Episode 6 Homes Under the Hammer

-Welcome to the show.

-Despite all the doom and gloom,

the property market is still a tempting place to invest your money.

Yes, and if you are cautious and do your research,

there are still bargains to be found buying your home under the hammer.

Now, if you are looking for variety

and good value, then the auction may be for you.

So, here are the properties that lured our buyers on today's show.

Property development is unpredictable but, in Kent,

confidence seems high.

I feel the risk of us losing money here is small or non-existent.

And, in a Stoke three bed with huge problems, well,

let's just say a bit of luck might help.

I was going to say, "Touch wood," but there's none left, is there?

These properties have been sold at auction.

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

when they went under the hammer.

Sold!

We are in the Kent town of Chatham.

This part of town is all very suburban and leafy.

You've got a kids play area and bowling green over there.

A school just down the road and, um, a graveyard to my left.

Now, that will put some buyers off,

although the way I look at it is that you've got a quiet,

well maintained space right next door to your home.

Because the house is just here.

It's got three bedrooms and a guide price of 180-185,000.

# All I want is a quiet place to live. #

Intriguingly,

the property lot comes with an extra little annexe building.

But more of that later.

I'm not expecting loads of hidden features in this one

due to the period of the property. But look at all this space. Wow!

Really nice, wide hallway.

And a rather luminous green kitchen, don't you think?

But it's a great area, it overlooks that pretty garden.

You've got a second reception room here which of course you could knock

these two into one and have one big kitchen, open plan breakfast room.

Wonderful for families.

And then you've got the sitting room at the front of the property.

You've got to get rid of these horrible polystyrene tiles,

get them all down, they are a fire hazard.

But my first impressions of this property? I really, really like it.

So far, no old world charm worth keeping.

But the two bedrooms upstairs are also a good size.

The bathroom and separate loo are pretty dated.

Now, I said there were two bedrooms, but there is a third room up there.

I've always wanted a property with a pool.

But this isn't exactly what I had in mind.

How is this for an added bonus?

I bet they were CUEING up for this one.

# I need a hot shot... #

Well, it's worth remembering that anything inside the house

when the hammer falls at auction is yours.

So, that means this pool table as well.

Although I think there is a better home for it. In the little annexe.

Wow! This is brilliant!

As a mum, straightaway I'm thinking, kids playroom,

my children would love this.

They would be getting that pool table straight into this room

for starters.

But this will certainly add value to a property like that.

And of course, don't forget, you could even

rent this out as a separate entity entirely.

This is a decent sized plot and I'm wondering

if you could make more of it.

How about building a double height extension to the left,

with the garages extending to the right where the walkway is

and splitting the property in the middle to create a pair of semis?!

I have seen it done before, very successfully.

And it could be a way of increasing your return.

Of course, it would all be down to planning.

And whether the numbers stack up.

All in all, I reckon for the £180-£185,000 guide price,

there are some really interesting possibilities here.

What does a local agent think of this property?

It's got everything it needs.

I don't think you need to go into the building side of things.

I think it's more cosmetic, get it tidied up, get it nice,

get it ready and sell it.

I honestly believe that if it's done to a good standard,

you could command £275,000 for the whole lot once done.

And what if it was put on the rental market?

I believe that you'd get between £950 and £1,000 per calendar month.

This isn't a standard suburban three bed house.

I think it's an exciting opportunity to do something different

with all the added extras you have here.

Or, if that doesn't appeal, refurb and sell on for a decent profit.

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

Lot, 13, detached house for improvement.

Start me where you will, 170 will get it on the way.

£170,000 bid on my right. I have 170, I have 172. I'm obliged.

172. And five. 175, and seven. And seven. 178, I'm obliged.

178 and nine. 179, thank you. 180, in the front. Fresh place.

181 sitting down, 182. 182 and three.

And five. 187. 190.

192, thank you, ladies. 195. 197 I am bid. £200,000, may I say?

198. 199 for the ladies if you like, 199 may I say?

First-time then at 198. 199 I'm bid. 200 if you like. 200 I've got.

At £200,000 I've got for the first time. 200,000 for the second time.

Third and final time to the gentleman at the back for the third

and final time at £200,000, you've got it, sir. Well done.

