Episode 9 Homes Under the Hammer

Now, home is where the heart is, they say, but is your heart

in making money on property?

Well, let's find out who put their heart and soul

into buying their home under the hammer.

Now, buying property at auction can be a road to success,

but there are risks involved, so it's important to tread carefully.

Even experienced developers can make wrong moves, so let's see

what got people interested at the auctions on today's show.

In Manchester, this forlorn two-bed terrace was unloved,

except by a pigeon or two.

Will a buyer save it or take flight?

In Maidstone, Kent,

there's a one-bed flat in this block with a short lease

and it turns out time is of the essence for quite another reason!

'These properties went to auction.

'We'll find out who bought them

'and what they paid when they went under the hammer.'

It's yours now, sir.

This is Manchester city centre.

A great place for shopping and nightlife.

No surprise, it attracts visitors from many miles away,

as well as the local suburbs.

While Moston was once an upmarket haven for

Manchester's wealthy merchants and pretty much retained a village feel

while the city expanded around it, eventually, it did lose some

of its green spaces, but elegant Victorian streets still remain.

Well, this really is a lovely street.

It's tree-lined, people look like they're

looking after their houses...so, why is that significant?

Well, it's an old adage in the property industry that

the best thing you can possibly do

is buy the worst house on the best street.

HE SHARPLY INTAKES BREATH

Well, I think we've found it!

£30,000 to £40,000 was the guide price.

It's a two-bedroom mid-terrace. Let's take a look inside.

'The boarded windows don't make the most auspicious start.'

-OK!

-HE LAUGHS NERVOUSLY

What are we going to find?!

Well, it's...just judging by the height of the ceilings,

going to be a relatively impressive property.

I know it's not what first impressions might say.

Um...and you really have to use your imagination here a bit,

but just bear with me. A big front sitting room there.

I mean, it's quite dark at the moment cos of all

the boarded up windows, but it's not a bad sized space.

A bit of an under-stair storage area and then through

into your rear...sort of living area / whatever you want to call it.

As you can see, somebody's obviously started, uh,

some of the renovation works. That's good.

Yeah, I know at first glance you think, "Ooh, oh!"

But you probably would have had to do that anyway, so they've actually

done quite a lot of the work for you and got rid of all that rubbish.

Skips and skips and skips' worth of it, I'm sure.

But it's a reasonable sized space.

Big, big chimney breast there which certainly

imposes into the room rather a lot. So, that's OK.

Um, right to the rear of the property then,

a small, little additional...

my guess is, some kind of extension

and it looks to me like this was where the kitchen was.

I say was, because the kitchen has gone,

obviously ended up in the skip as well.

No kitchen can mean no loan.

My advice would be to try and get a part deferred one where

a portion of the mortgage is held back until you fit one.

Another issue is that sometimes properties are...

Can you believe it? ..too cheap to get a loan.

It can be difficult to get a small amount.

You usually can't borrow less than £25,000,

so a cash buyer might fancy this one.

While inside has been stripped bare,

I wish I could say the same about the garden.

There is access from the back which is a bonus

and that seems to be quite nicely kept, but the brickwork

on the extension looks like it needs some desperate attention.

Well, upstairs, I know it's quite simple,

but the layout to me really works very well.

You've got a big double bedroom at the front there,

this little landing area here, a smaller bedroom there

and then your bathroom where it should be upstairs here.

Now, I say bathroom, it's a

space which a bathroom will be in at some point,

but, again, like the kitchen, it doesn't exist, so, again,

when it comes to mortgages,

the fact there isn't a bathroom or a loo, not ideal.

Now, the other thing I do know is up here, is rather a lot of bird poo.

There must be birds in the loft, logically,

how did they get in there?

Probably through a hole in the roof and that is also serious.

From the front of the property, those pigeons are easy to spot.

# Come on, little pigeon, fly away with me... #

That roof has had it. No two ways about it.

But the brickwork and pointing look OK.

With the guide price of £30,000 to £40,000, it seems fairly cheap on

the face of it, what does a local estate agent make of it?

Brought back to a reasonable condition,

this property would probably sell at around about the £55,000 mark.

And the income a buy-to-let investor could obtain?

