to get the steel up there

and the steel came through the window.

HE LAUGHS

-It was a big job.

-Yes.

-SHE LAUGHS

-A big job but a worthwhile one,

just like the new patio doors.

Well, we blocked up the back door to put in the kitchen

so we needed a fresh back door so we put in these French doors here

to take advantage of the southern aspect

and a nice view over the garden.

We're going to get a fence put up along the boundary

and we will get a deck put in there so it'll open up onto a deck.

It'll be a nice, sunny, private spot.

It creates a perfect finish to the room

and though contractors were called in to do the plastering, rewiring

and building work, Tim did get stuck in

bricking up the old back door.

What we did, we used the old bricks we'd taken out from when we'd put in

the French doors and I cleaned them all by hand which was exhausting!

He appeared to be cleaning them with his nose

because he was covered in soot, it was horrible!

But the key question is whether their son got HIS hands dirty.

He's been telling us what he wants and what he likes,

that's what he's been doing and in the last week or so since the build,

we've come to near the end of the main building works,

he's been doing a lot of painting,

so most of the painting is down to him and his girlfriend.

Audrey and Tim reckon the final cost of renovation will be £19,000.

That's four grand over their original £15,000 estimate.

Add that to the £129,500 purchase price

and the total outlay will be £148,500.

Now that it's nearly completed,

what are the couple looking forward to most?

It'll be nice when I can finally see them

sitting in here with the doors open enjoying the garden

and doing all the things they meant to do with the house. So...

It'll be nice not having to be here at eight o'clock every morning!

But before Tim can put his feet up,

it's time to ask two local estate agents for their thoughts

on this £148,500 investment.

Overall, I'd say the finish so far is very good,

it gives you confidence for the finished article.

In particular I like the fact they've closed the kitchen door off

and opened it out from the dining room

and the French doors looking out into the garden are a nice touch as well.

My impression of the property is that they've converted it to a good standard.

They've put in a new kitchen to a good standard,

it's a nice finish, put in a new bathroom and a downstairs WC.

Again, they've done those to a good standard.

Even though their son is planning to move in,

would Tim and Audrey make any profit on this property?

Remember, they've spent £148,500 so what would a resale achieve?

I think you'd be looking at about £159,950 to market.

I'd anticipate a final figure in the region of £165-170,000.

That's roughly what we thought, I think.

I always hoped to make £10,000 so even the lower figure

would give you 10,000 or so. I'm satisfied, really.

-That's done a good job.

-Mm-hmm, yeah.

Those valuations could see a potential pre-tax profit

of between £11,500-21,500.

And if the circumstances change,

there's a potential rental income of between £700-750 per calendar month

giving the family a possible annual yield of around 6%.

But even with such good returns possible, for Tim and Audrey,

this venture has been all about helping their son with a new home.

Surely that's been a worthwhile exercise?

-It's certainly been worth it, don't you think?

-I think, yes.

It's worked out OK because I think

they're going to get the house they want.

I don't really want to do it again!

So I'll have to be doing it on my own next time then!

We now return to Crewe in Cheshire where earlier we saw this

grand Victorian house complete with some great character features.

What wasn't so great was some of the other features and the fact

that the house had been converted into two flats many years before.

Enter Derek who bought the property for £79,500.

Along with his mate, Paul, he planned to renovate it.

The problem was Derek wasn't 100% certain what the final product should be.

Definitely ideas of what to do with it so still up in the air about that one.

Right. You said, "originally it was for investment"?

Yeah, it was to change it from two flats to a house for a family

but now I've had some advice so I was maybe thinking about student lets.

-Oh, wow.

-So I'm not sure.

Well, whatever Derek decided it was nice to know that the house

would be restored as one property.

But with only one renovation under his belt,

I'm worried that Derek's background as a chef and kitchen manager

won't have fully prepared him for the challenge ahead.

We returned four months later to see if this place was still

a dog's dinner or if Derek had cooked up a storm.

Well, for starters the exterior looks good

with a new double-glazed front door and windows.

