Episode 2 Homes Under the Hammer


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Episode 2

Property redevelopment series. Martin Roberts and Lucy Alexander visit a flat in Lewisham, south east London, and a mid-terraced house in Gilesgate, County Durham.


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-Hello and welcome.

-For many, buying at auction offers the chance

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to get hold of properties that need a lot of work.

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People like to put their own stamp on what they buy

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and hopefully make a bit of a profit along the way.

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And you can often manage that if you buy your home under the hammer.

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We love the thrill and the excitement of an auction room.

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You can sometimes sense the hope and frustration in the air.

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You never know quite how it's going to go until the very last second,

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

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In Lewisham, south-east London, there's a battle to combat

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the mould creeping through this top-floor two-bedroom flat...

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And another battle, this time against the elements.

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Could the weather be getting the better of this

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mid-terrace in Gilesgate, County Durham?

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These properties have been sold at auction.

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We'll find out who bought them and what they paid for them

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when they went under the hammer.

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GAVEL BANGS Sold.

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This is Lewisham in south-east London.

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It's an area that could be described as up and coming.

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So, investing your money in Lewisham before prices start to escalate

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could be a wise move.

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Now, the property I'm here to see is on this tree-lined

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residential street and it's a two-bedroom first-floor flat

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which had a guide price of 130,000.

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Let's head up those steps and see what we've got to greet us inside.

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There are two other flats in the property

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and the big back garden has been divided into three,

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so that each flat has some valuable outside space.

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Once through the front door, a second door gives

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access to the flat I'm here to see at the top of the property.

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What I love about these properties is the feeling of space.

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Look, that's double, triple, quadruple height.

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You really have got a lot of space all around you.

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It needs a lot of work, though. Bathroom, a complete refit.

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Same goes with the kitchen.

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You've got a little window over here with a nice view of the garden.

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But looking around, you know, you are going to need to spend

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some time and energy, and there is mould, damp...

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I'm not sure what it is.

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It's not looking fantastic and it is worrying me.

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I'm going to investigate further.

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Well, there's me thinking the mould in the kitchen was bad -

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have a look at this! It is everywhere.

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All over the walls and the ceiling,

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even the back wall. It's dripping down.

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Now, I'm not sure whether there's been a big leak.

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I think it's condensation,

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but it's definitely worth getting in a specialist to sort that out

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because you wouldn't want to buy this at auction to later on

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find there are whole heaps of problems with this property.

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The two bedrooms don't seem quite as badly affected.

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The large double and the single both have high ceilings that I love,

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and I love that original woodwork that remains in both the rooms.

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The only downside is that both bedrooms overlook the road,

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so that could be noisy.

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I think I've found the solution and it involves

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the living room, which is currently serving as a third bedroom.

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Through here, we've got a fantastic space. Look at this.

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It really is a wonderful room.

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Again, one of the bonuses with this flat is the space you have.

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I'm just wondering, is it worth moving that kitchen into this room,

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and having a kitchen, little dining area, sitting room,

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and then you could call that bedroom number three?

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That is food for thought.

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Another ingredient that might be worth thinking about is the loft.

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This is a leasehold property, so it's vital to know

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whether you would own this as well.

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If it is included for that guide price of 130,000,

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you could really add value if you get a room up there.

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Outside, the property looks to be in pretty good condition.

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The bit of garden allocated for this flat is overgrown

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and hidden right behind the shed.

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Be prepared to get your boots on to clear it before you can sit

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and enjoy the lovely sunshine.

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Could the new owner of the flat be about to clean up,

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or will they end up stuck in the mud with this lot?

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We asked a local estate agent to come and have a look

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and get his opinion on the flat.

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I think the property needs a lot of work, it's got a lot of damp.

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Needs a new bathroom, a new kitchen, new flooring, quite a lot to be done.

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OK, so let's talk figures.

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How much could the flat be worth after a refurbishment

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if it remained a two-bedder?

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When this property is renovated, I think it could reach

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a maximum of around £230,000.

