Episode 9 Homes Under the Hammer


Episode 9

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

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in making money on property?

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

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into buying their home under the hammer.

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

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

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

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

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

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except by a pigeon or two.

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Will a buyer save it or take flight?

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In Maidstone, Kent,

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

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

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'These properties went to auction.

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'We'll find out who bought them

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

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It's yours now, sir.

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This is Manchester city centre.

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A great place for shopping and nightlife.

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No surprise, it attracts visitors from many miles away,

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as well as the local suburbs.

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While Moston was once an upmarket haven for

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

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

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

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Well, this really is a lovely street.

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

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

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

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the best thing you can possibly do

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is buy the worst house on the best street.

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HE SHARPLY INTAKES BREATH

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Well, I think we've found it!

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

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

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

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-OK!

-HE LAUGHS NERVOUSLY

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What are we going to find?!

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

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going to be a relatively impressive property.

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

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

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

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

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

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

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

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

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some of the renovation works. That's good.

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

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

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

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

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But it's a reasonable sized space.

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Big, big chimney breast there which certainly

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

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Um, right to the rear of the property then,

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a small, little additional...

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my guess is, some kind of extension

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

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I say was, because the kitchen has gone,

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obviously ended up in the skip as well.

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No kitchen can mean no loan.

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

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

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Another issue is that sometimes properties are...

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

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It can be difficult to get a small amount.

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

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so a cash buyer might fancy this one.

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While inside has been stripped bare,

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I wish I could say the same about the garden.

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There is access from the back which is a bonus

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

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on the extension looks like it needs some desperate attention.

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

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but the layout to me really works very well.

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

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this little landing area here, a smaller bedroom there

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and then your bathroom where it should be upstairs here.

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Now, I say bathroom, it's a

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space which a bathroom will be in at some point,

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

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when it comes to mortgages,

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

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

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There must be birds in the loft, logically,

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how did they get in there?

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

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

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

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

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But the brickwork and pointing look OK.

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

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

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Brought back to a reasonable condition,

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

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

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From a rental point of view,

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

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

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

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

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

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

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when it went under the hammer.

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And this bidding happened towards the end of the day.

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Moston in Manchester, a vacant two-bedroom

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mid-terraced house,

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four miles north-east of Manchester city centre.

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15,000.

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£15,000.

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15 right up the back.

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

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25?

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

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

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

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32 in front.

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33 sitting down. 34, sir?

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34, standing up. 35? 36. 37.

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No? At 36, standing up.

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A new bidder right at the back.

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Thank you. At 37, sir.

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I've got 37. I need 38.

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39.

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40, sir?

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41.

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42.

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43.

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

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

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43 I need.

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Will you give me 43?

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He is. 43 and a half, sir?

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

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

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It's yours now, sir. Well done.

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# Going, going, gone! #

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

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

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

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

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-David, good to meet you.

-Good to meet you, Martin.

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-Congratulations!

-Thank you.

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What was it particularly that appealed about this place?

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The fact that...

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..it's a good street...

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is very attractive.

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

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

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-is a good result.

-Somebody's obviously done a bit of work.

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What are you going to do with it?

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Pretty much everything.

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

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

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

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

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Downstairs, there is an issue with the kitchen,

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where I'm going to put the kitchen.

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

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

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He really focuses on how energy efficient

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and comfortable his properties are.

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People think terraced houses are very cosy.

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The problem is the front and back walls.

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

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and bring them up to modern insulation standards.

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

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plasterboard on the inside of the walls.

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

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but it will just make the room so much warmer.

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And warm tenants are happy tenants.

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I like David's approach.

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

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and make his tenants happy.

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# Oh happy day (Oh happy day)

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# Oh happy day (Oh happy day). #

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-So what is the budget for the work?

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

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-Listen, congratulations. Good luck with it.

-Thanks very much.

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Looking forward to seeing how you get on.

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

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A solid house in a nice area.

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

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You can find out later in the show.

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

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

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

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

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

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

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

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

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I'm going to check it out.

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The well tended communal gardens are a bonus.

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

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So good first impressions.

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

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One of the first things I notice, storage heaters.

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We will come back to that a little later on.

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

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

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

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

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

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You could put some sofas there and there.

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And kitchen, again, really small.

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

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

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but it could be a nice cosy place to live.

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Now, one word of caution.

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

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

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without first obtaining the freeholder's permission

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

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Now, back to something we saw earlier.

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So, storage heaters versus gas central heating. Verdict?

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Let me sit down.

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Storage heaters are notoriously unpopular and might put people off.

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They can be expensive to run and difficult to control.

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They are also pricey to replace if they break.

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Between £200 and £500 each.

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

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At least a few thousand pounds.

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

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

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I would definitely look into the cost of switching

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

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and get these heaters working nice and effectively

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for whoever ends up living here.

