Episode 67 Homes Under the Hammer


Episode 67

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-There are property auctions held all over the UK.

-A thriving business

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-with billions of pounds' worth of properties sold every year.

-So if you want to find out more

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about buying and selling under the hammer, you've come to the right place.

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We're always saying you should do your research before you buy at auction, but what does that mean?

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You should go and see the property if you can and find out as much about it as possible.

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That's a very good start. Let's see what tempted the buyers today.

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In Cumbria, I call for reinforcements.

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Hello. Equipment hire services?

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Can you send a very big skip?

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In London, I'm cooking up ideas to make this flat liveable.

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"I'll fry some eggs." Far too tight. It's not working for me at all.

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And this-baked bungalow in Derby needs creativity.

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Somebody's done some clearing up and you've got a very interesting canvas on which to paint your masterpiece.

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All these properties have been sold at auctions and we'll find out who bought them

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and what they paid for them when they went under the hammer.

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I'm in Cumbria and just 12 miles from the border with Scotland.

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The place I've come to see is in a hamlet on the outskirts of Carlisle,

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although it does seem to have some amenities of its own.

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Well, you'd be sorted for a pint.

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I'm in the semi-rural hamlet of Coathill on the east side of the town.

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You've easy access to Carlisle and the motorways and all this beautiful countryside.

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What more could you possibly want?

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There is a slight drawback in some people's eyes - no school or shop.

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But these can be found in neighbouring villages.

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So is the property I'm here to see picture-postcard perfect?

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Well, you can't knock the location, right on the edge of the village.

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Beautiful views all around. The house may not be to everyone's taste. Turn of the century.

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Looks a substantial size, though. Three bedrooms, semi-detached. A guide price of 95,000 quid.

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Let's take a look.

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'A quick look at the outside tells me there's a bit of re-rendering required

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'and the roof might need attention, too.'

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So what have we got?

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A double-glazed door. That'll keep the wind off the hills out.

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Stairs up to your bedrooms there and then through into your living room.

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Straight away, I know what's called for. Hello, equipment hire services?

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Can you send a very big skip? Thank you.

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I think it's one of those rip it out and start again jobs.

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Intrinsically, not a bad space.

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An open fire would be much nicer. Ceilings want to come down.

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But in terms of layout, a nice big room. Then through into your kitchen.

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Everything here wants dumped in that skip.

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Downstairs loo, maybe not ideal. Maybe think about converting that and sticking it upstairs.

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Other than that, yeah... it's a skip it job!

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# What does it get? It gets thrown in the bin... #

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In a property like this, you need to see past the faded decoration and worn-out fittings.

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There is potential here. You just have to look for it.

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So upstairs... What delights are in store?

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Well, a reasonable-sized bedroom to the left there.

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Smaller odd room to the right. And it doesn't get much better to the rear. You've got this room.

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Somebody has tried to make it a little bit more palatable by sticking in this dormer,

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but this isn't going to work. The ceiling height is unacceptable

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and these polystyrene tiles have got to go.

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Sort of Heath Robinson crazy stuff going on with the heating system there.

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And then a cupboard? Oh, no, it's not a cupboard. It's a toilet.

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Not really sure that works, but a nice view out the window.

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The low ceiling and miniature loo might do for a doll's house, but here they'd have to go.

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# With a hammer, nail and a hunk of wood I'll build a doll house... #

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Thankfully, the dinky dimensions end when you go outside.

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So the house itself a good-sized space,

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but walk outside and you find this incredible garden -

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but pretty much like the house itself, it needs a bit of work,

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but you can't complain about the setting. You've got open fields, sheep, hills in the distance.

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And just take a look at that. What a beautiful little church.

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A fabulous outlook like this certainly improves my view of this place,

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but the house needs some reconfiguration or, even better given the space, an extension.

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We asked the auctioneer who sold it for his opinion on this property,

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which had a £95,000 guide price.

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It's got great potential. It needs a full programme of modernisation.

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New kitchen, new bathroom and hopefully get the bathroom upstairs,

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whilst not losing any bedrooms.

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Possibly a small extension. There's plenty of room to extend either out the side or to the rear.

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Let's get some values, then. Firstly, how much rent could the new owner charge?

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Renovated, with an upstairs bathroom and possibly downstairs toilet and shower room, utility room,

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I think the property would rent in the current market for about £500-£525 per calendar month.

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What if the buyer decided to renovate and sell on?

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Sales-wise, if the property was done up to a good condition,

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and shifting the bathroom upstairs whilst retaining three bedrooms,

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a utility room and shower room downstairs, I think the property would achieve, in this market,

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in the region of £165,000.

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Well, more than a weekend's work to sort this place out,

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but for a rural lifestyle with easy access to good communication links like the motorway and Carlisle,

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I don't think you can go too wrong. Let's see who agreed.

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Is there 80 in the room for this? £80,00 for Lot 43?

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80 shall we say? Tempted? Yes, you are.

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At £80,000 I'm bid. 82 I've got.

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84 may I say? 86? 6 I have.

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88. And 90?

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No. Back with you at 88.

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90 anywhere? 90 I've got, stood to the rear.

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92. 93.

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94. 95?

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95 I've got. With you at the rear.

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It's against you, sir. You're out.

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Selling this at 95. You must be here for a reason. It's not to look at me.

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Now is the time to bid. At £95,000 I'm selling this.

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First time. 96.

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New position. 97, sir? Nearly got it.

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No.

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96. With you, sir. New position. Sat to the rear.

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Tempt you with a half? No?

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£96,000, then. For the first time.

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At £96,000 for the second time. Could be the last bid of the day. At £96,000. Are we all done?

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All out? Third and final time. Sold to the rear, sir. Can I have your paddle number?

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Sweeping in with that last-minute bid of £96,000 was Jim,

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who not only has a property portfolio, but also owns that local pub.

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His son, Stephen, a joiner by trade, will be taking charge of this project.

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# Father and son

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# Down the road they come... #

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I met the father and son team to find out what their plans were for this dilapidated three-bed semi.

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-Jim, Stephen, great to meet you.

-Thank you.

-Congratulations.

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-Why did you want this place?

