Episode 74 Homes Under the Hammer

-Hello and welcome.

-The price of property goes down as well as up.

-So it pays to buy at the right price.

-And one way is by buying your home under the hammer.

If you're sitting at home thinking you'd like to buy at auction, now might be a good time to start.

But the market is always changing, so you have to judge the right time.

-On today's show, three bidders have already put their money on the line.

-And here is what they bought.

I'm visiting a site near Grimsby where the plot thickens.

It's attractive, it's got planning permission, it's simple. Or is it?

I want to unlock the potential of this two-sided property in Kent.

Look at the amount of keys to all the rooms!

And in Shropshire, might I have unearthed a precious pad?

Allegedly, it was the inspiration for Tolkien's Lord of the Rings and Middle Earth.

All these properties were sold at auction. We'll find out who bought them and what they paid for them

when they went under the hammer.

I'm just 20 minutes from Grimsby in South Killingholme.

The landscape is dominated by its power station and oil refineries, both a major source of employment.

# When I ask around

# No one's calling you a liar Because no smoke without fire. #

This was at one time a rural area, which explains the odd farm-style house,

but I'm here to see a plot with an attractive price tag.

More good news - the plot of land has planning permission for building four two-bedroom houses.

And at a guide price of just 75,000 quid.

'£75,000 doesn't seem like much with the plans already passed and for four properties.

'It's definitely worth a look.'

At first glance, it's not a huge plot to get those four houses on,

but it is at least flat and in an established residential area,

there's likely to be easy access to electricity, sewerage etc,

which can really keep your development costs down.

It's also not badly located. You've got playing fields that way.

In the distance, there is the refinery and industrial stuff,

but it's far enough away. You can hear it and occasionally smell it,

but overall it's not bad.

# No, it's not love

# But it's not bad... #

'This isn't bad at all and seems like a great opportunity for not much outlay,

'but everything hinges on just how saleable those houses would be.'

So handily I have the plans that have been passed and these are they.

Really making the most of what is not a huge plot.

But it does have access onto that road, so what we've got basically is a row of mini terraces.

One, two, three, four. Layout, fairly simple.

Lounge, dining room, kitchen downstairs with a WC.

Then upstairs just two bedrooms, a bathroom. And one at the end accommodates the dogleg in the plot.

Not huge. Each one managing to be about 800 square foot in total.

Perfectly adequate starter homes.

Not exactly huge, but with the best chance of selling in this area.

# Build a home Cos I never want to know

# What it is to be alone No, not again... #

This looks like a good little development of four linked homes,

each with a garden and off-street parking. The site, if it goes for anything like the guide price,

would be a great starting point. Let's tot up the sums.

Assuming you spend approximately a third of the end value on the plot of land itself

then you could be quids in here.

Let's say the properties will sell for around £90,000 each

and it costs you around £50,000 each to build them. That gives you a gross development profit

of around £85,000. But is it really going to be that easy?

To answer that question you really need to take a close look at the area and that market.

# Take a look at me now

# There's just an empty space

# And you coming back to me is against the odds

# And that's what I've got to face... #

Now it looks like we're out of the recession and oil and petrol prices are rising,

but that doesn't necessarily filter down to the people who make it in factories like the one behind me.

So like many other parts of the country, this area has suffered and there is high unemployment.

So with banks and building societies demanding so much deposit for new-build houses

and any other property and unemployment in the area,

is this the time to be considering building on a plot of land? You may need a Plan B.

It's all about supply and demand and perhaps this is not the best time for first-time buyers

without sizeable deposits. Whoever buys this may need to consider holding on to the land

for a while before building. Or build and consider the rental route.

On the face of it, the guide price of £75,000 might seem like a terrific bargain, but is it?

We asked a local estate agent for his thoughts

and the four two-bedroom houses.

I think it's a good idea

to put four properties on that plot. It lends itself well to two-bedroom properties.

I don't think they've overmaximised the plot potential.

So what could the rental be for these four new-builds?

I think these properties would rent well. You're looking approximately at £450 per calendar month each.

-What if they were sold on?

-I think if you were to resell them in current market conditions,

you'd be looking between £85,000 and £95,000 per property.

Well, this is a nice enough little plot of land.

It's attractive, it's got planning permission, it's simple. Or is it?

It all depends on whether or not you're able to sell what you might build on it.

Still, if the price is right, there may well be money to be made.

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

Guided at £75,000 for this.

Start me at £60,000 for this lot.

60,000?

55 if you like. 55 I have.

At £55,000. 56.

56. 57.

58. 59.

60. 61.

62. 63.

64.

65. 65. 66.

67. 68. 69.

70.

71. 72. 73.

At 73. 74. At 74.

74,500.