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

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

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# You've got to warm up

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# You've got to warm up. #

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This flat has a short lease.

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Not a worryingly shortly lease,

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

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Mortgage companies should not have an issue lending

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with the current length but the lower the lease gets,

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the more expensive it is to extend,

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and it will put subsequent buyers off.

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So my advice would be to just bite the bullet,

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fork out the cash and get it sorted.

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

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

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I think this could be a good one

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

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Does a local estate agent agree?

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

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I would suggest it's probably going to achieve

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

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And the potential rental income it could generate?

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Once renovated, I would imagine this property letting

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

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

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which would rent very well.

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

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95, we go to now.

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

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So what are we going to say on that one?

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

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

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

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

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

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65. 66.

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And seven. 67. And eight.

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68. And nine. 69.

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

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

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

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

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

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

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74 for the second time.

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

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You've bought it. F552.

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The successful bidders, paying 74,000, were Stuart

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

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# I've found a new baby

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# I've found a new boy

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# That sweet talking baby

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# Is my pride and joy. #

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The couple are both police officers

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and already have a one-year-old daughter.

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

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-Lindsey and Stuart, congratulations. And congratulations.

-Thank you.

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

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So whose idea was that then?

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

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We just thought, the banks are a bit rubbish,

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so we'd see what we could find.

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We looked at auctions for well over a year

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

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So we just went for it.

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

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

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

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

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

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The communal areas are really well maintained.

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-But things like the windows probably need replacing.

-Yes. We have looked at getting double glazing.

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We've just obviously got to get permission.

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

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What about things internally in the flat?

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

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

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

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

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How much have you got to spend here?

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

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

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The majority would be on the windows.

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-Between £3,000 to £5,000?

-Yes. I think it will be manageable.

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And the couple are hoping that this

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

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So what is the timescale?

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

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

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

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

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

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It's been such a pleasure meeting you today.

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

-Thank you.

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

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How fantastic! But that budget, are they serious?

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You can find out how it all goes

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and when the baby arrives later on in the show.

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

0:18:170:18:20

toward success.

0:18:200:18:22

But the second stage is just as important -

0:18:220:18:24

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

0:18:240:18:29

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

0:18:290:18:33

Back now to Moston in Greater Manchester and an auction lot

0:18:330:18:37

that appeared to be the classic redevelopment property.

0:18:370:18:40

The worst house on the best street.

0:18:400:18:43

It caught the eye of David,

0:18:430:18:45

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

0:18:450:18:50

even though it had no kitchen or bathroom.

0:18:500:18:53

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

0:18:530:18:55

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

0:18:560:19:02

It's now 18 weeks later and what was originally

0:19:050:19:09

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

0:19:090:19:14

# Look how far we've come

0:19:140:19:17

# Look what we've made

0:19:170:19:19

# Started from nothing

0:19:190:19:23

# Building

0:19:230:19:24

# Brick by brick by brick by brick

0:19:240:19:26

# Brick by brick by brick by brick

0:19:260:19:29

# Brick by brick by brick by brick

0:19:290:19:32

# Brick by brick by brick by brick

0:19:320:19:34

# Brick by brick by brick by brick

0:19:340:19:37

# Brick by brick by brick by brick. #

0:19:370:19:38

So here is the big change of layout downstairs.

0:19:380:19:41

The kitchen was behind me in the outhouse.

0:19:410:19:45

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

0:19:450:19:49

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

0:19:490:19:52

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

0:19:520:19:56

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

0:19:560:19:59

A great space for white goods and laundry

0:19:590:20:02

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

0:20:020:20:06

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

0:20:060:20:10

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

0:20:100:20:13

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

0:20:130:20:17

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

0:20:210:20:26

The pigeons have been evicted from the roof

0:20:350:20:38

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

0:20:380:20:42

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

0:20:420:20:48

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

0:20:480:20:52

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

0:20:520:20:57

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

0:20:570:21:02

Now onto the money.

0:21:040:21:06

How much has the refurbishment come in at?

0:21:060:21:08

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

0:21:080:21:12

It has crept up towards £20,000.

0:21:120:21:16

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

0:21:160:21:19

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

0:21:190:21:25

and we've upped the spec a little bit.

0:21:250:21:27

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

0:21:270:21:30

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

0:21:300:21:33

it takes his total investment to £63,000.

0:21:330:21:37

What will two local estate agents think of the transformations

0:21:370:21:41

David's made?

0:21:410:21:42

From a sales point of view,

0:21:420:21:43

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

0:21:430:21:48

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

0:21:480:21:54

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

0:21:540:21:57

and £12,000 before taxes and expenses.

0:21:570:22:00

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

0:22:000:22:04

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

0:22:040:22:09

It's in very good condition.