And that final bid of £200,000 was from Steve on the left.

And his business partner, Andrew.

The pair have been working together developing property

for about a year now.

With Andrew the builder, on the right, originally from Poland

and Steve the spreadsheet and money man.

Steve and Andrew, congratulations.

So, how did you guys end up in Chatham?

Well, we came here via the auction room.

Looking for a house to do up

and we were struggling with the estate agents.

So, we thought we'd look at the auction route.

What I love about it of course is that little annexe.

That is like a real bonus to this property.

Yeah, that's fascinating

because in the auction catalogue there was no sign behind the hedge

of either the garage on one end of the house or the link

between the pitched roof annexe and the main house.

We really think we can do something with that.

I think you have really got to convert that into some

sort of living space. Granny annexe, Nanny annexe, playroom.

What about the sort of uncovered... Well, it is covered, the walkway,

but it's very open to the elements.

Would you try and make that an integral part of the property?

What we'd really like to do is turn the front door to face the front.

So, put a new cavity wall across the front of that walkway,

put the front door onto it and then use that as a corridor to link

the main house and the annexe together.

I'm focused on talking about the annexe,

what about the main centre of the property,

what are you going to do to turn it around?

The rooms are going to stay as they are.

Starting from the top floor.

We will have two double bedrooms and one single bedroom.

The bathroom and the toilet are going to be changed.

Where you have a dividing wall, that's going to come down and we're

going to move the main entrance wall into the bathroom forward.

So, you will have one big toilet/bathroom,

family bathroom upstairs.

We find that there is no need to put an extra en-suite.

Although we had an idea to make an en-suite but probably

because it's a two-bedroom... I mean, 2+1, three-bedroom house.

-There is no need for an extra bathroom upstairs.

-Hold on a minute.

-It's a two-bedroom and one pool room.

-Yes, there is that.

I need to ask you this question. What is the budget?

The budget here is to try and get the house done for about £30,000.

-OK, and your timescale?

-Timescale, typically, what?

I think it will be between eight to ten weeks.

What would your top valuation of this property be, once it's

done up, looking fabulous.

-We reckon we can achieve a price between 300 and £320,000.

-Really?

-Yes.

-Wow.

-Without doing any extension work.

And how do you feel about that?

I feel the risk of us losing money here is small or non-existent.

And so I am seeing anything 260 and upwards would be

a result in the right direction.

Guys, good luck with this project. I can't wait to see how it turns out.

Well, we have our fingers crossed, that's the main thing.

-Lovely to meet you, good luck.

-Thanks.

Well, Steve and Andrew will make this place work, I'm sure of it.

But will they tip the value over 300 grand?

There is only one way to find out. Join us later in the show.

We are in Bradeley, Stoke-on-Trent.

So, what am I here to see? Well, it's a three bed mid-terrace.

In this fairly attractive row of similar properties.

I like the brick built frontage. And from the outside, this is it.

Looks pretty good. The guide price of £40,000 plus.

Hm. Sounds suspiciously low.

So, let's investigate what we have.

The corridor here, I mean, I don't like that as a layout.

It feels a bit claustrophobic the moment you come through

the front door.

Not even going to go there for a second.

But through here into your main sort of living area

and this is actually quite a nice space.

It's got this dual aspect which is always good.

Hm. We'll come back to that. Onwards through here

is your kitchen and I think onwards through to a bathroom.

I'm just going to go upstairs.

Well, up here, the good news is, there is a bathroom and a sink.

The bad news is, there is no loo. So, that's not ideal.

I think you've also stolen space from the bedrooms

because it does actually feel a little bit cramped.

The good news again though is that it seems that the majority,

if not all of the walls are actually stud partition.

Not that difficult to take down and rejig the layout up here.

And I think that with a bit of careful thought, you could

make it much better than it is.

OK, nothing else for it. Back downstairs.

Well, I can't get away with it any longer, it is

time to address the elephant in the room, as they say.

The obvious thing with this property which is clearly pretty bad.

This is one of the most incredible examples of dry rot

I have ever seen in a house.

It's caused by water and a combination of that

and an enclosed space, as in underneath these floorboards.

The problem with dry rot is, those tendrils,

they stretch everywhere, they go through wood,

they go through concrete, they are a disaster, as you can see.