At 75. At 75, against you. I'll take another 500 now, sir.

At £75,000.

75,500.

6? 76.

76,500. £76,500.

At £76,000. Are you sure?

At £76,500 once.

£76,500 twice.

Third and last time at £76,500.

Thank you, sir. Your number, please.

The successful bid of £76,500 came from Mike and his twin brother John,

who work nearby in Grimsby running their own property development company.

They work with their other brother Neil and have done several new-builds over the years.

I met Mike and Neil at the site to find out what attracted them to this auction lot.

-Mike, Neil, good to meet you both.

-Likewise.

-Congratulations. Tell me why you wanted to buy the plot.

We're in the development business and we're always on the lookout for little pockets of land.

My son brought this to our attention last year. We had our eye on it.

It slipped through the net a bit, then he notified us that the auction was due and this was included in it.

-When we originally looked, it was up for £96,000.

-Ah!

-So in the delay we actually saved £20,000 on it.

-Fantastic. So what's the deal? You were at the auction.

-With our brother.

-Neil, you're part of the team?

-Yes, it's a three-way split. It involves the three brothers.

-So what was it about the plot you liked?

-Just the idea you could start from scratch.

You get so many older properties and find all sorts of nightmares.

With this, you start with a blank canvas.

# You just build me up

# And then you let me down... #

This band of brothers are thinking ahead and are prepared to hang on to these planned houses

in the short term. Even better, they hope to sell a couple to investors

who have spotted the rental potential. So to give themselves the best shot at a sale,

how will they make them stand out?

Quality. Definitely quality. We don't just throw things together. We listen to what customers want.

We pride ourselves on quality.

We just built two houses last year for private customers. They went really well.

Talk me through the numbers and how much it'll cost to do it.

We've projected some figures of about £200,000

with a resale figure of about 100.

So we're hoping to achieve 100 plus profit if we sell them

-or we rent them at a cost of 270 overall.

-Right.

-276.

-How does the team divide itself?

-John and Mike do the joinery. Mike's an ex-building inspector.

-That's useful.

-I'm from an engineering background, so with Mike's son, my nephew,

-I do all the electrics.

-So what's the timescale?

-We're looking to get started in the next few weeks.

And we're confident, weather permitting, that we'll complete it within 6-8 months max.

# We'll always be blood brothers... #

The team of siblings have tradespeople they work with regularly to help with the build.

The only issue they have with the site is a lamppost that needs to be moved before work begins

and nearby trees that need to be felled. Not major problems and they seem confident

that this project will go smoothly.

Well, Mike and Neil and the team certainly have the right idea,

keeping a tight hold on the budget and it looks like, as I predicted,

they'll probably sell a couple to developers and rent the other two out. The way to go.

It means the development will hopefully be a success. Find out how they get on later in the show.

Chatham in Kent, a low-cost area with an illustrious past.

I think that is a fair description, but what does that really mean?

It means times have been tough for Chatham over the past 30 years,

but what you can't take away from it is the lovely coastal setting,

a fast train link to London and houses that, for the south east, are very, very cheap.

'In fact, average house prices in this area are £60,000 cheaper than the national average.

'That's astonishing given that thanks to the high-speed rail link it's 45 minutes from the capital.

'I wonder if today's lot has the potential to make a speedy return?'

A couple of miles from the centre of Chatham on a pleasant residential road. Ex-local authority housing,

built probably around the 1950s, decent views, mostly semis,

so what am I here to see?

Office premises, of course(!) How strange.

'What I'm looking at is two converted semis

'on offer as one lot at a guide price of £220,000-£230,000.'

You know, it feels a bit like a commercial property, but also the hallway to a house.

A bit odd, but very spacious, solid. Incredibly dated, so you'd need to turn all this around.

But a great space. You've got a meeting room or lounge area.

Fantastic views, nice garden.

Second reception room, a dining room or another meeting room, I suppose.

And a rather large kitchen, very dated. All the units need replacing.

But it just goes to show how enormous this place is.

And to show you, look at the amount of keys to all the rooms.

I'd better get cracking.

# I like the way

# That she unlocks my door

# She found the key

# That you threw away... #

I'd feel like a jailer lugging that set of keys around the place.

But at least you can be certain the security is pretty well covered

in this double-sited property.

Through into the second part of the building and here you have another staircase

and a lovely big room. Again an office space or sitting room. Does it feel familiar?

Second reception room. Again, I'm getting a slight sense of deja vu.

And a rather large kitchen. Now it's very similar to next door.

That's because all of this is the mirror image of the property next door.

These are a pair of semis that have been knocked through. You can see the doorway there.

I really think these properties should be residential dwellings.