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This flat is a great size

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and you might even be able to squeeze in a third bedroom.

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However, I still have my concerns, as it needs plenty of updating

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and there's that worrying mould to consider.

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Let's head to the auction and find out who was prepared to take it on.

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I move on now to Lot 133.

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It's a two-bedroom raised ground floor flat, in need of updating.

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It's got its own section of garden.

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Who'd like to get me started on this? What about 150?

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OK, we'll start there, 150 I've got. Thank you.

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151, 152, 153, 154, 155.

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Considerable interest at the auction,

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and we rejoin the bids at £180,000.

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180, 181, 182, 183, 184.

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185? Yeah? 185, 186?

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LAUGHTER

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Anybody else? If not, 185 for the first,

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185 for the second,

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185 for the third and final time. Are we all done?

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-GAVEL BANGS

-Sold, 185, well bought.

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That successful bidder, paying £185,000, was Grant.

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He and his partner Dawn have bought the flat as an investment.

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I met them back at the flat to find out more.

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Dawn and Grant, congratulations. I want to know the whole story

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-and how you've ended up with this property.

-It was our first auction.

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-Yep.

-Which was interesting. We'd had about five properties on the go

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that we were looking at on the day. This one ended up

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a lot more over guide, but it had potential and I liked it.

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Are you a property developer?

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Is this something you've been doing for a long time?

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We started this a year ago, finished a place down in Hampshire

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in Liss Forest, which is just under offer now.

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A lot of work. Moved kitchens, bathrooms, the lot, so...

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What was it that you did before you started the houses?

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It's always been project management but in banking and insurance

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and financial services.

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Why did you want to stop that and move into this?

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-Just a complete lifestyle change.

-Yeah, just a complete change

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and just potentially do something different.

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He's much happier. Although he's using the same skills,

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if you will, project management, but it's obviously a different area.

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Plus, you are your own boss.

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It's also planning, and having a proper plan,

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whether it's finding new people if someone doesn't turn up...

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What's it like living with him? Because project-managing,

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making sure you're on time... I mean, is he quite strict?

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-Spreadsheets!

-SHE LAUGHS

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-There are spreadsheets.

-Yes.

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You've got to laugh. Poor Grant!

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He doesn't stand a chance between us, does he?

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I wonder WHY the couple have bought the flat.

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Is the intention to sell or rent?

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We'll put it onto the rental market. That's the plan.

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So are you going to try and reconfigure the space,

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or leave it as it is?

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The bathroom is quite small.

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There is a partition wall between that and the kitchen

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which we'll take down anyway cos it's rotten,

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so there might be configuring to be done there.

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I've seen people move the kitchen into the lounge,

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and then create a third bedroom. You could have that at the back.

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-That could work, yes.

-That could work, just...yeah.

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Hopefully the plumber can work the pipes.

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We'll have a think about it.

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Grant intends to take on a lot of the work himself

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using the skills he learned on his previous project.

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Dawn will provide crucial backup,

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helping to source materials and tradesmen.

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Now to tackle the problem that could scupper all those well-laid plans.

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I have noticed a lot of black mould all over the walls.

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What do you know about it?

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We had a surveyor come in recently

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and he confirmed it was just condensation.

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He tested it with a damp meter and the walls aren't damp.

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So it's just a bad case of condensation.

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How much does Grant think the work is going to cost?

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We've said 20,000 to do it,

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How long do you think this project, start to finish, will take you?

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-Erring on caution, probably three months.

-Yeah.

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Guys, congratulations. It's been lovely talking to you both

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-and I can't wait to see what you do with it!

-Thanks.

-Thank you.

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Will we come back and see a spacious two-bed,

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or will they have squeezed in that third bedroom?

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You can join me later on in the programme to find out.

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We're in the lively and historic university city of Durham

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in the North-East of England.

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The property I'm here to see is a 15-minute walk away

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from the city centre, in a suburb that retains a lovely village feel.