It's expensive to put right

and it needs to be done properly otherwise it comes back.

# My world is crumbling My world is crumbling. #

I'd get a survey done before I even thought of buying this

property to find out the extent of the infestation.

Maybe outside will cheer me up.

Well, there is a good sized back garden to the property

and it would seem even bigger

if you got rid of or trimmed back at least that privet hedge.

But another bit of really good news is at the back here there is

actually a rear access.

So, pretty much like other people have done,

put a garage in here, gets your car off the road.

Yeah, a nice additional bonus.

What will a local estate agent make of this crumbly terrace?

In a nice order, this could be somewhere around £85-£90,000.

OK, so that is the potential value, what could the rental income be?

In a good condition, I'd place this on to the rental market

somewhere between £400 and £425 per calendar month.

Well, it's sometimes said that mid-terraced

properties are a safe bet.

Since as long as the ones on either side are all right,

how bad can the one in the middle be?

Well, this is a case in point of that theory being complete rubbish.

Because it is horrendous. As we've seen.

Still, as long as you get it at the right price,

it could still be a good investment.

Let's see who went for it under the hammer.

Lot 53. A large mid-townhouse, first floor bathroom. What's this?

35 to start me on this one.

35 bid, thank you. At £35,000. 35,000. I'll say 38. Can we say 38?

38 bid. £38,000. 40?

A ding dong battle got underway for this property

and we rejoin the auction with the bid standing at 45,000.

New bidder, 45. 45 and a half. 46.

46 and a half. 47. 47 and a half.

48. 48.

49. 50.

50. No?

At £50,000, standing there, then. At 50,000. 51 anywhere else?

At £50,000 then for the first time. New bidder, 51. 52?

52. 53. No? 53,000, gentleman in the blue T-shirt.

Just wave again so there's no mistake. Thank you.

£53,000 then all done now.

At £53,000 once, £53,000 twice.

Third and last time at £53,000, your lot, sir, well done.

That final bid of £53,000 was made by Clint. He and his wife Kerry own

a stud farm for Welsh cob horses.

And they have just finished renovation work on their own home.

I met the couple to find out more.

-Clint, Kerry. Great to meet you both.

-And you.

-Thank you.

-Please tell me you looked at this house before you bought it?

-No.

-No.

Argh!

The typical mistake.

Right, why?

We decided on the way that we were going to pay about 50,000.

I was working under the assumption that I needed to

-spend about 10 on it, resell it for about 75, not a bad profit.

-Oh, no!

-The actual auction, I stopped on our limit of 50,000.

-Right.

So, I just put my hand at 51.

I then got a kick off me wife to say, "What are you doing?"

Somebody went 52, I went 53 and we bought it.

After then I thought to myself, "That was a good price"

And then I thought, "Why was it a good price?"

Now, it's bad enough that they didn't view the property

beforehand, but guess what else they didn't do? Yep, that's right.

They didn't read the legal pack.

If they had, they would have spotted information that said they had to

pay the seller's fees, upping their total spend thus far to £56,000.

And, by the way, the pack also mentioned the dry rot.

So, what's the plan to deal with that?

Well, everything is going to be ripped out.

All the wood is coming out, obviously.

Treat the walls and the floors with the fungal disinfectant, basically.

New stairs going in, so that will eliminate the dry rot.

We've looked up, it's only travelled halfway up the stairs.

So, there is no dry rot upstairs.

Clint and Kerry intend to tackle the dry rot themselves.

On a tight budget, fair enough.

Though I would always recommend getting in the experts

because, if you don't get it right, it will return.

If you do decide to treat it yourself,

bear in mind that you should go past where you think the dry rot ends

because it travels and never replace boards or skirting or whatever

with untreated wood.

Otherwise you will just be inviting trouble.

And of course, you need to find the source of the damp that

caused the problem in the first place.

You are now the proud owners. What are you going to do?

Just basically refurbish the lot.

We are going to be knocking some walls out,

extending the kitchen, extending the rooms upstairs.

How much extra is it going to cost you to put right all

-the problems which you didn't know about?

-No extra, really.

-What you do mean, no extra?

-We were planning on spending 10,000.

-Right.