All you'd need to get is change of use. It's not as if you're taking a shop away from a high street

or changing the street scene. The big question with this is - would they make you money?

# It's all about the money... #

Upstairs is a further rabbit warren of rooms. If you turned this place back into two residential properties

you'd have three decent-sized bedrooms and an upstairs bathroom apiece.

Get it right and you'd feel like all your Christmases had come at once.

Sorry, couldn't resist that one.

Although it may seem a shame to chop this gorgeous back garden in two,

each property would still have a good amount of outside space.

# It's all about the money... #

Properties on this street vary in value from £115,000 to £160,000

so you'd need to be sure you factor in a realistic sale price before you go wild with your budget.

Remember, the guide price here was between £220,000 and £320,000.

We invited a local estate agent along to give us his opinion

on its highs and lows.

Pros?

They're big houses. Solid houses. You've got nice-sized gardens.

The cons are you're a long way away from everything. All ex-council houses are nice sizes,

but you tend to be away from everything and when there are local shops, they tend to close

because of not getting customers.

As ever, it's not just the property. It's about location and amenities.

You should always do your research.

Also, careful calculations need to be done about what's worth spending.

What does the estate agent think?

You could spend anything from £5,000-£15,000,

depending on how well you want to do it and what you want to achieve. But they'll be sellable, rentable.

You'll always get a buyer or renter at the right prices.

Firstly, what would he suggest the buyer could sell these for?

I would market each property at around £130,000, but I'd expect them to sell at 125.

Bearing that in mind, would selling be something he'd opt for here or would letting it be better?

In today's market, I'd try to rent them. It'd be much easier and the actual income would be a lot better.

I'd be very surprised if it didn't get £700-£750 per calendar month.

Well, two houses right next door to each other are easier to renovate, which is one big bonus.

Is it two houses for the price of one? Well, no, it's not,

but it is a tidy little investment that could generate a decent yield.

Let's see who went for it.

Where do you want to start on this? Guided at 220-230.

£180,000 to start me. 180 I've got. I'm on the way. 180.

185. And 190 now.

195 in a fresh place. £200,000 if you like.

200 I've got. 210 I've got. 215 if you like.

215. 220.

225? I thought you were there.

225? 222 if it helps. 222.

225 I've got. And 8. 228.

228. And 30? 230?

230?

For the first time at 228.

For the second time at £228,000.

Third and final time. You've all had a fair go. Thank you. 228.

That successful £228,000 bid was made by Anthony.

He used to work in IT, but more recently he's got into property renovation.

I met him back at his latest purchase so he could tell me all.

# Hey there, Anthony boy Why are you in such a rush?

# The girl she wants to talk to you Look at him, how he blush... #

-Anthony, congratulations.

-Thank you very much.

-So two properties here!

-Yes, indeed.

-What are you going to do?

-Turn them back into residential properties,

close the doors up, the doorways, and put them back to two.

-What was it that took your eye about these properties?

-First, it's close to where I live

and that makes it easy to come and do the work. I'll do most of it myself.

-You need to get change of use.

-Yes, I've put in the planning application to separate them.

That'll take about eight weeks to come through. That's fine. It's well within the timeframe.

I've put in the building regulations to make sure the council check it's done to the right standard.

It also makes it slightly easier for deciding what to do

because you can do the same in both houses.

So when you've planned for one, you know how long it'll take.

-Are you an experienced developer?

-In 2010, I was made redundant. I was an IT manager.

I've been in IT for 21 years.

It just seemed to me I needed to do something else.

What did I like doing? What can I do? I do like DIY, basically.

I've put in lots of bathrooms and kitchens for family and friends, so it seemed natural.

So not only has he got double the property, but double the experience

as he's done work on houses before. Coupled with his background as an IT manager,

you'd expect efficiency and attention to detail. And that's just what we have here.

He read the legal pack, did his research and was aware that the buyer has to cover the seller's fees

which amounted to £6,000!

Ouch! But Anthony wasn't alarmed. He was a man with a plan.

Generally, I'm just going to do a bit of redecoration, new kitchen, new bathroom,

replace the sliding door and put a new door in there.

It's a big commercial giveaway with that big glass door.

Yeah, that's right. We need to make it look like a residential house.

-How much are you intending to spend?

-I'm going to spend around about £30,000 on the two.

A £15,000 budget per property and Anthony is hoping to have all the work completed in 14 weeks.

Then to free him and his capital up to do something else, he plans to sell.

How much would you like to achieve when you go to sell these properties?

I've been advised they'd be around about £150,000.

Yeah. £150,000 is quite optimistic. I know it's very varied along this street.

Well, one sold in 2010 across the road for 160 and it's smaller with a smaller garden.

The only thing extra it has is parking, but both of these properties have space for parking,

so the buyer could add a garage.