-It needs to be renovated.

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We've got a few of these properties. We thought we might get a bargain.

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-So what's the idea for it? Do it up to sell it on?

-Buy to let.

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-It's a substantial property.

-Yeah.

-But not without its problems.

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Major problems. The roof has to come off, raised.

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All the plaster back down to bare brick, ceilings out,

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floors out. And then start from the beginning.

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Electrical, plumbing, bathroom, kitchen. The full works.

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-That sounds like it'll be expensive.

-It's going to cost us roughly 30-40 to do it up.

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-But it should be a hell of a property afterwards.

-Yeah, you bet.

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And what's your involvement, Stephen?

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Basically, from start to finish. Raising the roof,

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-floors, everything.

-And you'll be doing it?

-Yeah.

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'But for any work Stephen isn't able to do, he'll be bringing in local tradesmen to help.

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'As they both live and work nearby, they aren't short of contacts, which is lucky,

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'because this property is not short of jobs for them.'

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-Are there other properties that wouldn't have been so much work?

-A lot. Lots of them.

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But there's no way you would find anywhere with a view like this.

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The potential for it is just fantastic.

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You might be falling into a trap. It's buy to let. You're not supposed to be so passionate.

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We'll really enjoy this property, I can assure you. And it'll be a good return, I'm sure.

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-What is the timescale for it?

-Between 6 and 9 months.

-Right.

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It'll take that, without doubt.

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In that time, they also plan to steal a bit of the garden for an extension.

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The extension comes out, the kitchen looks over the fields. There's a utility and downstairs toilet,

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then into the kitchen/diner. Then you've got your living room and a bathroom upstairs.

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-And lose a bedroom?

-No, still keep three bedrooms. I've kind of designed it out.

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There will be one rather small bedroom, but it's a selling point for the future having that upstairs.

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Fantastic. It sounds extraordinary. 6-9 months, we'll be back.

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-Yep.

-I look forward to seeing how you progress.

-You'll see a big difference.

-I'm sure we will.

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Thank you.

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Well, father and son team Jim and Stephen certainly seem aware of the challenges ahead,

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but I am a little bit concerned this is a buy to let property and that's a lot of money to spend.

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Find out how they get on restoring this rural house later in the show.

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This is beautiful Blackheath in south-east London.

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With bunting, boutiques and little independent eateries,

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it's a gorgeous inner-city village with a price tag to match.

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Just a mile south of all this loveliness is Leigh - less popular and not so pretty,

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but much, much cheaper.

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With its own fast rail link into the city, it's still convenient

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and with gentrification happening, it's worth a look.

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The lot I'm here to see is on this busy road,

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but you're only a 10-minute walk from Leigh train station and a 5-minute drive to Blackheath

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without its crazy prices.

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The property I'm here to see is a flat in this grand Victorian pile

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and it had a guide price of £110,000.

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Nowadays, it's hard to believe that in London houses like this were originally built for one family

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and that the now practical off-street parking would have been a grand driveway.

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Inside, the shared entrance hall is a tad tatty, but still retains some of its former grandeur,

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with cornicing, lovely high ceilings and some stained glass on the half-landing windows.

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I'm wondering if the second-floor two-bedroom flat I'm here to see will have any grandeur, too.

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So straight into the flat. What have we got, then?

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Well, bathroom to the left. I do like natural light in a bathroom

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and there's a lovely big window. Nothing nicer for doing your makeup.

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Bedroom to the right. I would call that a very small double.

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What have we got through here? I thought it was an airing cupboard.

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It would be a good idea to knock those two rooms through and have a much larger space.

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And in here the kitchen.

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All the units are against the back wall. Not ideal,

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especially if you want to do some cooking. Far too tight.

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It's not working for me at all. Bedroom through here.

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Nice space to the back of the property. So where is the lounge?

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Does that mean this is the kitchen/lounge area?

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As you can see, it's just not a big enough space. I don't usually say this,

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but in this instance - this is a one-bedroom flat.

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There are a few ways to reconfigure. What I would like to do is to either

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knock through this way along here and have these two bedrooms

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as a kitchen/dining area, living room.

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And this would be the bedroom because it's nice and big. But think about the road noise.

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You might hear lots of traffic in the evening. Or you could knock through this way here

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and have the kitchen/dining/living room this way, but that means you've got a rather small bedroom.

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I think I'd go for option number one. But if there's anything I'd take from this,

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it's that it's a one-bedroom flat. NOT two.

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The back of the property faces out over peaceful gardens and a playing field,

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so it's a shame to put the bedroom at the front, but it's the easiest way to reconfigure the space,

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unless you rip out all the walls and start again. That would eat into your budget

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when turning this from a two to a one-bed should be the priority.

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# It's the night When two become one... #

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This small flat hasn't quite lived up to the scale and grandeur of the outside,

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but I still like the feel of it. It's young professional territory.

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Out of the window you can even see Canary Wharf. However, there are some kinks in the paperwork,

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namely regarding the 91-year lease.

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The lease was extended 8 years ago. You won't have to do that for a while. Sorted!

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Not so. In fact, I've been told the freeholder is absent, which is a very bad thing for a leasehold flat.

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If there's no freeholder, who do you pay your service charge to? Who maintains the fabric?

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Who organises the insurance? And what happens when you need to extend the lease again, as you will?

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Problem!

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Problem indeed. And something which may make it trickier to get a mortgage on this.

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But there is always something with an auction property to give you the heebie jeebies.

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You just have to decide if you can handle the hassle of sorting it.

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# Problem! #

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The guide price for this pad was £110,000. We invited along

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a local estate agent to tell us more about up-and-coming Leigh.

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The area is young, vibrant, lively.

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Ideal for a first-time buyer.

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A lot of corporate professionals in the area from Central London.

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You have a lot of pubs, bars, clubs, restaurants. A nice area, generally.

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As for the property itself, the estate agent agrees it would only work as a one-bed,

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so let's talk values.

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The property in its current condition I would estimate at £130,000-£135,000.

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However, when the renovations are carried out,

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I'd say that I'd be able to obtain £160,000-£170,000 on the property.

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And rental?