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So this is Gilesgate, very close to Durham city centre.

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And more importantly, to its student population.

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Yes, we are in Studentland, which makes this property

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potentially very interesting. It's got three bedrooms,

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it's terraced - let's take a look.

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The guide price in the auction catalogue was £49,950-plus.

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OK. Well, through the front door

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and straightaway I'm thinking "Mmm, yes, bit of work required."

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Look at that fuse board. The old fuses...not good.

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So apart from electrics, what else is required?

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Well, down here, glancing into that downstairs room

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which would have originally been the lounge, you can see

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that it has already been used, I think, as some kind of a let,

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because that is laid out as a bedroom.

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A fairly untidy one,

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but a bedroom nevertheless.

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But this room, this is a very large kitchen/living area.

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This is an ideal room as a kind of common room -

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it has a cooker in here.

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It carries on through the back - a bit of a utility area

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and on to the loo, and then upstairs to the bedrooms.

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Erm... Oh, that's nasty.

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Yes. It was all looking quite good until that.

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Moving swiftly on. It's great.

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Well, maybe not. But I'm prepared to give it time to grow on me.

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The mould certainly has.

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There is significant damp here.

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I think our old friend the flat-roof extension is at fault.

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I need to check outside.

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Well, when you're looking at properties,

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it's really important to look at them from all angles.

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If you head out the front here, and take a look at the roof,

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you can see something which could be a problem.

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You can see the tiles look like they've got some problems with them

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and if you look at the chimney stack,

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again, the pointing on that looks like it's in need of some attention.

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Now, any work on the roof is going to need scaffolding

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if it's to be done safely, and that is going to be expensive.

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So, as I said, whenever you view a property,

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make sure you come outside and give it a good look.

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If you're going to rent this out as an HMO

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- that's a house of multiple occupancy -

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then among a lot of other regulated issues, like fire alarms,

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gas certificates and so on,

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HMO inspectors would look at the suitability of the rooms.

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At the front of the house, there is a good-sized double,

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but the single room is small.

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The third at the back is very small,

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and only has this skylight.

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Would they all qualify as habitable, lettable rooms? I'm not sure.

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We invited a local estate agent along to find out what

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he would advise for this property

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that was guided at £49,950.

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If you were to look at owner-occupier values, a resale price could be

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somewhere in the region of £90,000 as a two-bedroom property.

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If it were to go on the open student market for sale, you would be able

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to achieve somewhere in the region of £110-£115,000.

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On a family rental basis,

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I would suggest somewhere in the region of £500 per calendar month.

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On a student market, we rent on the basis of £80 per room per week,

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which would equate to £240 per week,

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a total of £960 per calendar month.

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Don't forget that although this might sound like a no-brainer,

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you have all those regulations to comply with for an HMO let,

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and also, students don't rent for 52 weeks a year.

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Well, this is a good-sized house with masses of potential.

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Yes, there is work to be done,

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but get it right and this really could be a bit of a gold mine.

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

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We're going to go to a three-bedroom mid-terraced property.

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It's got the gas-fired central heating, it's got the double glazing.

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We've got it advertised with a price guide of 49,950 plus.

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Can I ask for 50,000?

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I'll take £46,000. 47 anywhere else. One bid on the left-hand side of 46. Do I have 47?

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47 on the telephone. 48. 48.

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49. 50.

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Shaking your head.

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I'll take 500 if it will help.

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49 and a half. Do I have 50,000? 50,000 on the telephone. 50,500.

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Definitely shaking. Going once at 50,000.

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Sorry. 50,500. 51.

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51 bid. 51 and a half. 52.

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52 and a half bid. 53. 54.

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54 bid. 55.

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55 bid.

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55 and a half. 56. 56 bid.

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56 and a half. 57. Do I have 57 anywhere else?

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Going once at 56 and a half, going for the second time at £56,500.

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Sold to the gentleman standing.

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That final bid of £56,500 was made by Andre

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and Hillary here with daughter Sophie.