-So you feel very positive about it?

-Yeah, I don't think it's going to be too much of a problem.

-Any chance you might keep them and rent them?

-Only if they don't achieve the right sort of money

or they don't sell. But we'll just wait and see. My initial response is to get them sold, do something else.

-So is this your big, new, future career?

-I wouldn't say that.

-I probably will go back to the IT because that's where I have experience.

-Really?

See how these ones do. If they do OK, then I can take a bit of time and decide what to do next.

But I've got a few years left to work and I need to make sure I'm making some sort of living.

The other benefit of it is every time I do a property I lose about a stone and a half!

That doesn't happen to me! Good luck. I cannot wait to see it and I hope you get the permissions.

-Thank you.

-Thank you very much.

So developing feels like a natural step for Anthony. Maybe he's found his calling.

I'll be interested to see how these houses turn out, but I'm a little bit worried the instant profit

may not be quite there. You can find out if that's the case, if he heads back into IT

and if he loses 1½ stone later in the show.

Coming up: I'm in Shropshire checking out a very small one-bed.

That is pretty much it. What do you expect? It's a one-bedroom flat.

In Kent, did Anthony learn a few lessons about timing when taking on two properties?

There are things that take a bit longer than you think.

-But first, did the plot turn grim near Grimsby?

-The bank who originally agreed to support us

at the 11th hour decided not to.

We're back in South Killingholme near Grimsby, where three brothers made a bid to build on this plot.

On auction day, John and Mike purchased the site for £76,500.

Brother Neil completed the trio.

# To build a home With pictures on the wall... #

The land was in an established residential area, so access to utilities did not present problems.

The only downside was that the site was in the shadow of an industrial plant.

They wanted to build four linked two-bedroom houses on the site, which had planning permission.

Not only did they have the plan down pat, they also had a plan of action.

So what was it that you liked?

The idea of starting from scratch. You get so many old properties with all sorts of nightmares.

With this, you start from a blank canvas.

# This is the industry... #

So this is a dream team when it comes to building,

but a dream can become a nightmare if you don't stick to the original plans.

The three brothers bought the land for £76,500.

They planned to spend a total of £200,000 constructing the four houses

and expected it to take 6-8 months.

We've come back a whopping two years and five months later to see if it's houses or holes in the ground

for these brothers and what took them so long anyway?

# If I could build my whole world around you, darling

# First I'd put heaven by your side

# Pretty flowers would grow wherever you walked, honey

-# And over your head would be the bluest sky... #

-Finally, it's houses, not weeds!

The four two-bedroom houses are mostly ready for sale or let.

It's been a long, hard slog, but they have got there at last.

As we bought the project as a complete package, it included the plans,

so we were unable to make any changes to the design.

The four houses are identical, apart from the end of the row, with a slightly different layout.

On the ground floor, there's a well-proportioned living room with stairs to the upper floor.

The kitchen is light and airy with direct access to the rear garden.

There's also a useful downstairs loo.

Upstairs, there are two double bedrooms - front and back - with a bathroom in-between.

The quality is evident in the fixtures and fittings throughout

and that's no accident.

We always imagine ourselves living in these houses that we build,

so we decided to upgrade the specification and standard.

We don't feel it necessary to sacrifice quality for profit.

But this was a project with architects' drawings and full planning permission in place.

It should have taken six months, but instead it took nearly two and a half years!

The biggest challenge was financial.

The banks who agreed to support it at the eleventh hour decided not to.

It was a national decision, not just directed at ourselves.

But this band of brothers were not going to let the small issue of funding stop this development.

We came up with a successful outfit based in Doncaster who put us in touch with local businessmen

who support developments such as ours for people such as us who were let down by the banks.

The siblings bought the plot of land for 76,500 and their construction costs have climbed to 230,000.

That makes their total investment £306,500 for all four houses.

Will their high quality specification compensate for the delays and the overspend?

We invited two local estate agents along to hear their opinions.

First, the one who saw the site before the build.

The builders have done an excellent standard of finish here

I'm really surprised at the quality of the fixtures and fittings

with the bathrooms and kitchens. Overall, very impressed with the level of finish.

I'm really impressed with the appearance of the development.

The four houses have made a really good impact on the street scene.

I really like the layout of the houses.

They are quite spacious which is quite different from a lot of new-build houses in the area.

I like the fact they've got the off-road parking. They have field views to the rear which is excellent

They would appeal to young families with the garden spaces to the rear.

What could each property achieve if they were sold separately?

I think each individual property should be marketed at £105,000

to achieve approximately £100,000 in this more difficult market.

I would anticipate that each house would sell for around £100,000 in today's market.