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Once fully renovated, I'd say the property would achieve £850 per calendar month.

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A cute little flat in a decent area, but in fact it's a one-bed masquerading as a two-bed

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with freeholder issues that could cause you many a headache to solve.

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Let's see who went for this at the auction.

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Lot 26 is a two-bed flat. Requires a little bit of updating.

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100 anywhere? 100,000.

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105. 110. 115.

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120. 125?

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One more go? Have a think.

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125 elsewhere.

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Seems low, this one. 125. New spot. 126.

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127.

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128. 129?

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128 with you.

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129?

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If not, 128. Going. You're going to lose it. 128 first time.

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Second time. Third and last time. All done?

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Sold. 128. Well done.

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Slightly hidden from view, that successful £128,000 bid was made by Austin,

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who was purchasing the property with his colleague Imran. They're not your standard swish developers.

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These guys have a rather clever game they're playing.

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# I can't keep wasting my time

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# On your games... #

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-Austin, congratulations. Imran.

-Lovely to meet you.

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-I bet you are absolutely thrilled.

-Yeah, it's a nice little property.

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Tell me why you've bought this.

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We're part of a property company. We work on joint ventures with clients.

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So we buy them at auction to flip, turn around and split the profit.

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-So you've not bought this for yourselves.

-No, we've bought this with two or three other clients.

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We've pooled their money and we find projects for them and we project manage it.

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So they see the project later on once we've bought it.

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-So you take all the hard work and stress out of buying property!

-Yeah.

-Fabulous.

-Or take the stress on!

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Are there still people out there that need that hand-holding process to that extent?

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Yeah. A lot of our clients are successful business people working long hours.

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They want to get another investment and have yield coming in, but they don't have time to go to auctions,

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do the research. We take all that from them, all the stress, and they get a nice profit at the end.

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-You guys seem to know what you're talking about.

-Hopefully!

-What is your background?

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I'm an ex-agent. I ran an agency for six years, then set up on my own. And I work for these clients, too.

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-What's your background?

-I've been in property for 2½-3 years.

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We've got some great people who have been doing it for 15 years. Austin was originally a client.

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We've just built that rapport.

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'By joining forces, funds and experience, I think Austin and Imran have come up with

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'a very interesting business model. It wouldn't be for everyone, as you hand over a chunk of your profits,

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'but it seems to be working well for these two. So what have they got in store to transform this place?'

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The aim is really to turn it back into a one-bedroom, which I think it was originally.

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So we'll turn it back.

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So we're knocking this through here into a nice through lounge and kitchen there,

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-then create the bedroom here with loads of light.

-And budget?

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-We've budgeted for £20,000-£25,000.

-It's quite a fair amount. You don't have to install central heating.

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-It really is kitchen, bathroom...

-That's it.

-Take down the stud partition wall, flooring.

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We take the worst case scenario and work back from there.

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Hopefully, we'll spend less than 20, but we like to do it up to a good standard.

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-We might get better kitchen units.

-We'll upgrade certain things, maybe a nice work surface in,

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nicer floors. So that when people do walk in, it's not got a typical developer's stamp on it.

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They feel some love and care. We've got some lovely features,

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so it's making the most of those, adding a few more character things.

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That will push it over, say, another flat that's a little bit bigger.

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The key is getting someone who has seen something else and come here.

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I'm liking the sounds of their plans to turn this flat from flawed to fabulous.

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With their builders set and good to go, Imran and Austin think they could complete this in 8 weeks.

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They're not even fazed by some of the other problems that came with this particular pad.

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Imran, buying this at auction doesn't come without its problems.

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What have you stumbled across here?

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There's a few issues. There's an absent freeholder.

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Luckily, we're negotiating with the other leaseholders to hopefully take control of the freehold,

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so we can hopefully give someone a share of the freehold, so they have greater control of communals,

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the building. It gives them a sense of ownership. We're working now on that for the next few months.

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A challenge, but we'll get round it.

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-Well done again. I'm expecting great things here. Congratulations.

-Thanks.

-Thank you.

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Austin and Imran have really hit on a great business model here

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and I am sure they will make that tired flat shine.

0:23:210:23:25

You can find out how it looks later in the show.

0:23:250:23:29

Coming up: I visit a bungalow in Derby with some cons, but a big pro.

0:23:290:23:35

One thing you certainly have got is space!

0:23:350:23:38

In south-east London, has Austin and Imran's project been tough enough?

0:23:390:23:45

-I'd like a challenge for the next one!

-Don't say that!

0:23:450:23:49

But first, in Cumbria, just how good a job did Jim and Stephen do here?

0:23:500:23:56

I've decided to move into it.

0:23:560:23:59

We've returned to Coathill, near Carlisle in Cumbria.

0:24:020:24:05

The property purchased at auction here for £96,000 was this, a three-bed semi.

0:24:050:24:12

It was bought by Jim and his son Stephen, a joiner, who was going to take on most of the work.

0:24:120:24:18

And this house wasn't short on things to do.

0:24:180:24:23

-It's a substantial property.

-Yeah.

-But not without its problems.

0:24:230:24:28

Major problems. The roof has to come off, raised,

0:24:280:24:33

all the plaster back down to bare brick.

0:24:330:24:36

Floors out, and then start from the beginning.

0:24:360:24:40

Electrical, plumbing, bathroom, kitchen. The full works.

0:24:400:24:45

That was just over 13 months ago. So have they managed to give this the thorough overhaul it needed?

0:24:450:24:52

We've come back to find out.

0:24:520:24:55

Well, the boys promised the full works and they've delivered,

0:25:180:25:22

particularly by adding a rear extension for a rather fabulous new kitchen.

0:25:220:25:28

The kitchen was the biggest part of the project. We've taken out that external wall there,

0:25:300:25:37

put on a lean-to extension.

0:25:370:25:40

We were quite lucky with the extension. We didn't need planning permission for this size.

0:25:400:25:46

We put in a high-spec kitchen and a utility room for selling points for the future.

0:25:460:25:52

Although they didn't need planning permission, it's always the best course to take council advice

0:25:520:25:58

on what is and isn't allowed.