From a rental point of view,

I'd expect a property of this nature, when it's finished, to rent

for a figure of approximately £450 per calendar month, possibly £475.

Well, first impressions are, this house is a bit of a mess,

but all that work is stuff you would have had to do anyway,

so, it's a bonus that somebody's started it for you.

A decent house in a good area, let's see who bought it

when it went under the hammer.

And this bidding happened towards the end of the day.

Moston in Manchester, a vacant two-bedroom

mid-terraced house,

four miles north-east of Manchester city centre.

15,000.

£15,000.

15 right up the back.

20 I'm looking for. 20 here. Shall we say 25?

25?

Yes, 25 I've got. 30 I need. 35.

No, it's with you, sir, at £30,000. I'll take 31 then.

Somebody right behind you then, sir, so that's 31 right behind you.

32 in front.

33 sitting down. 34, sir?

34, standing up. 35? 36. 37.

No? At 36, standing up.

A new bidder right at the back.

Thank you. At 37, sir.

I've got 37. I need 38.

39.

40, sir?

41.

42.

43.

No? With you, sir, at £42,000. I'm looking for 43.

I'll take a half at 42 and a half.

43 I need.

Will you give me 43?

He is. 43 and a half, sir?

No? You definitely out, sir? I've got 43.

First time, second time, we're all finished?

It's yours now, sir. Well done.

# Going, going, gone! #

The successful bidder, who didn't hang around, was David.

He paid £43,000 for the messy mid-terrace in Moston, Manchester.

He's a full-time landlord who has several properties in his portfolio.

I met him back at the house to find out his plans.

-David, good to meet you.

-Good to meet you, Martin.

-Congratulations!

-Thank you.

What was it particularly that appealed about this place?

The fact that...

..it's a good street...

is very attractive.

I would have probably paid more than 43,000 for this house

on a less good street, so, to get it on a really nice street like this...

-is a good result.

-Somebody's obviously done a bit of work.

What are you going to do with it?

Pretty much everything.

You know, it's going to need the roof fixing and the pigeons removing.

It's probably going to need damp taken away from the bottom.

New kitchen, new bathroom, new electrics, new plumbing,

new everything, really. Upstairs, I think, is fine.

Downstairs, there is an issue with the kitchen,

where I'm going to put the kitchen.

The question is, whether it goes in here or in that outhouse.

David reckons he has a unique approach to his rental portfolio.

He really focuses on how energy efficient

and comfortable his properties are.

People think terraced houses are very cosy.

The problem is the front and back walls.

There are no cavities in them so you can't cavity fill the walls

and bring them up to modern insulation standards.

So what we will do here is we'll put insulated

plasterboard on the inside of the walls.

It will shrink the room a bit, by about 10 centimetres,

but it will just make the room so much warmer.

And warm tenants are happy tenants.

I like David's approach.

It is refreshing to see he intends to make the property better

and make his tenants happy.

# Oh happy day (Oh happy day)

# Oh happy day (Oh happy day). #

-So what is the budget for the work?

-£15,000, I think, should see it right.

-Listen, congratulations. Good luck with it.

-Thanks very much.

Looking forward to seeing how you get on.

I think David has got himself a good buy with this property.

A solid house in a nice area.

The only question is, where will the kitchen be when we come back?

You can find out later in the show.

This is Maidstone in Kent on the banks of the River Medway,

once the route for much of the town's trade.

The property I'm here to see is a very comfortable seven minute walk from the train station.

It's a little longer to the high street but only by about a minute.

You couldn't get much more central, which should make up for the fact

there's not a whole heap of curb appeal about this place.

Still, for a one-bedroom flat so well located,

£45,000 to £55,000, doesn't sound too bad.

I'm going to check it out.

The well tended communal gardens are a bonus.

And the stairwell in the communal area is neat and tidy.

So good first impressions.

Nicely maintained public areas, which is always good to see.

One of the first things I notice, storage heaters.

We will come back to that a little later on.

You've got a bathroom there and a nice white suite.

You could possibly re-use that. A bedroom. A bit on the small size.

It's funny because these sort of properties and buildings that were built in the '80s

were always a lot smaller than the ones that were built in the '60s and '70s.