That makes a total sale value of £400,000,

meaning a profit of 93,500, minus the usual taxes and expenses.

That sounds good advice.

We have already been offered 110 which we're considering at the moment,

so not too far away.

What about the rental market in this area?

I think if these properties were coming to the rental market,

they should be offered at £495 per calendar month.

In the current climate, the rental market is extremely buoyant

and I would recommend a rental figure of around £475 to £495 per calendar month.

That's not too bad. We've already sought advice in this regard and we've been given a figure of 500

so that's what we'll settle for and that's what we've got at the moment.

# Once bitten, twice shy, babe... #

It's been a long haul for the trio, so is it a case of once bitten, twice shy

or would they do it all again?

We've got some other land for six dwellings that we could start building on,

but we're looking long-term and we've seen some other land which has a lot more dwellings to be put up,

so we're seeking the finance to commence that project.

Close to the beautiful World Heritage Site of Ironbridge Gorge

is the Shropshire town of Telford.

Officially designated a "new town", it was built in the 1960s and '70s

in a former coal-mining area.

It was named after Thomas Telford, the world-famous civil engineer

and one of the fathers of the Industrial Revolution.

The town has all the amenities you would expect of somewhere purpose-built in the last 50 years.

The property I'm here to see is just a couple of miles from the town centre.

Well, amongst other things, Telford is the location of The Wrekin, the smallest mountain in England.

Apparently, from the top, you can see 15 counties

and allegedly, it was the inspiration for Tolkien's Lord Of The Rings and Middle Earth.

Well, this might be Middle England, not Middle Earth, but I too have a quest.

That's to find promising properties and I think I might have just found one.

Well, these 1970s flats have certainly got a lot going for them in terms of location -

great transport links, probably quite easy to maintain

and the property I'm here to see is a ground floor flat at a guide price of 30,000 quid. Let's take a look.

The area outside the flat seems fairly well kept.

That's a promising sign,

although you'd need to factor any communal ground maintenance fee into your costings.

Off-road parking is a definite plus and the entrance to the flat itself has disabled access.

All of that adds to the desirability factor.

So I wouldn't expect too much. It is just a one-bedroom flat.

But what are we going to find?

Toilet there with a bath, which is good.

Down this little corridor, you've got your one bedroom there,

your living room there and then into the kitchen. That is pretty much it.

What did you expect? It's a one-bedroom flat.

But in terms of condition, the kitchen lets it down somewhat.

It needs cleaning up. If you were renting this place out, you could possibly get away with it as it is,

but new kitchen units don't cost a fortune these days, so spend a little bit of money in here,

maybe think about taking down that rather strange and interesting wall and you give the flat a little lift.

I mean, small but perfectly formed is what it is.

# I could use a little love right now... #

Hmm, this place is rather compact and bijou,

but really it just needs a bit of love and attention to bring it up to standard.

Upgrading the kitchen is a must, as is checking the electrics.

It will need to be redecorated throughout, though with new tiling and flooring in the bathroom,

with a bit of elbow grease, the existing suite might suffice.

One reason why ground floor flats are popular is that they often come with their own outdoor space

and this flat is no exception. There's no direct access.

You have to come into the communal area and then out through the door, but it is your space.

The flat isn't big, but this makes a big difference, so big tick.

The garden space may not be massive and it's a shame you don't have direct access,

but any outside space is a bonus.

So, for what was a guide price of £30,000,

it seems to me that this flat could be a wise investment.

But what would a local property expert think?

We asked one to brave the pouring rain...

# Why does it always rain on me...?

..and give us his opinion on the place.

Positive side to the property, it's on the ground floor,

so somebody that can't manage the stairs can access the ground floor.

The downside to this property, I would say if you're an investor and buying this to let out,

what you tend to find is tenants normally change relatively quickly,

so after six months, you'll probably need to get a new tenant as people move on to something bigger,

whereas some of the larger properties, two and three-bedroom houses, tenants stay a bit longer.

Well, you can't do anything about its size.

If it's going to have a fast turnover of tenants, you don't want to be refitting the flat every time.

Even if you bought it for anywhere near the £30,000 guide price, that would eat into any profit.

What kind of returns are likely on a small flat like this?

If this property was to be refurbished,

I would suggest an asking price of between £33,000 and £35,000.

If it was brought up to a decent rental standard,

I would suggest a rental price of £375 per calendar month.

This flat might be small, but as a buy-to-let investment,

it could generate a pretty healthy annual yield.

Clearly, a bit of work needed to sort this one out,

but ground floor flats are always popular and a good location to boot.

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

Lot 65 is a one-bedroom, leasehold, ground floor apartment.

Yes, it does require modernising. So lot 65... Can we start it at 15? 15 bid.

At £15,000.