0:25:580:26:01

Selling isn't the only plan Stephen has for further down the line.

0:26:010:26:06

Once external work has been done, he's considering adding a double garage with a bedroom above it.

0:26:060:26:12

For now, from the roof right through to the ground floor, every inch of this place has been renovated

0:26:160:26:23

and is as good as new. In fact, it looks so impressive...

0:26:230:26:28

I've decided to move into it rather than see somebody else rent it out.

0:26:280:26:34

It cuts back on the rental value!

0:26:340:26:36

Initially it was for rental, but at the end of the day the quality and standards are there,

0:26:360:26:43

so when Stephen said, "Dad, I really want to move in. I'd love to stay in the village," fantastic.

0:26:430:26:50

And I don't blame Stephen. Although experts were called in for some work,

0:26:500:26:56

Stephen did the bulk of it. He's put a lot of time, effort and skill into making this property

0:26:560:27:02

something special. He had to fit doing it into evenings and weekends around his other jobs,

0:27:020:27:08

so the original timescale of 6-9 months has stretched and there's still the garden,

0:27:080:27:14

but if something's worth doing, it's worth doing right.

0:27:140:27:18

Stephen's always been meticulous in the jobs that he's doing.

0:27:200:27:24

If the job's not done right, it's not getting done at all.

0:27:240:27:28

He's just so...hands-on. He's done a fantastic job here. Really, really proud of him.

0:27:280:27:36

As well he should be.

0:27:360:27:38

In addition to all the work that's been carried out,

0:27:380:27:42

there's a brand-new and I thought necessary addition up here.

0:27:420:27:47

There wasn't a bathroom upstairs at all in the house, so we've rejigged the walls upstairs

0:27:470:27:54

to form three bedrooms, a bathroom and an en suite in the master.

0:27:540:27:58

Here in the main bathroom, we had flexibility from the start.

0:27:580:28:03

We re-aligned the walls to make the standard bath fit in lengthways

0:28:030:28:07

and also managed to squeeze in quite a large shower with the toilet and sink as well.

0:28:070:28:13

I'm delighted.

0:28:130:28:15

The upstairs is certainly a far cry from the chaos, cracks and crazy ceilings that were here before.

0:28:150:28:22

The original budget for the project was £30,000-£40,000.

0:28:230:28:28

Once everything's finished, they reckon they'll be closer to the 40, so within budget.

0:28:280:28:33

That's not the only thing Stephen's breathing a sigh of relief over.

0:28:330:28:38

Finishing and moving in the house and moving out of my parents' house!

0:28:380:28:42

-Aye.

-Having my own space.

0:28:430:28:46

Let's hope they're also left laughing when it comes to money.

0:28:460:28:50

With their £96,000 purchase price added to the £40,000 for the work,

0:28:500:28:54

their total outlay here is £136,000. We invited two local property experts

0:28:540:29:01

to cast their eyes over this much-improved pad.

0:29:010:29:05

They've done a very good job to a very high specification.

0:29:090:29:13

The extension is really good.

0:29:130:29:15

It gives them a sizeable kitchen and great views over the back over open fields.

0:29:150:29:20

It's very nice.

0:29:200:29:22

My overall impression on the property is absolutely lovely.

0:29:220:29:27

They have done all the work to a very high specification and it's a beautiful property

0:29:270:29:33

situated in a nice, quiet village with absolutely amazing views.

0:29:330:29:38

Although Stephen has moved in to the house, if he did do an about turn and decided to sell,

0:29:380:29:44

would he and his dad stand to make a healthy profit?

0:29:440:29:48

If this was on the open market, I would recommend an asking price

0:29:480:29:53

of £160,000-£165,000.

0:29:530:29:56

I would put it in the region of £160,000-£165,000.

0:29:560:30:03

Once the garden's finished, the outside, we'd expect about 170, so that's good.

0:30:030:30:09

There's a bit of spare cash there. It's all right.

0:30:090:30:12

A pre-tax profit of £24,000-£29,000, then, but what about if they went down the rental route?

0:30:120:30:19

If this property came to the rental market,

0:30:190:30:22

I would recommend in the region of £500-£550 per calendar month.

0:30:220:30:27

If this property went on the rental market today,

0:30:270:30:30

they would achieve in the region of £525-£550 per calendar month.

0:30:300:30:37

Good. But we're not going to rent it out. We're going to keep it now.

0:30:370:30:42

Stephen's going to stay in it. He's happy.

0:30:420:30:46

And that makes me happy, too.

0:30:460:30:49

I'm in Normanton, a suburb of Derby in the east Midlands.

0:30:560:31:01

This charming arboretum is an important landmark as it was one of the very first public parks

0:31:010:31:07

in the country. Parts of it were used in Ken Russell's film of the novel Women In Love.

0:31:070:31:14

So will I fall in love with today's bricks and mortar?

0:31:190:31:24

It's certainly looking appealing. £55,000 plus was the guide price for this -

0:31:240:31:30

a two-bedroom, semi-detached bungalow. Let's take a look.

0:31:300:31:35

A broken bathtub isn't really my idea of a pleasant garden water feature.

0:31:350:31:41

The outside certainly needs a good tidy up, but the building itself looks in good shape.

0:31:410:31:47

So what sort of layout is in store?

0:31:470:31:50

There's a little entrance area here which is always useful, somewhere to hang your coats.

0:31:500:31:56

And then a pretty standard layout for a bungalow.

0:31:560:32:00

A main central area off which the rooms spread.

0:32:000:32:03

Bedroom one at the front there, bedroom two, a nice size there.

0:32:030:32:08

It looks like somebody's taken off some of the plaster. Yes, right.

0:32:080:32:14

It looks like a renovation has been begun and not quite finished yet, but that can be not a bad thing,

0:32:150:32:22

especially if it's all the hard manual work of stripping off what was on the walls.

0:32:220:32:28

So not necessarily a bad thing, although it's off-putting to see it.

0:32:280:32:33

But through into this room, your living room, not a bad size. And we're not finished yet.