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I met them to find out more.

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-Hillary, Andre, lovely to meet you both. Congratulations.

-Thank you.

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-Good place.

-It's got character.

-Tell me why you wanted to buy it.

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Sophie is studying philosophy at Durham University and is

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renting a house a couple of streets away.

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She thought this might be a good area to buy in. We have let out houses before.

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We have done them up and let them out, but not to students.

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-Right. You bought it for your daughter?

-I want more rent than that!

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-You are going to be ruthless, are you?

-We're not ruthless.

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Durham I really like and it would be

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an excuse to spend more time in Durham.

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And Sophie could help us do this up.

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-It's more than just a property? It's a lifestyle decision.

-Yes.

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-Tell me about you two. What do you do?

-We teach at York College.

-Great.

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-Art and Design.

-Fantastic.

-We've been teaching life drawing the last couple of days.

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-Life?

-Life drawing. Nude model.

-This is something different, doing up properties.

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I would have thought you'd be able to bring some of your art

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and design into this.

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-Do you want a mural on the walls?

-That would be good.

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In our house at home he has painted lilies on doors and on the walls.

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Good. I'd be disappointed if you don't. Make a feature of it.

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It makes a change from magnolia. But no life drawing please, we're British.

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But with Sophie studying here at university

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maybe this could be her next student pad.

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-She could be living in this next year?

-She could. She could.

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-If she pays us enough rent.

-Come on. It's your daughter.

-This is business.

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I think he's joking.

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They have a budget of £7,000 set aside for the project

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-What are the plans for it?

-The roof at the back probably needs replacing.

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-The roof needs a good looking at.

-Roofs can be expensive.

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-You could blow seven grand on the roof.

-I don't think so.

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We have actually got some quotes and it won't be that much.

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-Don't worry.

-We need to check the boiler out. We need to check the electrics.

-Yes.

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The last house we did a heck of a lot of work.

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But I wouldn't want to get up on a roof.

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A wise decision. Some jobs should be left to the professionals.

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The couple are hoping to have the house ready in about six

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months, in time for the next student academic year.

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As they both teach, they'll have time off in the summer to do some

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finishing touches.

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It could work out just fine.

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What are you most looking forward to?

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The point where the roof is done and all the major stuff's done

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and we can just paint and make it look nicer.

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Listen, lovely to meet you both.

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I'm exhausted after that interview. Good luck with it.

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-Thank you.

-Thank you.

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And breathe.

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Wonderful.

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Andre and Hillary have got themselves a great buy here.

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The charming thing is, I kind of don't think they really realise

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quite what a fantastic investment it is.

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I can't wait to see how they go on sorting it out.

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Will there be a special mural painted when we get back?

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Oh, yeah, and will she end up on the roof? Hopefully not.

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You can find out later in the show.

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Now, finding good tradesmen is often the key to getting a property

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done up well and on time.

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But some people choose to do it themselves to keep the budget down.

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So, have our buyers been getting stuck in or just stuck?

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Let's find out.

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Lewisham in south-east London has begun attracting buyers who have

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spotted that it's still a little more affordable than its neighbours,

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even though it has good train access to Docklands and Central London.

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Earlier in the programme, on this tree-lined street,

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the two-bed first-floor flat in this property was

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bought for 185,000 by Grant and his partner, Dawn.

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The intention is to, having bought it and renovated it,

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put it onto the rental market. That's the plan.

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The most obvious issue about this property was that horrible, black

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mould everywhere, but I wondered what else they were going to tackle.

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So, are you going to try to reconfigure this space

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-or leave it as it is?

-The bathroom is quite small.

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There is a partition wall between that and the kitchen

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which we'll take down anyway because it's currently rotten.

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Potentially there could be other changes. I don't know.

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They'd set a budget of 20,000 and hoped to have the flat ready

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to let in three months.

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It is now four and a half months later and we're back.

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Wow. The flat has really undergone some major changes.

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The staircase now welcomes you into this flat and the beautiful

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open-plan kitchen/living area is at the front of the property.