You can see there is a table and chairs there, so it demonstrates that people can eat in here.

You could put some sofas there and there.

And kitchen, again, really small.

But I'm hoping you would be able to get rid of that water tank.

So overall, it is a little bit on the small side,

but it could be a nice cosy place to live.

Now, one word of caution.

In a leasehold property like this, you can't just come in

and start knocking walls down to try and make the layout bigger

without first obtaining the freeholder's permission

and there's no guarantee you'll get it.

Now, back to something we saw earlier.

So, storage heaters versus gas central heating. Verdict?

Let me sit down.

Storage heaters are notoriously unpopular and might put people off.

They can be expensive to run and difficult to control.

They are also pricey to replace if they break.

Between £200 and £500 each.

But gas, while being cheaper in the long run, is expensive to install.

At least a few thousand pounds.

And I don't even know if it's going to be in this block at all.

Personally, if I was going to rent this flat out or live here,

I would definitely look into the cost of switching

and if that's not an option, take advice on modern thermostats

and get these heaters working nice and effectively

for whoever ends up living here.

# If you don't believe I can warm you right

# Take me to your house and let me stay all night

# You've got to warm up

# You've got to warm up. #

This flat has a short lease.

Not a worryingly shortly lease,

but at 74 years it's something that needs to be addressed.

Mortgage companies should not have an issue lending

with the current length but the lower the lease gets,

the more expensive it is to extend,

and it will put subsequent buyers off.

So my advice would be to just bite the bullet,

fork out the cash and get it sorted.

It's an expensive bit of paperwork but worth every single penny.

It's not a big project and it's only a few minutes from the town centre.

I think this could be a good one

if it goes for anything around the guide price of £45,000 to £55,000.

Does a local estate agent agree?

What could it fetch on the open market with a decent refurbishment?

I would suggest it's probably going to achieve

somewhere in the region of £90,000 to £95,000.

And the potential rental income it could generate?

Once renovated, I would imagine this property letting

for something in the region of £550 per calendar month.

This is a nice easy flat in an extremely convenient location,

which would rent very well.

So let's see who went for it at the auction.

95, we go to now.

Purpose-built modern town centre flat for investment or occupation.

So what are we going to say on that one?

Can I say £50,000 to start me off on this one? I'll take 45.

£45,000 bid, I've got. At 50, do I see? 50, I'm bid. 55.

It's against you. 55 at the back, I have. 57 now if you like. At 55,000.

57, I've got. 60. And two. 62.

From either of you. 62. 64. And six. 66, can I see?

65. 66.

And seven. 67. And eight.

68. And nine. 69.

Oh, you are looking for moral encouragement? 69, bid. At 70.

And one. 71 now, if you like. At 70,000 to the couple over there. 71.

72 sitting down. 73. At 72 then, I'm selling for the first time.

72,000 for the second time. Third... 73. And four. And five.

He wants it, you know. He really wants it. 75? At £74,000. 75?

Are we all done at 74 then? For the first time.

74 for the second time.

Third and final time at £74,000. Are we all done? Well done.

You've bought it. F552.

The successful bidders, paying 74,000, were Stuart

and his wife, Lindsey, who is expecting their second baby.

# I've found a new baby

# I've found a new boy

# That sweet talking baby

# Is my pride and joy. #

The couple are both police officers

and already have a one-year-old daughter.

I met them back at the flat to find out their plans.

-Lindsey and Stuart, congratulations. And congratulations.

-Thank you.

You are just about to have a baby and you've bought a flat.

So whose idea was that then?

Mine, kind of. I like a lot of work. We have done a couple of others.

We just thought, the banks are a bit rubbish,

so we'd see what we could find.

We looked at auctions for well over a year

and this time around we thought we could rent it as well if we can't sell it.

So we just went for it.

Property developing is something Lindsey and Stuart have always wanted to do as a sideline

but haven't been able to fund a separate property until now.

They usually live in the property, take their time to do it up and then sell on.

Let's talk about the block of flats. It's fabulous.

It's set in a wonderful little setting. Very green.

The communal areas are really well maintained.

-But things like the windows probably need replacing.