0:32:330:32:39

You've got a big set of patio doors leading out into this little conservatory area

0:32:390:32:45

and onwards into the garden. It's only a single skin, so not really very damp-proof,

0:32:450:32:51

but it's a useful little bit of space and then continuing our tour of this little bungalow

0:32:510:32:57

we complete the circuit in the kitchen. Again, walls have been stripped.

0:32:570:33:02

Units have been taken out. That does bring up one very important point.

0:33:020:33:07

It's not a fully-functional kitchen.

0:33:070:33:09

You'd have a devil of a job getting a mortgage on this place, but at least some work is done.

0:33:090:33:16

And you've got a very interesting canvas on which to paint your masterpiece.

0:33:160:33:21

Or rather plaster your masterpiece.

0:33:210:33:24

# Faster, faster, plaster casters Are you wasting time

0:33:240:33:28

# Faster, faster, plaster casters Who's the next in line? #

0:33:280:33:33

If you're not a plasterer and most of us aren't,

0:33:330:33:37

don't underestimate what a big job this will be or how much it'll cost.

0:33:370:33:42

Make sure your budget covers that as well as the price of a new kitchen and bathroom.

0:33:420:33:48

You also need to be careful that it is mortgageable.

0:33:480:33:52

There are many conditions lenders can insist on and here it's not just the kitchen that may raise eyebrows.

0:33:520:33:59

On the plus side, the property is already kitted out with central heating and double glazing,

0:33:590:34:05

so you won't get too cold while reassembling the walls.

0:34:050:34:09

That's inside covered, but what about out back?

0:34:090:34:13

At the rear of the property, a bit of a hotch potch of buildings with a bit of an extension,

0:34:130:34:19

but one thing you certainly have got is space!

0:34:190:34:23

A really nice-sized garden and also, I think,

0:34:230:34:28

enough room to do a bit more impressive an extension, coming out

0:34:280:34:33

and maybe even going up into a dormer like a couple have done.

0:34:330:34:37

With all this space and the attractive guide price of £55,000, there's a lot of potential

0:34:370:34:43

to make this two-bedroom bungalow bigger and better.

0:34:430:34:48

-# I've just got to make it better

-Got to make it better...

-#

0:34:480:34:53

We invited the auctioneer who sold it along to give his opinion on the best option.

0:34:540:35:01

This is a bungalow that's been occupied by somebody fairly elderly for quite some years.

0:35:010:35:09

I think you need to be careful what you spend. Properties in this area have a limited ceiling value.

0:35:090:35:16

But providing you don't pay too much for it, it's got the makings of giving you some return.

0:35:160:35:22

But what is that ceiling price and could this property reach it if given a good renovation?

0:35:230:35:30

Whatever you do to this property, it probably has a ceiling value of no more than about £100,000.

0:35:300:35:36

That's pushing it to the limit. Probably 90-95 is nearer the mark.

0:35:360:35:41

If you put three bedrooms into it, if it is feasible to go upstairs

0:35:410:35:46

or somehow you configure a third bedroom on ground level,

0:35:460:35:49

you could put another £15,000 or £20,000 potentially onto its value

0:35:490:35:53

but you've got a lot of costs to achieve that, so the benefit may actually be almost nothing.

0:35:530:36:01

How about if it was put on the lettings market?

0:36:010:36:05

This would have a rental value of about £400 per calendar month.

0:36:050:36:09

Well, somebody's done the preliminary work for you,

0:36:130:36:18

but there is still a lot to be done to make this place habitable. Let's see who fancied the challenge.

0:36:180:36:25

Lot number 7. 55 plus is the guide price. Very realistic.

0:36:270:36:32

Who's got 50? He has. Thank you. 50,000 is the opening bid.

0:36:320:36:36

51. 52. 53.

0:36:360:36:40

54. New bidder. 55. 56.

0:36:400:36:44

57. 58. 59.

0:36:440:36:48

60. 61.

0:36:480:36:50

62. 63. 64.

0:36:500:36:53

65. 66. 67.

0:36:530:36:58

67 thousand and a half.

0:36:580:37:01

68. And a half.

0:37:010:37:04

69. And a half.

0:37:040:37:06

70,000.

0:37:060:37:09

70,000. Is that definite?

0:37:090:37:11

Do I take that as a "no"? £70,000, then. Once, twice, third time.

0:37:110:37:16

It's yours, madam. Thank you.

0:37:160:37:19

'So determination won the day and that successful £70,000 bid was placed by community worker Bev.

0:37:230:37:30

'She purchased the bungalow on behalf of herself and husband John, a plumbing and gas engineer.

0:37:300:37:36

'Those skills will come in handy and this isn't their first foray into property.'

0:37:360:37:41

-Bev, John, good to meet you both. Congratulations.

-Thank you.

-Tell me why you wanted to buy this place.

0:37:430:37:49

-We just wanted another property to add to our portfolio.

-How many house have you got?

-This is our sixth.

0:37:490:37:55

-Are they rented out?

-Yeah, they're all rented out.

0:37:550:37:58

-So why this particular house?

-It was just an opportunity. It was within our price range.

0:37:580:38:03

-I thought, "Let's go for it." That's why.

-What was it that you liked?

0:38:030:38:08

The location. We've never had a bungalow,

0:38:080:38:11

so we thought a two-bedroom bungalow would be a good property let.

0:38:110:38:15

-I didn't actually look inside the property.

-No!

0:38:150:38:18

I should know better, shouldn't I?

0:38:180:38:20

I thought with double glazing, a combi boiler, a wee snooch around,

0:38:200:38:24

-we thought, "It's bound to be OK."

-Yeah, of course(!)

0:38:240:38:28

# Naughty, naughty

0:38:280:38:31

# Oh, I like it that way... #

0:38:320:38:35

'Naughty, naughty Bev! I've said it before, but I'll say it again.

0:38:370:38:41

'Purchasing a property without having seen it is a very risky strategy and often doesn't pay off,

0:38:410:38:47

'particularly when it starts to throw up financial hurdles.'

0:38:470:38:51

We had a bit of difficulty with the mortgage because the mortgage we went for, they said "no",

0:38:510:38:57

so we had to go for a light refurb mortgage which obviously cost us a bit more,

0:38:570:39:02

an extra 10% on the deposit, so more money to find than we anticipated.

