Episode 16 Homes Under the Hammer

Hello. Whether you're a seasoned developer or first-time buyer,

you definitely want value for money.

Which can be tricky in a fluctuating market,

which is why more and more people

are having a go at buying their homes under the hammer.

Now, Martin, sometimes you know you've got yourself a bargain

and other times, well, you're not quite sure.

The only way to really know is to test the market.

So, did the buyers on today's show get themselves a bargain?

Here's what they bought.

In Hammersmith, I get a reality check on the capital's property prices.

In certain parts of London, this is what you get for nearly a quarter of a million quid.

This mid-terrace in Gillingham, Kent, is so near the station

you don't need a minute to win it.

56 seconds - get a load of that!

And in Derbyshire, it's not the price that's a barrier to buying this house.

I'd love to look inside.

Got a slight issue.

Can't get in.

All these properties were sold at auction.

We'll find out who bought them

and what they paid for them when they went under the hammer.

I'm in West London today,

an area which seems to be not only blooming

but has a lot going for it too.

# I'm gonna get myself I'm gonna get myself

# I'm gonna get myself Connected... #

Well, if you're looking for good connections,

it doesn't get much better than Hammersmith.

More Tube lines than you can shake a stick at,

the M4... You've got the Thames, if you want it.

So, a very popular place to be.

Even in these tough times, property prices around here

went up by over 5% last year, in 2012.

So, a nice leafy street,

close to the centre with all its good things going on.

And I'm here to see a one-bedroom flat on the first floor,

with a guide price of £225,000.

Let's take a look.

The flat is leasehold and comes with a 125-year lease.

It's one of three flats in this rather elegantly fronted building.

Let's hope the interior lives up to the exterior.

So, what have we got?

Well, not too many surprises in store, I guess,

if you're looking at a one-bedroom flat, but you never know.

Through the front door, facing you, the bathroom and loo.

Bedroom over there - we'll come to that in a minute.

Then through into the only other room in the property,

which is this. So this is your kitchen

and your living area.

Um...now, the kitchen - pretty serviceable.

The flat itself, not in bad condition.

You could, theoretically, just use it pretty much as it is.

But to my mind, it's had a bit of the character taken out of it,

and renovated not particularly excitingly.

Nice to have the sash windows both at the front and the rear of the property,

but here in the bedroom, again, not a massive amount of space.

I think this flat really needs a sensitive touch.

It needs a bit of character put back in it.

And then you'd have a half-decent flat.

But at the end of it all,

in certain parts of London,

this is what you get for nearly a quarter of a million quid.

Well, it seems crazy that such a relatively small flat

could command such a high value.

For that price, you might expect chandeliers on the ceiling

and top-notch fixtures and fittings.

However, one room does have a delusion of grandeur.

Don't you just love this light pull in the bathroom?

Well, I suppose they do call it the throne room.

There's another key thing about this flat

that any potential purchaser shouldn't be left in the dark about.

Two really important things you need to consider when you're buying a flat

are number one - the lease, how long is it,

and number two - the communal areas

and your proportion of any bills that might be incurred

keeping those up to scratch.

Well, as you can see, one of the things which does slightly

let this flat down is this communal stairway.

The good news is that there are plans in place

to actually do up the communal areas - front door, this area here,

possibly the roof.

The bad news is that you, as the new owner of this place,

will be partly responsible for the cost of those repairs,

and if you're not sure what they're going to be,

you could be letting yourself in for all sorts of unknown amounts of money.

So definitely, that's something that needs to be checked out before you buy.

So, potentially some extra costs on top of the £225,000 guide price.

Can you really add value to this flat

and make it a good investment?

What can a local estate agent tell us?

I personally would put in a high-spec kitchen in here.

If you've got an open-plan kitchen/reception room,

it's worth spending the extra money.

Put high-quality units in,

high-quality appliances

and nice granite work surfaces -

something to give it the wow factor,

which is what everybody wants.

Indeed. We all want wow.

But with that £225,000 guide price,

plus the cost of giving it wow status,

can it really be a worthwhile investment?

Once the property has been refurbished to a high standard,

I would expect to market this property

anything in the region from sort of £295,000

to £315,000.

What about its rental potential?

I would expect to obtain a rent of round about £1,300 per calendar month.