At £15,000. 16, can I say now? 16, thank you.

At 16. 17? 17. 18.

19. 20. 21.

22.

£23,000. 24.

25.

£25,000 seated second row.

£25,000. 26 anywhere else?

At £25,000 then for the first time.

At £25,000 for the second time.

Third and final time, £25,000...

You bought it. Well done.

'So, for £25,000, £5,000 below the guide price,

'the successful bidder for this one-bedroom flat was 22-year-old Steph.

'She's in the final year of a Business and Economics degree and lives in Telford.'

# So you're living by numbers

# And numbers you answer to... #

'I met her back at the flat to find out why she thought the numbers added up on this property.'

-Steph, lovely to meet you.

-Lovely to meet you too.

-How are you?

-I'm OK. Ish.

-Why "ish"?

I bought a flat. Other than that, everything's cool.

-It's quite a nice flat.

-Pleasantly surprised, yes.

-Why did you want to buy it?

Well, I've had some money for a while that I've been looking for an investment opportunity,

but I didn't think I would be able to buy a property for a good few years yet.

-And I was at the auction and this came up at the right price.

-Right.

-First property purchase then?

-Yeah.

-For you to live in or to rent out?

-I'm hoping to rent out.

-OK.

-Yeah.

I'm hoping to start a portfolio if I can.

'Steph is living at home with her parents and is hoping not only to build up a portfolio of properties,

'but perhaps make it her career path,

'so this flat represents that all-important first step in that direction.'

Why Telford and why this property?

I live in Telford, so locality was the main reason, and this property, purely price.

It should deliver a reasonable return on your investment

and not a whole shed-load of stuff to do to get it sorted.

-Pleasantly surprised, considering I hadn't seen it prior.

-Ah!

-Sorry.

Yeah. Apart from that.

Why hadn't you seen it prior?

I wasn't expecting to buy it at the auction,

then a hand, not my hand, Dad's hand crept up for me.

Oh, it did, did it?

-It did a little bit.

-So you hadn't seen it inside?

-No.

-Had you seen it from the outside?

-No. I'd seen a picture in the catalogue.

-That's all right then(!)

But it wasn't even this flat. It was of this block, but over there

-so not quite.

-Wow!

So...legal pack?

Legal pack? Not so much.

-Steph!

-Sorry. It wasn't completely blind though.

How much more blind can it get? You hadn't seen it, you hadn't read the legal pack.

I was looking at one on the same estate about a few months ago, prior to buying this one.

-I read the legal pack for that one.

-Oh!

-It's the same seller.

So I knew the area, such as mining and...

So it wasn't as blind. Ish.

What about things like community charge or your maintenance charge?

Yeah, because they were in the same one and I was also aware in that pack

that they'll be regenerating these flats which I'll have to fork out for in the next five years.

Any idea what that charge is going to be?

-Just over 15,000 for the whole block

-OK.

-Between six of us.

So it's not too bad. About £2,500.

-But it could have caught you out.

-Had I not known, yeah.

'So it wasn't totally a step into the unknown, but still not really the approach I'd recommend,

'especially since every property is different.

'However, I think in this case Steph has been lucky and uncovered a pretty decent deal.'

-What will you do to it?

-We'll replace the kitchen, tiling in the bathroom, sprucing up,

just making it more desirable on the rental market.

-How involved are you going to get with the renovation?

-Very. I'm happy mucking in.

I'm going to do all the decorating. I'm hoping to learn how to tile.

That's going to be my new skill that I'll acquire.

-Great.

-But anything that professionals need to do, electrics, I can't do myself,

so I'll get other people in for those.

What kind of budget have you set aside?

1,500, I'm thinking. If I have to spend more, I have to spend more, but no more than 2,000.

1,500 quid, including replacing the kitchen, it's going to be a bit tight, isn't it?

-We'll make it work.

-How?

-Elbow grease.

Right. And kitchen units?

-I've already purchased those.

-How much did they cost?

The whole kitchen was £500, including a double oven and a hob. They're only six months old.

-Well done. So that gives you 1,000 quid just about to do everything else?

-Yeah.

-What kind of timescale?

-I'm hoping it's 12 weeks. I'm not rushing it, but I'd like to learn along the way.

-Who's giving you a bit of a guiding hand?

-Family, friends.

They've happily offered their services which I'm going to snap up.

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

-Thank you.

Well, the flat may be small, but it's a great start for Steph's property portfolio

and she seems really excited about sorting it out. Great stuff.

You can see how she gets on later in the show.

They say time is a great healer, but it can also be the enemy if you're up against a deadline.

-So what has happened to those properties?

-Let's go back and find out.

We return to Chatham in Kent now where, earlier, I met Anthony.