0:39:020:39:07

And they have criteria that we have to do so much of the work within a specified time frame, so...

0:39:070:39:14

You discovered you couldn't get this mortgage

0:39:140:39:17

-in between the time when you've exchanged contracts and completion?

-Yes.

-Tick-tock!

0:39:170:39:22

I was in a panic at the time and I was actually devastated

0:39:220:39:26

when John came back home and showed me all the pictures that he took on his mobile phone.

0:39:260:39:31

-I thought, "What have I done?" My heart sank.

-Did you have to go to a different mortgage provider?

0:39:310:39:37

Fortunately, the mortgage provider that we were with,

0:39:370:39:41

they just told us that they would have to give us a different product,

0:39:410:39:45

so subsequently, it just cost us more deposit

0:39:450:39:48

-and obviously, the monthly repayment are much greater.

-Right.

0:39:480:39:53

-Yeah, so...

-A few sleepless nights, I imagine?

0:39:530:39:56

Very much so.

0:39:560:39:59

'John and Bev seem OK about it now, but this could easily have gone the other way.

0:40:000:40:05

'Refurbishment mortgages are not necessarily easy to come by,

0:40:050:40:09

'but are provided by some companies, specifically for landlords.

0:40:090:40:14

'They take into account what the value of the property will be once renovation is carried out.

0:40:140:40:19

'Not only must the work be done in a specific time frame, but it must make the property's value rise

0:40:190:40:25

'to what the mortgage company have estimated its refurbished price would be

0:40:250:40:30

'or the full funding won't be released,

0:40:300:40:33

'so all added pressure, particularly for John, as he'll be doing most of the work here.'

0:40:330:40:38

John, what will you do to sort it out?

0:40:400:40:43

The bathroom first, then I'll do all the plastering, the kitchen.

0:40:430:40:47

I think I'm going to try and move the boiler into the loft

0:40:470:40:51

to create a bit more room for cupboards and units and stuff like that.

0:40:510:40:55

Yeah, just a complete renovation.

0:40:550:40:57

-And are you going to help at all with the renovation?

-No.

0:40:570:41:02

-LAUGHTER

-I hope so.

0:41:020:41:04

I'll pick all the... I'll help with the cupboards and stuff.

0:41:050:41:09

-And pick all the faults.

-I'll do a bit of painting. I can do a paintbrush, but not much.

0:41:090:41:14

-So how long is it going to take you to do the work?

-Probably four to six weeks.

0:41:140:41:19

Obviously, I'll be doing it between my work schedule,

0:41:190:41:23

so hopefully, I'll be here till probably 12 o'clock at night to try and get it done within that time.

0:41:230:41:29

What sort of budget have you put aside for the work?

0:41:290:41:33

-Well, I'm thinking around 6,000 to 8,000.

-Really?

0:41:330:41:37

Or even... At the most, 10.

0:41:370:41:40

Right. But you are doing most of the work yourself

0:41:400:41:43

-and you are lucky that you've got one of those skills that normally people have to buy in.

-Yeah.

-Yes.

0:41:430:41:50

-Congratulations.

-Thank you.

-Good luck.

-Thank you.

-We look forward to seeing how you get on.

0:41:500:41:55

-Cheers.

-OK, thank you.

0:41:550:41:57

There you go, Bev and John experiencing another very clear reason

0:41:590:42:04

why you must look at a property before you buy it at auction

0:42:040:42:08

because it's not just a case of what YOU might find when you eventually look inside,

0:42:080:42:13

it's what somebody who is lending you the money might find and they may well turn round and say "nope"

0:42:130:42:19

which leaves you in a right mess.

0:42:190:42:21

Luckily, they got it sorted. Just a small job of sorting out the property now!

0:42:210:42:26

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

0:42:260:42:29

This is the part of the programme where we go back to find out if all those promises have come true.

0:42:320:42:38

-Did our buyers do everything they said they would?

-I think we should go back and find out.

0:42:380:42:44

'We're back in Lee, just a mile south of beautiful Blackheath in south-east London.

0:42:450:42:51

'Here, Austin and Imran paid 128,000 at the auction for this -

0:42:510:42:57

'a supposed two-bed flat in this stunning Victorian building that would work much better as a one-bed.

0:42:570:43:04

'They bought it as part of an intriguing business model.'

0:43:040:43:08

-So you've not bought this for yourselves?

-No.

0:43:080:43:11

We bought this with two or three other clients. They pooled their money together.

0:43:110:43:16

We find projects for them, then we project-manage the refurbishment.

0:43:160:43:20

They see the project once we've bought it. They saw it last week for the first time.

0:43:200:43:25

-You take all the hard work and the stress out of buying property?

-Yes.

-Fabulous.

-Or take the stress on!

0:43:250:43:32

Here's hoping the renovation of this place was stress-free for all involved.

0:43:320:43:37

We last met them 11 weeks ago.

0:43:370:43:39

I can't wait to see if this truly tiny property has now been transformed.

0:43:390:43:45

Unsurprisingly, they have delivered and turned this place into a wonderful one-bed

0:43:490:43:55

by knocking the previous two bedrooms together

0:43:550:43:58

to make a large and light, open-plan kitchen and living space...

0:43:580:44:02

..and turning what was the kitchen into the bedroom.

0:44:060:44:09

This was originally the kitchen, so there were kitchen units along there which were just disgusting

0:44:100:44:17

and here there was a doorway going into one of the bedrooms.

0:44:170:44:21

So we decided to make this the master bedroom just because of the size, the light's really nice.

0:44:210:44:27

Although the road's there, we're set back from it a bit,

0:44:270:44:30

but having a bigger bedroom was definitely the right way forward.

0:44:300:44:35

We obviously blocked up this wall, moved the whole kitchen out.

0:44:350:44:39

We built in some storage. There's still enough room for a double bed.

0:44:390:44:44

The slopey ceiling actually makes it feel really cosy and I think that's important for a bedroom.

0:44:440:44:49

With the carpet, in winter, it's going to be a really nice place to come and relax.

0:44:490:44:54

Yeah, what we've done to it, I'm really pleased with it.