-Yes. We have looked at getting double glazing.

We've just obviously got to get permission.

A couple of the other flats have changed it already, so it shouldn't be too much of a problem.

What about things internally in the flat?

Other than to freshen it up and make it modern, obviously you've

got a water tank in there that takes a lot of space in the kitchen.

I'm hoping to get that taken for a combi and either make an open plan

kitchen or at least make the kitchen larger by removing that.

How much have you got to spend here?

If we can do the boiler, I am going to go for five.

But without the boiler, I would say about £3,000.

The majority would be on the windows.

-Between £3,000 to £5,000?

-Yes. I think it will be manageable.

And the couple are hoping that this

might end up being the start of a full-time property career.

So what is the timescale?

A month, if I'm left to do it with no baby.

If the baby comes, I would say two to three.

I'll be off every day so I can devote every day to coming here and get it done.

So even though you are off with your paternity leave, you are going to be here?

Yes. I don't like to sit around. She doesn't let me!

It's been such a pleasure meeting you today.

-Good luck with the baby. I hope the flat goes to plan.

-Thank you.

So this is a platform for Lindsay and Stuart to forge a new career.

How fantastic! But that budget, are they serious?

You can find out how it all goes

and when the baby arrives later on in the show.

Now, getting the property for the right price is the first step

toward success.

But the second stage is just as important -

sticking to your plans and budget is the best route to a decent profit.

So how did our buyers get on? Let's find out.

Back now to Moston in Greater Manchester and an auction lot

that appeared to be the classic redevelopment property.

The worst house on the best street.

It caught the eye of David,

a property developer for many years, who paid £43,000 for it,

even though it had no kitchen or bathroom.

He planned to add it to his buy-to-let portfolio.

There was plenty to do but David had a realistic budget of £15,000.

It's now 18 weeks later and what was originally

the worst house on the street is now, well, one of the best.

# Look how far we've come

# Look what we've made

# Started from nothing

# Building

# Brick by brick by brick by brick

# Brick by brick by brick by brick

# Brick by brick by brick by brick

# Brick by brick by brick by brick

# Brick by brick by brick by brick

# Brick by brick by brick by brick. #

So here is the big change of layout downstairs.

The kitchen was behind me in the outhouse.

Now, it's in this room, which is the new kitchen.

I think it's fantastic. It will be a nice, warm, dry kitchen.

Originally, the former kitchen was in the extension at the back

of the property. But that is now going to be the utility room.

A great space for white goods and laundry

and somewhere to leave your shoes if you are going out into the back yard.

Apart from his builder, David employed a structural engineer to supervise

the removal of the rear chimney from the kitchen and bedroom above,

which is now almost the same size as the master bedroom at the front.

David and his team have completely rewired and replumbed the property.

The pigeons have been evicted from the roof

and there's new timbers and about 100 replacement tiles,

plus insulation in the loft, so the property is now watertight and cosy.

One of the important things about this house is the insulation.

Tenants want to be warm. You can see that this wall has been plastered.

What you can't see is that behind there is insulated plasterboard. It's about this thick.

Now onto the money.

How much has the refurbishment come in at?

My original budget was £15,000. I have spent more than that.

It has crept up towards £20,000.

That's partly because we found some extra structural work.

And partly, the tenant who came on the scene and negotiated with me

and we've upped the spec a little bit.

Well, it's good news that David's got a tenant lined up.

And with the £43,000 he paid at auction,

it takes his total investment to £63,000.

What will two local estate agents think of the transformations

David's made?

From a sales point of view,

I would look to market the property at between £70,000 and £75,000.

For a sale on this property, I'd look to market the property at £75,000.

If David was to sell, that's a profit of between £7,000

and £12,000 before taxes and expenses.

He's really interested in the rental yield of this two-bedroom terrace.

So, what do the estate agents think he could get in the present?

It's in very good condition.

I think you could get quite a good rent for a two-bedroom property.

£500 per calendar month.

Well, I think it will be attractive to a tenant and the rental

market's obviously very strong at the moment.

So I would expect to achieve a rental figure

of between £450 to £500 per calendar month.

That top figure would give David a yield of over 9.5%.

David has already agreed to slightly less than that figure.