-So, whether it meant 10,000, we were just going to come in

and we'd have better fixings, you know,

the finishing product or 10,000, meaning the work we've got to do.

And we're going to be doing the work ourselves.

So, we don't need to get anybody else in.

-You'll then potentially make some money, won't you?

-Yeah, yeah.

It stands at 56 now. If we spend 10,000 on it, that's 66.

And obviously then depending on what it's valued at when it's finished.

We plan on having it done in about 10 weeks.

I was going to say, "touch wood," but there's none left, is there?

-Congratulations. Good luck with it.

-Thank you very much.

-Thank you.

Well, I think Kerry and Clint

recognise that they did break every single rule in

the book buying this place, but you've got to love their attitude.

And it seems like they have an action plan to sort it out.

There is only one big question for Kerry and Clint.

Are you feeling lucky?

Well, time has simply flown by.

Have our buyers managed to make progress with their properties?

Let's go back and check out what's happened.

We are now returning to the Kent town of Chatham,

where earlier in the programme this three bedroomed detached

property adjacent to a graveyard was bought for £200,000 by

Steve, on the left, and Andrew, who are based in Surrey.

Andrew is originally from Poland and he does the building work,

while Steve is an ex-lawyer, looking after the finances.

They saw great potential for the extra building on the site.

Pretty much the rooms are going to stay as they are.

Starting from the top floor.

We will have two double bedrooms, one single bedroom.

Hold on a minute, it's a two bedroom and one pool room.

Yes, there is that.

They were going to sell and hope to pocket a profit

and they hope their budget of 30,000 wouldn't leave them SNOOKERED.

They set a timescale of about eight to ten weeks.

Now it's eight months later and next to the quietest part of town,

there is now definitely something to shout about.

The property has replacement windows throughout,

but the living room is only the beginning.

Because the former dining room and kitchen have been knocked into one.

The utility room will be placed in what used to be the store shed,

while the annexe is going to be linked to the main house

by creating a corridor with a parallel wall.

I thought that little annexe was intriguing and offered

tonnes of possibilities, so what did they do with it in the end?

We've gone for these high-level windows instead of

the previous single-glazed metal windows,

and we've put a good cloakroom bathroom over on this side.

So, whoever buys this house can

either use it as a bedroom or as another living room.

I think it's a really elegant and flexible solution.

A terrace with French windows is underway

and the other foundations are the beginning of a garden room,

which they have decided is a cost effective addition.

Back inside the main house, the former bathroom and loo

have been knocked into one well-equipped family bathroom.

The pool table's also gone

and the three bedrooms have been tastefully redecorated.

There's still the garden to landscape, and

with the additional work on the extension,

and with the high-level finish kitchen,

I wonder what effect all of that has had

on their original £30,000 budget.

We spent around £40,000 - perhaps a little above in the end,

but we're still very comfortable that what we've spent makes good

sense for this particular house.

With the £200,000 they spent at auction,

it takes the total investment to £240,000.

And have the plans remained the same?

Yes, the plan is to sell the house.

Agents, from time to time, like to try to persuade us to rent them,

but our business is selling them

and moving on to renovate the next.

What will these two local estate agents make of the renovation work?

Now, I know they don't want to let the house out but,

out of interest, how much could this fetch on the rental market?

I predict a rental income of £1,400 per calendar month.

I think if the property was rented out,

they would achieve around £1,500 per calendar month.

Well, that's an impressive yield of 7%.

And what about that all-important resale figure?

Do the agents think the property would be worth

more than the £240,000 that Andrew and Steve have invested here?

I would value this property for £300,000-£330,000.

We'd aim to sell this property for £365,000.

Well, a real disparity in the valuations there.

One valuation would give us a £60,000 profit,

while the other would produce a whacking £125,000.

Minus all the usual taxes and expenses.

£365,000 is a very good achievement,

but I think the £350,000 mark is where we're going to land.

This has been the fifth property

that Andrew and Steve have refurbished.

Their development business is going well.

So, what's next?

We've got another house we're working on already,

which is an even bigger project than this one.

Potentially including some new development in the garden as well.

But at the moment, unless Andy has different ideas, we carry on.

So, from a renovation with hardly any problems,

to one here in Bradeley, Stoke with...