0:44:540:44:58

There are a few things to finish off throughout,

0:44:580:45:02

but the flat has been painted, re-carpeted, and has a new kitchen and bathroom suite.

0:45:020:45:07

The loo is still separate from the bathroom, but now at least has its own basin.

0:45:070:45:12

Overall, this now feels much more liveable and modern.

0:45:120:45:16

The level of spec was important. The wooden floor was a key thing.

0:45:170:45:21

Spots were a key thing, a nice, neutral kitchen,

0:45:210:45:24

so we had to save some money some places and we spent the money on the wooden floors and the spotlights.

0:45:240:45:30

And building the wardrobes was expensive. It's just give and take a little bit.

0:45:300:45:35

There's little extras like the chrom fittings with the light switches.

0:45:350:45:39

They're important just to try and add that value.

0:45:390:45:42

It's just about trying not to overstretch the budget,

0:45:420:45:45

but making sure the money coming through on the spend is realistic,

0:45:450:45:49

spending where people see the value being added, but we did what we coul with the budget we had.

0:45:490:45:56

# That's M-O-N-E-Y

0:45:560:45:58

# So sexy... #

0:45:580:46:00

Ah, yes, the all-important budget. How did that work out here?

0:46:000:46:05

The budget went really well. We said before we'd spend between 20,000 and 25,000

0:46:050:46:10

So far, we're at the 20,000-mark, so we're at the lower end of the budget

0:46:100:46:15

Obviously, there's a few little finishing touches,

0:46:150:46:18

but I think we'll come in at the £20,000-mark, so we're really happy with the spend.

0:46:180:46:22

-We didn't want to go over.

-We didn't have the money to go over.

0:46:220:46:26

That was particularly important for these guys

0:46:260:46:30

as it wasn't their money they were spending.

0:46:300:46:33

They had hoped to complete the renovation in eight weeks,

0:46:330:46:36

but 11 weeks in and there is still a little bit left to do.

0:46:360:46:40

We are over the timescale, but we're under the budget, so it's not too bad.

0:46:400:46:45

In a few days, we should be completely finished, then it'll be straight on the market.

0:46:450:46:50

-What we've done to it, it should sell quite quickly.

-Hmm.

-Hopefully.

0:46:500:46:54

With the cost of the property being 128,000, added to a £20,000 spend on the work,

0:46:540:47:01

the total outlay here comes to £148,000.

0:47:010:47:05

We invited two local estate agents to cast their eyes over the flat.

0:47:070:47:12

It's a very nice property. It's not massive, but it's very well laid out

0:47:150:47:19

They've done the right things to make it feel big and spacious.

0:47:190:47:24

The property is done to a very high standard.

0:47:240:47:27

It's nice, very clean, bright, airy.

0:47:270:47:29

He's used good space here. He's made full use of good space.

0:47:290:47:33

Yeah, very nice.

0:47:330:47:35

Open-plan kitchen/living rooms are difficult. Some people like them some people don't.

0:47:350:47:40

Years ago, they weren't popular at all. They've become more popular.

0:47:400:47:44

The kitchen mustn't dominate the room. I think they've got that right

0:47:440:47:48

So they think Austin and Imran have done a great job here, but will the finances prove fruitful?

0:47:490:47:56

If they were to consider letting it, how much could they rent it out for?

0:47:560:48:01

If I was renting this property,

0:48:010:48:03

I believe I would get £800 to £850 per calendar month.

0:48:030:48:07

I believe this property would achieve anywhere from £900 to £950 per calendar month.

0:48:070:48:12

Yeah, 900 to 950 was my kind of guess on it.

0:48:120:48:16

Yeah, if we got about £900 per month I'd be quite happy with that.

0:48:160:48:20

A pretty good return on the investment, so that's good.

0:48:200:48:24

Those suggestions would mean a rental yield of between 6 and 7.5% which would be very healthy,

0:48:250:48:31

but with Austin and Imran ready to move on to their next project

0:48:310:48:35

and as well as their clients set on selling, what could it sell for?

0:48:350:48:40

If I was putting it on for sale, I'd be looking for it to achieve £180,000 to £185,000.

0:48:420:48:48

I would say this property would achieve from £180,000 to £190,000.

0:48:480:48:53

-That's good.

-Exactly what we thought, yeah.

0:48:530:48:56

We aimed for the 190-mark, so that's in line with what we wanted.

0:48:560:48:59

So a potential £32,000 to £42,000 profit to be made after the usual taxes and expenses.

0:48:590:49:06

It seems like this has all come together beautifully.

0:49:060:49:10

Yeah, it has. It's been quite an easy project. There's only been a slight delay.

0:49:110:49:16

-The costs have been good.

-As there's not been too many problems with the project, it's been quite nice.

0:49:160:49:23

-I wouldn't mind a bit of a challenge for the next one maybe.

-Don't say that!

0:49:230:49:28

'It's destination Derby now where, earlier, we met husband and wife team Bev and John.

0:49:300:49:36

'They paid £70,000 at auction for this bungalow

0:49:360:49:40

'which they hadn't even viewed prior to purchase. Tut-tut!

0:49:400:49:44

'The place needed serious attention and it was up to plumbing and gas engineer John to get down to it.'

0:49:440:49:51

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

0:49:520:49:56

The bathroom first, then all the plastering, the kitchen. Just a complete renovation.

0:49:560:50:01

-Are you going to help at all with the renovation?

-No.

0:50:010:50:05

-LAUGHTER

-I hope so.

0:50:050:50:08

-I'll pick all the... I'll help with the cupboards and stuff.

-And pick all the faults.

0:50:080:50:14

I'll do a bit of painting. I can do a paintbrush, but not much.

0:50:140:50:18

It was going to take more than a spot of painting to get this place licked into shape.

0:50:180:50:23

Because the property was predominantly bare brick,

0:50:230:50:26

they had to take out a light refurbishment mortgage.

0:50:260:50:30

One condition of that was that they complete the work in a set period of time, so the pressure was on.

0:50:300:50:37

We've come back 12 weeks after we first met them to see if the house has gone from hopeless to homely.