But there's a good reason for that.

It's actually going to someone who's been in one of my other houses.

And he's done quite a lot of the work here.

And as he was working on the house, he wanted to live in it.

And negotiated a tenancy with me.

A little bit less than the market rate,

as a thank you to him for the great work he's done for me.

We are back in Maidstone in Kent.

Earlier in the programme, Stuart and his wife Lindsay

paid 74,000 for this one-bedroomed flat

as their first investment property.

The couple are both police officers.

Lindsay was on maternity leave expecting the couple's second baby.

If the freeholder agreed, they'd hoped to replace the windows.

And I thought the central heating could do with replacing as well.

I was surprised Stuart had set a budget of just 3,000 to 5,000.

And the timescale?

A month if I'm left to do it with no baby.

If baby comes, I'd say two to three.

Well, it's now 14 weeks later and baby Paige is now six weeks old.

And look at the lovely flat that Stuart has successfully

delivered as well!

# I'm going to watch you shine

# Gonna paint a sign so you'll always know

# As long as one and one is two

# There could never be a father

# Loves his daughter more than I love you. #

I'm really pleased to see the storage radiators have been

replaced in the bedroom and the hallway.

But as Lindsay explains, the combi boiler just wasn't feasible.

So, in the front room, we re-wallpapered throughout.

Just general paintwork, skirting boards and ceiling,

and new windows installed.

We had new heaters, electric heaters installed.

We couldn't go for gas central heating, so we just upgraded them.

We initially wanted to move this cupboard and expand the kitchen,

but we couldn't because there's no gas in the building,

so we couldn't change the system.

So obviously we weren't given permission to do that.

Apart from replacing the windows,

Stuart has done the majority of the work himself with help from his dad.

Unfortunately, we had to keep the same shape of the kitchen

because we couldn't get permission to make it larger.

So, new worktops, new cupboards, cooker top, new sinks -

everything has all been put in and fresh bit of paint on them.

In the end, Stuart left the bathroom suite

and just changed the flooring and added a matching wall colour.

The idea was, Stuart would come up here even if I was overdue

and get it all done and everything would be great.

But I was so heavily pregnant, with a year-and-a-half child

running around, so that wasn't going to happen.

I needed him at home.

The toddler got dumped on grandparents

and the newborn obviously came with us

and we had to take it in turns - one would do something

while the other looked after her and go from there.

It was quite nice, got a bit of family time, the three of us.

Now, with no combi boiler in the end, I'm keen to find out

if Stuart did manage to keep to that very small budget of 3,000-5,000.

The budget was pretty good. We got 4,100 in the end.

It worked out quite nicely.

Well, I am impressed.

With the 74,000 they paid at auction,

that takes their total investment to £78,100.

So, have they decided against selling?

Well, we have different opinions.

Lindsay wants to rent the place, I want to sell it

and hopefully take a profit and make more houses and do the same thing.

So we'll just see who wins between the two of us.

Well, maybe making that decision will be a bit easier when Stuart

and Lindsay hear the valuations from two local estate agents.

If I were to put this property up to let, I would expect to get 550.

They might even squeeze £600 per calendar month.

I would expect to achieve around £575 per calendar month.

A yield of almost 9%, based on £575 per calendar month.

Will that convince Stuart to rent it out?

No, I want to sell it.

I want to rent it. I think it's a good income.

-But you want to sell, don't you?

-Yeah.

Oh, a battle of wills here. And what about Stuart's preferred option?

What could it resell for?

I would expect to achieve something in the region of £90,000.

I would expect this property to achieve around £100,000.

A potential profit of between

£11,900 and £21,900, minus taxes and fees.

Anything above 90, to be honest, I'd be quite happy to sell it.

Well, no matter who gets their way on this flat,

you have to admire them for taking on their first property

development project just as their second baby was about to be born.

And doing such a good job, too!

I think the timing has been...

You know, it could have been better a month before or

a couple of months later.

But the right property came along at the right location,

and so the timing we just had to accept.

Has all this whetted your appetite for property developing?

Make sure you tune in next time to Homes Under The Hammer.

-We'll see then.

-Goodbye.

-Goodbye.