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They removed the walls that had formed the two front bedrooms

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and this lush, light room is the result.

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But where did the two bedrooms go?

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Well, the former kitchen has become one, as I suggested, and with

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the kitchen relocated to the very front of the flat, the middle

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room that I thought would make a kitchen-diner is now also a bedroom.

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And what about that black mould? Was there any damp? What was the cause?

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It was literally just condensation.

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All the rooms were locked up, all the windows were locked up,

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so there was just moisture everywhere.

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It was pure condensation.

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Following the expert's report, they cleaned the mould

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and then replaced a lot of the ceilings anyway.

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The flat had new fire doors installed,

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plus a replacement boiler,

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and the flat roof over the dormer window's been fixed.

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Grant has been on site every day,

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project-managing the team that he's employed,

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and he's been doing a lot of the hard work himself

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to reduce the costs.

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The loft space is jointly owned by all the flats in the property,

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so Grant and Dawn couldn't make use of it for a third bedroom.

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Outside, the overgrown garden has been partially cleared,

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and money is being included in the budget to finish the job.

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Talking of funding, how did the initial 20-grand budget fare?

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We've run over - we're ready 4,000 over,

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so we're looking at 24,000.

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With the 185,000 they paid at auction,

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it takes the total investment to £209,000.

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And it sounds like the original plan to rent the property

0:22:060:22:10

-has now changed.

-We ideally want to sell it.

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We don't want to keep it as a rental property.

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We would like to just take the profit and then move on to the next one.

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But will there be a profit?

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Don't forget, they paid 55 grand over the guide price,

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and they've gone over the renovation budget.

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Not by a drastic amount, though, but it all adds up.

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How much do the experts think the flat could now be worth?

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If I was to put this property on the market, I'd hope to achieve

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£255,000 to £260,000.

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If I was to put this property on the market today,

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I would put it on for £260,000.

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Well, a possible profit of £46,000 to £51,000 before taxes

0:22:490:22:55

and expenses, if they were to sell.

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If I was to put this property up to rent,

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I would expect it to achieve £1,200 per calendar month.

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If I was to put this property on the market today,

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it would achieve £1,200 per calendar month.

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And that would generate a yield of nearly 7% if they do decide to rent.

0:23:090:23:14

This has been the second property that the couple

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have invested in, after Grant's career change.

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So do they see this as a sustainable business model?

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We'd need to be pushing three a year.

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Right now, it's one to two.

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If we can do three to four, that'd be great.

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We're now returning to the city of Durham in the north-east

0:23:400:23:42

of England where, earlier in the programme,

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in the suburb of Gilesgate, this three-bed semi was

0:23:440:23:48

bought for £56,500 by art tutors Andre and Hillary.

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Their daughter, Sophie, is a student in Durham,

0:23:540:23:57

and she persuaded her parents that this would be a good place to

0:23:570:24:00

add to their portfolio.

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We have let out houses before, done them up and let them out,

0:24:030:24:06

-but not to students.

-You bought it for your daughter then, or...?

0:24:060:24:09

Well, I want more rent than that, so...

0:24:090:24:12

-Oh, you're going to be ruthless, are you?!

-No, we're not ruthless!

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The couple had a budget of £7,000 and hoped to have the property

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ready for the next academic year in about six months.

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Well, it's now ten and half months after our first visit

0:24:250:24:27

and we return to meet the family again.

0:24:270:24:31

The former kitchen at the back has been cleared

0:24:340:24:36

and the room is now a living area once again, because the

0:24:360:24:40

kitchen has been relocated into the utility room

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in the rear extension.

0:24:430:24:45

You still have to go through the kitchen to get to the bathroom

0:24:450:24:49

where the suite has been retained and new flooring laid.

0:24:490:24:53

But the plans for the property have taken a detour.