0:50:370:50:43

It looks great so far.

0:51:070:51:09

Although there are a few finishing touches to be added in here, it's nearly done.

0:51:090:51:14

And with it having needed so much work, that must be a huge relief.

0:51:140:51:18

I'm glad that the project is now coming to a conclusion

0:51:180:51:22

because it's taken a lot of time to actually do.

0:51:220:51:25

It's been tough, but I enjoyed it, I totally enjoyed it.

0:51:250:51:29

I could come in the evenings, put my ghetto-blaster on and lock into a zone. It was a pleasure to do it.

0:51:290:51:35

It makes a world of difference when renovating that you enjoy what you're doing,

0:51:350:51:40

otherwise the hard graft can feel like a real drag, rather than a labour of love.

0:51:400:51:45

And here that wasn't the only advantage John and Bev had on their side.

0:51:450:51:50

Being a Gas Safe engineer, it enabled me to do a lot with the central heating system,

0:51:500:51:55

move things about, fit radiators.

0:51:550:51:57

We made a lot of savings that way.

0:51:570:52:00

The only thing we'll get an expert i to do is the garden because that in itself is time-consuming.

0:52:000:52:06

It will be cheaper. The time I could go out working and earning, it'll be easier to pay someone to do it.

0:52:060:52:12

-Employ the right people.

-They'll do it in a week. I'd be there for a month!

0:52:120:52:16

Ah, yes, the garden. It was always a good space with potential.

0:52:160:52:20

Now it's been cleared and is ready for its makeover.

0:52:200:52:23

At the front, not much has changed yet,

0:52:230:52:25

but Bev and John are planning to make the most of it

0:52:250:52:29

by adding off-street parking and tidying up the driveway.

0:52:290:52:33

That will make all the difference, particularly to the end value.

0:52:330:52:37

They expect, when they finish, to come in at around £10,000 for this renovation.

0:52:370:52:42

That was their maximum budget, although they helped keep costs down by getting family members involved.

0:52:420:52:49

Even Bev turned her hand to some of the work.

0:52:490:52:52

I have actually done some covings myself.

0:52:540:52:58

Well, filling in.

0:52:580:53:00

-It took you two days, didn't it?

-Yeah, but hey, I did my little bit.

0:53:000:53:04

They had hoped to get it all completed in four to six weeks

0:53:040:53:08

and we're 12 weeks in, so they have run over,

0:53:080:53:11

but they're nearly there and have a pair of tenants lined up for when everything is finished.

0:53:110:53:17

This had an impact on the design of particular aspects of the inside of the property.

0:53:170:53:23

With this kitchen in mind for the elderly couple,

0:53:230:53:26

we decided not to actually have a free-standing cooker with them bending down and everything else,

0:53:260:53:32

so we've actually had the hob and we've done the built-in oven which is a nice feature as well.

0:53:320:53:39

We've also got the splashback and that's about the only thing left to be done in the kitchen,

0:53:390:53:44

then it'll be ready for them to move in in the next couple of weeks.

0:53:440:53:48

Bev and John bought the bungalow for 70,000.

0:53:490:53:52

When finished, they hope to have spent no more than 10,000 on the renovations,

0:53:520:53:58

bringing their total to £80,000.

0:53:580:54:00

We invited a local estate agent and the auctioneer who sold it

0:54:000:54:04

to give us their opinions on it.

0:54:040:54:07

I think it's fair to say

0:54:090:54:11

that when you see a property in pretty derelict condition...

0:54:110:54:15

That could be overstating it slightly.

0:54:150:54:17

..and then you see it renovated, you always realise there's a huge change

0:54:170:54:22

and the impression is always very good, so yes, I'm impressed.

0:54:220:54:26

I've had a good look round the property.

0:54:260:54:28

They've done remarkably well in the time that they've had.

0:54:280:54:32

It presents very well. It's been extended at some time in the past, so it's a good size too.

0:54:320:54:37

So it's all good so far, but how about the all-important figures?

0:54:370:54:42

The couple bought this to let out and have tenants waiting in the wings.

0:54:420:54:48

What rental can they expect?

0:54:480:54:50

Very rentable, but I think its ceiling value would probably be

0:54:500:54:54

something in the order of £525 a calendar month.

0:54:540:54:57

500 seems more comfortable, but it's somewhere around those figures.

0:54:570:55:02

I think you'd be looking at £550 per calendar month.

0:55:020:55:05

I would have expected that sort of rent, to be honest.

0:55:050:55:09

We've got a few other properties in the area and that's the sort of...

0:55:090:55:13

That's the sort of rent, but this is a two-bedroom, so 500 is a very good rent.

0:55:130:55:18

Even that lower figure of £500 per calendar month would yield a healthy 7.5%.

0:55:180:55:26

John and Bev's prospective tenants have indicated

0:55:260:55:29

they might be interested in buying the property eventually,

0:55:290:55:33

so could this be a profitable option?

0:55:330:55:36

I think if this went on the market with the outside work completed, and that's essential,

0:55:360:55:42

it would have an asking price of probably around £115,000 and I would expect them to achieve close to that

0:55:420:55:48

If you put this property on the market, you'd be looking at offers in the region of £110,000.

0:55:480:55:53

So, a pre-tax and expenses profit of between £30,000 and £35,000. Sound good?

0:55:530:56:00

-That's better than we thought.

-Whoa!

-A lot better than we thought.

-Whoa!

0:56:000:56:06

-We thought maybe 90, up there, but I'm pleased with that.

-We're in the money.

0:56:060:56:11

It'd certainly be worth considering at some point.

0:56:110:56:14

What else does their future hold?

0:56:140:56:17

We will try and go to the auction probably again nearer Christmas, so it's been quite good, really.

0:56:170:56:23

-I must admit.

-It's been really good. I mean, I'd do this all day long.

0:56:230:56:28

Well, John, if you keep going the way you're going, you might just get to.

0:56:280:56:33

See you next time with more auction buying stories, some successful, some not so.

0:56:370:56:43

-To be continued here on Homes Under The Hammer.

-See you then.

-Goodbye.

-Goodbye.

0:56:430:56:48

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