He spent £228,000 at an auction on this, what looked like two standard semis.

But it was being sold as one lot as it had been converted too and used as office space.

Anthony had previously worked in IT, but was now making headway in property renovation.

-So is this your big, new future career?

-I wouldn't say that. I will probably at some point go back to IT

-That's what I've got huge experience of.

-Really?

-Yeah.

I'll see how these ones do and if they do OK, I can take a bit of time and decide what to do next.

The other benefit of it is every time I do a property, I lose about a stone and a half.

That doesn't happen to me. That's not fair!

Well, let's hope this renovation has been worth the, um...WAIT

as we're back five months later

to see if Anthony found splitting this property in two again twice as nice or double trouble.

The left-hand side of the property is certainly feeling a lot more like a home now

as not only did Anthony split the properties into two,

but has renovated and redecorated throughout.

Is the right-hand house looking just as swell?

What was one large and rather cluttered office space

is now two separate and really lovely homes inside and out.

Outside, we've put in new deckings, new patio doors, re-laid turf here

and made an allotment area over there where we had two greenhouses previously and a shed

which we've given to charity because most people don't really want something like that.

We've also separated the property with a nice, new fence

and put another deck and patio window on the other side, so both houses have a similar look and feel.

Anthony has clearly put a lot of time, thought and effort into this project. The results are fantastic.

His original timescale was 14 weeks

and that has only been pushed slightly to 16 to get both completed.

Now both properties are finished, is he tempted to stick with renovation, rather than IT management?

I haven't really decided. I really do this as an investment.

If the opportunity arises, I will do another one of these.

If I see a good job, I'll apply for it. Luckily, I'm in a position to do that.

# Well, I'm a lucky man

# With fire in my hands... #

But there was one area where Anthony found he wasn't in luck.

Although the practical task of dividing the property was easy,

dealing with the paperwork and red tape around changing its use back to residential

wasn't quite so straightforward.

The split of use and the subsequent work with building regulations and things like that

is a lot more work than I imagined it would be.

You have to be aware of that when you go and buy a house at auction for this sort of purpose.

There are things that might be a bit of a challenge and take a bit longer.

Wise words indeed, but Anthony doesn't seem to have been too fazed

and is definitely pleased with the end result here.

He aimed to spend £30,000 in total on the work.

How much did it all cost in the end?

About 29,500. The actual budget worked out exactly as I planned. I didn't use any contingency.

So he didn't lose a penny from his budget, but did he manage to lose a few pounds?

I did lose a little bit of weight. I did lose a stone and a half. About three months' physical work.

It just shows if you do something like that, you will lose weight. It works well for me.

Oh, jealous! But back to brass tacks.

With the purchase price of £228,000, plus £6,000 to cover the seller's fees

and £29,500 on the work,

Anthony's total outlay here is £263,500.

We invited two local estate agents to view both properties,

one of whom is on his second visit.

They've been done to a very high standard. I looked at them the first time.

It's surprising how big the rooms are

now the cupboards aren't here any more. The rooms are lovely sizes.

The focal selling point of both houses is the gardens.

The larger plot will appeal to the keen gardening enthusiasts.

The other one is a little less maintenance.

As the property on the right has a slightly larger plot, it may be worth more when it comes to selling.

What would the estate agents market them for?

I would sell next door for 150,000 and I would sell this one at 155,000 to 160,000.

Both properties are unique in comparison to what's available in the local area.

I would aim to achieve 155,000 for one property and 160,000 for the larger plot.

That's really in line with what I was expecting.

Yeah, very good.

Anthony could make a potential pre-tax profit

of between £41,500 and £56,500 in total here

and, in fact, has already sold one of them.

If he were to opt for the rental route on either though, what could that achieve?

I think they'd rent very easily and I'd be looking to achieve around £800 per month for both properties.

If he struggles with selling them at the price he needs,

he would rent them out very easily at between £750 and £795 per month.

Yeah, that's again the expectation,

but if I was looking for rental properties, I wouldn't be buying these sort of properties

because you can get a better return off smaller properties in this area. I'm looking for the sale.

Not even a yield of around 7% is tempting Anthony towards rental,

but given the potential profit on selling, I don't blame him.

Don't you love it when a plan comes together?

The project's done exactly what I wanted it to. I was on budget with my spend.

I've already sold one property for the valuations.

Yes, so it's gone exactly as I wanted which is rare, I suppose, but it worked well for me.

It was in the Shropshire new town of Telford

that we first came across a one-bedroom, leasehold ground floor flat with its own garden.

Although slightly tired, this flat, built in the '70s,

really only needed a bit of modernisation to get it back up to standard.

That was a pleasant surprise for Steph, a Business and Economics student who lives in Telford.