0:22:090:22:10

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

0:22:100:22:14

£500 per calendar month.

0:22:140:22:15

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

0:22:150:22:18

market's obviously very strong at the moment.

0:22:180:22:20

So I would expect to achieve a rental figure

0:22:200:22:22

of between £450 to £500 per calendar month.

0:22:220:22:25

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

0:22:270:22:31

David has already agreed to slightly less than that figure.

0:22:310:22:35

But there's a good reason for that.

0:22:350:22:37

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

0:22:370:22:41

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

0:22:410:22:43

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

0:22:440:22:48

And negotiated a tenancy with me.

0:22:480:22:51

A little bit less than the market rate,

0:22:510:22:55

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

0:22:550:22:58

We are back in Maidstone in Kent.

0:23:030:23:05

Earlier in the programme, Stuart and his wife Lindsay

0:23:050:23:08

paid 74,000 for this one-bedroomed flat

0:23:080:23:11

as their first investment property.

0:23:110:23:13

The couple are both police officers.

0:23:140:23:16

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

0:23:160:23:20

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

0:23:210:23:25

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

0:23:250:23:29

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

0:23:290:23:32

And the timescale?

0:23:330:23:36

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

0:23:360:23:38

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

0:23:380:23:41

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

0:23:410:23:46

And look at the lovely flat that Stuart has successfully

0:23:510:23:54

delivered as well!

0:23:540:23:55

# I'm going to watch you shine

0:23:580:24:01

# Gonna paint a sign so you'll always know

0:24:010:24:05

# As long as one and one is two

0:24:050:24:09

# There could never be a father

0:24:120:24:14

# Loves his daughter more than I love you. #

0:24:140:24:19

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

0:24:200:24:24

replaced in the bedroom and the hallway.

0:24:240:24:26

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

0:24:260:24:30

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

0:24:300:24:34

Just general paintwork, skirting boards and ceiling,

0:24:340:24:37

and new windows installed.

0:24:370:24:39

We had new heaters, electric heaters installed.

0:24:390:24:42

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

0:24:420:24:46

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

0:24:460:24:50

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

0:24:500:24:53

so we couldn't change the system.

0:24:530:24:54

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

0:24:540:24:58

Apart from replacing the windows,

0:24:580:25:00

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

0:25:000:25:04

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

0:25:040:25:07

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

0:25:070:25:09

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

0:25:090:25:13

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

0:25:130:25:16

In the end, Stuart left the bathroom suite

0:25:160:25:19

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

0:25:190:25:22

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

0:25:240:25:27

and get it all done and everything would be great.

0:25:270:25:29

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

0:25:290:25:32

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

0:25:320:25:35

I needed him at home.

0:25:350:25:36

The toddler got dumped on grandparents

0:25:360:25:40

and the newborn obviously came with us

0:25:400:25:42

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

0:25:420:25:45

while the other looked after her and go from there.

0:25:450:25:47

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

0:25:470:25:50

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

0:25:500:25:53

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

0:25:530:25:59

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

0:25:590:26:02

It worked out quite nicely.

0:26:020:26:05

Well, I am impressed.

0:26:050:26:07

With the 74,000 they paid at auction,

0:26:070:26:09

that takes their total investment to £78,100.

0:26:090:26:14

So, have they decided against selling?

0:26:140:26:16

Well, we have different opinions.

0:26:160:26:18

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

0:26:180:26:21

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

0:26:210:26:25

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

0:26:250:26:27

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

0:26:270:26:31

and Lindsay hear the valuations from two local estate agents.

0:26:310:26:35

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

0:26:360:26:42

They might even squeeze £600 per calendar month.

0:26:420:26:45

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

0:26:450:26:49

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

0:26:490:26:55

Will that convince Stuart to rent it out?

0:26:550:26:58

No, I want to sell it.

0:26:580:27:00

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

0:27:000:27:03

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

-Yeah.

0:27:030:27:07

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

0:27:070:27:10

What could it resell for?

0:27:100:27:13

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

0:27:130:27:16

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

0:27:160:27:19

A potential profit of between

0:27:190:27:22

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

0:27:220:27:28

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

0:27:280:27:32

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

0:27:320:27:35

you have to admire them for taking on their first property

0:27:350:27:38

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

0:27:380:27:42

And doing such a good job, too!

0:27:420:27:45

I think the timing has been...

0:27:450:27:47

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

0:27:470:27:50

a couple of months later.

0:27:500:27:52

But the right property came along at the right location,

0:27:520:27:54

and so the timing we just had to accept.

0:27:540:27:58

Has all this whetted your appetite for property developing?

0:28:000:28:03

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

0:28:030:28:07

-We'll see then.

-Goodbye.

-Goodbye.

0:28:070:28:09

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