Well, more than a few.

Clint and his wife, Kerry, paid £53,000.

Clint was named after the Dirty Harry star, Clint Eastwood,

but I'm afraid he didn't "Make my day" when we met.

Please tell me you looked at this house before you bought it.

BOTH: Nope.

Oh!

THEY LAUGH

Hmm. It's no laughing matter because this house was riddled with dry rot

on the ground floor.

And I could see it costing Clint

a fistful of dollars to put it right.

They both breed horses

and Clint rebuilds horse boxes,

so his practical skills are going to come in handy.

They set a budget of £10,000

and reckoned it would take a couple of months.

MUSIC: Turn The Tide by Johnny Hates Jazz

Well, it's now five months later

and we've returned to check on the progress.

The wall between the hall and the living room

has been removed.

They waved goodbye to the rotten floor,

replacing it with these rippling tiles,

a bit like the tide on a beach.

# I know we can turn the tide

# Together we can change the way things are... #

And the house has washed up lots of other treasures.

With so much dry rot to tackle,

it meant the floor could be completely opened up.

OK, what we've done in here is,

we've taken down the dividing wall.

Which has taken away the dingy corridor

that was leading in from the front door

and has given us a lovely open space.

Removing the infected timbers was only half the story.

The house was stripped right back and the walls were treated

with a fungicidal wash to prevent any future problems.

Only then, could the impressive lay out changes begin.

OK, what we've done is we've taken a wall out behind us,

to open up the kitchen up to give us the kitchen dining room now.

An open flow.

There was two walls at the end there,

we've taken the collage wall out

and the downstairs toilet out.

We've had to put the toilet upstairs into the bathroom.

It was the smallest bathroom I've seen,

so that meant us moving the dividing wall.

It made one of the bedrooms a little bit smaller,

but we've got a nice big bathroom...

A bigger bathroom now.

With help from qualified experts,

the house now has new central heating,

and there's new lighting and the plumbing has been changed.

It was hard work cos we've both got full time jobs,

so it was a case of coming down here in the evenings

and at weekends.

In total, it's taken us, with the hours,

counting up the hours we've actually spent on the house, 12 weeks.

I wonder what effect it had on their budget.

We had a budget of £10,000.

As we got further on through the project,

we upped the standard a bit, didn't we?

Which meant the glass balustrade was coming in,

the shinier tiles, we were going to have, so, yeah.

So, we spent £12,000 so, yeah, we're really chuffed with it, yeah.

Clint and Kerry, if you remember,

didn't read the legal pack and the seller's fees cost them £3,000

on top of their bid, bringing the auction total to £56,000.

I'm really not surprised they went over that £10,000 budget

but that brings their total spend now to £68,000.

We ask two local estate agents to come along and give their opinions.

I'm worried they're almost at the price they were looking to sell for.

Have they done enough to take it to a higher value?

Much improved from the last time I was in the property.

Nice new kitchen in there.

Nice new bathroom and fitments.

My first impressions were that the vendors of the property have

spent a lot of time on the attention to detail.

With unique flooring, it's quite a selling point.

Well, the plan has always been to sell.

But how much rental income could the property generate,

if Clint and Kerry did have a change of plan?

The rental value would be £495 per calendar month.

If I was going to place this on the rental market,

I'd be asking somewhere around £500 per calendar month.

And that's a yield of around 9%. Not a bad return.

How about that all important value on the resale market?

Will they get their money back?

They've invested £68,000.

Will they make their target profit of around £10,000?

Given the level of finish and detail on the property,

I'd place this on the market for £94,950.

If I was in the owner's shoes, at the moment,

I'd be looking to get this back on the market and hopefully achieve

somewhere around £100,000.

Whoa! A result!

That would mean a possible profit

of around £27,000-£32,000

before taxes and expenses.

In fact, the couple have already had their own valuation done

and they're going to put it on the market for around £110,000.

Despite all the trials and tribulations,

will they do another property?

Yeah, well, hopefully we're going to sell this

and get another one straight away.

Well, whether it's a bungalow, a mansion or a piece of land.

We'll be here to see what happens to it on Homes Under The Hammer.

So, make sure you join us next time.

-Goodbye for now.

-Goodbye.