0:24:560:24:59

Well, when we originally bought the property

0:24:590:25:01

we planned to rent it to four students,

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and that all looked great, and then, we found

0:25:040:25:07

out that there are HMO regulations which mean room sizes have to

0:25:070:25:11

be a specific size in communal areas, so, in the end,

0:25:110:25:15

we realised that we couldn't do it, even if we shifted walls

0:25:150:25:19

and sorted things out.

0:25:190:25:21

We ended up having to keep it as more of a family home,

0:25:210:25:25

and we're actually renting it out to a couple now, which is great.

0:25:250:25:28

Yeah, and they are lovely, so, I feel good about that.

0:25:280:25:31

# Gonna make you feel good Gonna make you feel good. #

0:25:310:25:37

It means upstairs

0:25:380:25:39

the three bedrooms have remained in their original configurations,

0:25:390:25:44

decorated, and the damp doors dealt with.

0:25:440:25:47

Downstairs, the living room has been returned to its original use.

0:25:490:25:54

But treating the damp in the former kitchen

0:25:540:25:56

threw up some unexpected problems.

0:25:560:25:58

Well, when we came to this wall, we had real problems with the damp.

0:26:000:26:05

There was poor guttering and it was letting in a lot of water,

0:26:050:26:08

the slates on the roof needed sorting.

0:26:080:26:12

There was also another problem - there were some units here

0:26:120:26:15

and when they took them out, they found some dry rot.

0:26:150:26:18

That had to be sorted and that was quite costly and time-consuming.

0:26:180:26:21

The work took longer than expected,

0:26:230:26:25

but with Sophie's help, they did a lot of the decorating themselves.

0:26:250:26:29

Time to "brush up" on the budget.

0:26:290:26:31

Did that stick to what it said on the tin?

0:26:310:26:34

Well, I think we originally estimated about 7,000,

0:26:340:26:37

but with solicitors' costs, auction fees, unexpected things that happened like the dry rot, the roof,

0:26:370:26:43

it ran to about 11,000 at the end.

0:26:430:26:46

With the 56,500 they spent at auction,

0:26:470:26:50

it takes the total investment to 67,500.

0:26:500:26:55

Time to see what two local estate agents think of the finish

0:26:550:26:58

-they've achieved.

-I think it was a good idea not to pursue

0:26:580:27:01

the student route for this property.

0:27:010:27:03

The sizes of the three bedrooms upstairs would always

0:27:030:27:05

make it difficult for student occupation.

0:27:050:27:07

Overall, the property is deceptively spacious.

0:27:070:27:10

I think the property could be improved

0:27:100:27:12

by refitting the kitchen and also the bathroom.

0:27:120:27:15

Could the property be worth more than the £67,500 invested?

0:27:150:27:20

In the current configuration for the property,

0:27:200:27:23

I'd recommend an asking price in the region of 80-£85,000.

0:27:230:27:26

I'd currently value the property at £75,000.

0:27:260:27:28

That valuation range for the current three-bedroom configuration

0:27:290:27:34

would generate a profit of £7,500-£17,500

0:27:340:27:38

before taxes and expenses.

0:27:380:27:41

Interestingly, both agents agreed the rental income would be

0:27:410:27:44

£450 per calendar month

0:27:440:27:47

in its current configuration - a yield of 8%.

0:27:470:27:50

And Hillary and Andre are achieving a slightly higher figure.

0:27:500:27:54

They haven't added a student let to their portfolio.

0:27:540:27:57

I wonder if they'll be trying again.

0:27:570:27:59

All the complications have made us think it is perhaps a little bit

0:27:590:28:03

harder renting to students than you actually first think.

0:28:030:28:06

Well, that's it for today.

0:28:110:28:12

Join us next time for more Homes Under the Hammer.

0:28:120:28:15

-We'll look forward to seeing

-you then. BOTH: Goodbye.

0:28:150:28:17

Martin Roberts and Lucy Alexander visit a flat in Lewisham, south east London, and a mid-terraced house in Gilesgate, County Durham.

Martin and Lucy find out who bought each property and what was paid at auction.