She purchased it for £25,000 at an auction with little or almost no study of her subject matter.

-You hadn't seen it inside?

-No.

-Had you seen it from the outside?

-No. I'd seen a picture in the catalogue.

-That's all right then(!)

-It wasn't completely blind.

-How much more blind can it get?

You hadn't seen it, you hadn't read the legal pack.

I was looking at one on the same estate about a few months ago, so I read the legal pack for that one.

-Oh.

-It was the same seller, so I knew areas such as mining and...

So it wasn't as blind. Ish.

Hmm, Steph, OK. Ish.

At the ripe young age of 22, Steph has just begun to build her portfolio

and you have to admire her, even if she is breaking some rules.

She wasn't daunted by the prospect of hard graft either.

With the help of family and friends, she was planning to get down to the work and learn some handy skills.

She was already ahead of the game as she had bought a kitchen from the internet

for an amazing 500 quid.

That was a considerable chunk of her £1,500 to £2,000 budget.

Her hope was that the flat would be ready to rent out in 8 to 12 weeks,

but she was prepared to take her time if she had to.

Now, six months later, how did our young portfolio apprentice do?

# Can you see my vision

# Of a red-hot summer in white?

# When love was the feeling

# With no indecision

# We were turning that key inside... #

Along with a redecorated and refreshed lounge,

the bedroom has also been given a makeover and a new carpet fitted.

But it was the kitchen that was in greatest need of updating.

# Can you see my vision...? #

This is the kitchen. This is my bargain off the internet which cost me £500. Dad fitted it.

I'm really happy with how it looks. My boyfriend tiled with the metro style of bricks.

The main issue we had in here was the ceiling.

We had a leaky ceiling which needed replacing.

That took a lot longer than we hoped which put back our timescale quite a lot, but I'm happy with the results.

In fact, it was the problem with the kitchen ceiling, along with having to finish her degree,

which were the main reasons for her timescale slipping.

With the kitchen sorted, it was then just a matter of giving the bathroom a new lease of life.

This is the bathroom. We've kept the suite the same just to keep the costs down,

but spruced it up with new taps, a shower. It's been re-tiled, floor tiles.

It's a lot more modern, but without spending the Earth on it.

Steph was hoping to learn to tile on this project, so is the tiling in the bathroom her handiwork?

I did end up getting somebody else to tile due to timing

and the fact that it would have taken me weeks, but maybe next time.

# Everybody's gotta learn some time

# Everybody's gotta learn some time... #

OK, so tiling is a skill for her to learn another time,

but as this was her first project, what did she learn about property developing?

This one was always going to be a steep learning curve and it has been,

steeper than I was possibly anticipating.

Most of the decorating in here was done by myself.

I've had help with the bits that I wasn't so good at,

but I've thoroughly enjoyed it and I've learnt lots in the process,

so hopefully, the next one will be a bit easier.

It was a steep learning curve in terms of the practical work,

but I'm sure with her background, the financial side would have been more straightforward,

so did she keep to her £1,500 to £2,000 budget?

We are at the top end. We are at the 2,000 point.

But I think the money has been well spent in the added extras,

just to spruce up the place and make it a little bit nicer.

A £2,000 spend on top of the £25,000 purchase price

will take her total outlay on the flat to £27,000 without costs or fees.

So will all this add up to be a healthy investment?

What do two local estate agents think of her revitalised, one-bedroom flat?

It's contemporary, light colours, entirely appropriate for the market.

The changes that have been done to the flat are a very good standard.

Everything is all very neutral.

It's nice to see laminate flooring in most of the rooms.

The kitchen is modern, exactly right for the younger buyer or tenant.

Steph planned to put the flat on the rental market,

but how would her £27,000 investment fare if she wanted to sell it?

If this was to go on the re-sale market, the most you could ask for is around £35,000.

If the owner decided to sell, they'd be looking around the £30,000 mark.

That's what I expected. I knew there wasn't any money in it for re-sale. At the moment.

As Steph says, there's not really much to be made at present on the re-sale market.

It may be a pre-tax profit of between £3,000 and £8,000,

but it's rental values that are crucial here.

To put this on the market for rent, I'd estimate you'd get £375 per calendar month.

The property should rent fairly easily at about £375 per calendar month.

That's more than I expected. I based my figures on 350, so that's a bonus, yeah. I'm happy with that.

£375 a month rental would generate an annual yield above 16%.

You don't have to be a graduate in Economics to realise that's a pretty high return.

So how does Steph reflect on her first ever property development?

I'm pleased with how it's gone and, hopefully, it's the first of many.

Join us next time for more action from the auction rooms all around the country.

-Yes, here on Homes Under The Hammer. Goodbye.

-Goodbye.