And the main course...

..well, what a treat.

Derek has completely renovated the whole ground floor

turning it into a lovely, light, spacious area.

A new kitchen has been installed.

At the rear, the old kitchen-bathroom has been

turned into a useful utility and shower and loo area.

There's been a good clean-up outside with new double glazing added too.

The old garage has been knocked down and the area made over

to create a new car parking space. But the biggest change?

Well, I wasn't quite sure

whether I was keeping two flats or putting it back into one house

but I decided one house so I've removed the external staircase

and the best thing about it is I managed to sell it for £400

and get it removed as well.

So the house is now one property and making it so

involved this major transformation inside.

This is the staircase we installed.

It was more straightforward than I thought,

we just cut out of the floor, took the ceiling away

and the staircase fitted in quite neat and tidy.

Upstairs now has three bedrooms.

The incredibly large front bedroom and two fair-sized ones.

The middle and the new one are where the former kitchen was.

And space has been taken from that room

to create a larger bathroom. Fortunately for Derek,

converting the house back into a single dwelling

didn't give him any headaches.

It was quite simple, actually because it wasn't split on the deeds

as two flats so it was just a case of reinstating the staircase

and the usual red tape rigmarole but it was quite straightforward.

Well, the paperwork may have been easy but as expected,

a renovation of this size did present some problems.

Ceilings had to be raised and floors relayed due to bowing joists.

But the house now looks in sparkling form

and considering Derek's four to six month schedule,

it's a great achievement to get this far in four months.

I've been here almost every day. I had three days off in four months.

Doing two jobs at the same time is hard but it's different jobs

so it's fun doing this at the start.

Getting to the end is a pain with the painting.

# When you're a hard-working man

# A hard-working man, yeah. #

This refurbishment wasn't a one-man show.

Contractors were called in to do the plastering and rewiring

and with friends and family getting stuck in,

Derek managed to keep the costs to 15 grand

when he'd budgeted 15 up to 20

so he's within schedule and budget.

Add that to his purchase price of £79,500

and his total outlay is £94,500.

Has he decided what to do with it?

I will have a look at selling it first to release cash again

but rental market would be possibly students to get the biggest return.

Whichever's more suitable comes first, I think.

Well, it seems Derek won't be rushed into a decision.

We asked two local estate agents what they thought

of this £94,500 investment.

Overall impressions of the property now I've seen it done,

it's done to a good standard.

'The things which he's done, making the bathroom

'that little bit bigger,'

the utility area and the downstairs shower room,

overall, he's done a good job to the property.

I think it's very, very nice. They've done a good job.

The refurbishment's super.

They've kept some of the original features like skirting boards,

coving, but they've updated the kitchen and bathrooms

to a very good standard.

Seems the house gets the thumbs-up from the estate agents

but has Derek made a profit on his £94,500 investment?

What could a resale achieve?

If I was putting this house on the market

as a family home as it is today,

I would ask in the region of £135,000-140,000.

As a three-bedroomed terrace property,

I would recommend an asking price of around £135,000.

Those valuations could see Derek make a potential pre-tax profit

minus the usual selling expenses of around £40-45,000.

But he still hasn't decided what he's going to do with the property.

Would the potential rental figures help make his mind up for him?

To rent out as a refurbished three-bedroom family home,

you'd be looking to ask in the region of around £600

per calendar month for rental.

My rental valuation would be £595 per calendar month.

Those figures for just renting this is a house could mean Derek

making a healthy yield of around 7.5% which isn't bad.

Well, whatever he decides - to rent or sell -

either way, the returns look good.

With this successful renovation under his chef's hat,

it looks like the taste of property developing has tempted Derek

to return for seconds.

I've already been having a nosy at another one

which is in a pretty bad condition

but you have to go for them to put profit back into the house.

Whether you're a seasoned professional or a property novice,

there's always lessons to be learned buying property.

So make sure you join us next time for more Homes Under The Hammer.

-We'll see you then.

-Goodbye.

-Goodbye.

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