Well, when it comes down to it,

not a lot of property for your pennies,

but that's what you have to pay for this kind of place

around these parts.

Let's see who fancied it when it went to auction.

35 is a one-bed self-contained flat.

Start at 200, go up.

200.

200, sitting down.

205.

205, yes?

210.

215.

220.

225.

225.

230.

230.

235.

236, yeah?

236. 237.

238.

240.

241.

24...2?

243.

244.

245.

246.

247.

248.

249.

250. 251, back in.

Lady, 252.

253.

Yeah?

254.

255.

255?

254, first time.

Second time.

Third and last time, if you're all done.

Sold, 254.

So, for £254,000,

the new owner of the first-floor one-bedroom flat in Hammersmith is Charles.

Charles is a banker by profession,

and I met him at the flat to find out more.

-Charles, great to meet you.

-Very good to meet you too.

-Congratulations.

-Thank you.

Tell me why you wanted to buy this flat.

I wanted to buy a flat in this area of London,

ideally for rental purposes,

but I had barely seen it.

I came in just as they were closing the door, so really it was a 30-second round.

And just make sure that the ceilings weren't coming down

and the building wasn't falling down.

-So you spent over a quarter of a million pounds on 30 seconds' glance?

-Yes.

How do you feel about that now?

As soon as you walk in, it's a very light flat, nice low windows.

Um...no, I'm very, very pleased with it.

I do have one rule, and that would apply to this one too,

-that any property I buy I'd be prepared to live in myself.

-Right.

In case you need to. Quite a few flats being sold off at the moment

do have a covenant that you cannot live in them as your prime residence.

-Right.

-So I was very careful when I bought this one that that was not the case.

And what about you - is this something you've done before?

Well, I was a banker for over 25 years,

and I left the bank industry on a full-time basis

three years ago.

And since then I've been working part-time as a consultant

-for some people I've worked for in the past.

-Right.

But wanting to keep some time free to do other things,

and this is one of the main things I would like to do.

I think this will be the first of other properties I would buy,

both inside London and also outside London.

My intention is,

within the next five years, to get a house outside London,

ideally bought at auction, and do it up and have that as my main home.

So Charles has a clear long-term goal,

but to achieve that, first he needs to

make this flat work as an investment.

So tell me what you're going to do to it.

We've got the kitchen behind us here in the room

and I think because it is all part of the main living room, do a very good high-spec kitchen -

integrated appliances,

either granite or wooden worktops, that type of thing.

The bathroom - completely redo that. It's very serviceable as it is,

but I think go for a fully-tiled bathroom,

good bathroom suite, good lighting.

Bedroom fairly straightforward -

put in some built-in cupboards and shelving.

In a small flat this size,

storage is always at a premium.

Right. And is that something you're going to do yourself?

I'll be overseeing it,

but I won't be doing anything myself.

I don't think you'd want to come and see the flat after I'd done everything!

So what's the budget for the work?

The budget is fairly flexible.

I probably could get away with, say, £10,000 to £12,000,

but I think if I go for a good spec,

I'd want to get some very good builders to do it and do it fairly quickly.

-I'm probably looking at nearer £20,000.

-And the timescale?

As quickly as possible, really.

I reckon the work probably will take about two months.

While Charles can control what he does to the inside of the flat,

he has less control over the communal areas and the outside.

Let's talk about the issues of the communal fees that are payable.

What do you know about all that?

At the moment, all I know is that there's an estimate

for the repair of both this house and the one next door.

There are six properties in the two

and the estimate is round about £50,000,

but my share of that is a lower percentage.

I don't know when they're going to be done.

It's the common parts in terms of the staircases, the entrance halls,

the front doors, all the outside windows,

the roof if it needs it.

And in some ways, you don't mind contributing if the property in general is benefiting.

That sort of kerbside appeal when you drive up to the house, it will look immediately very good.

Come through the communal parts, they'll all look good,

and then you come into the flat and it will hopefully look good as well.

-Well, congratulations.

-Thank you very much.

-Good luck with it.

-We look forward to seeing how it all turns out.

-Absolutely.

Thank you, Martin.

Well, Charles seems to know his stuff,

and seems to be prepared for any eventuality,

although I don't like the idea of this slightly unknown

bill for doing communal works.

In terms of the flat itself, though, he's on the right lines

and I look forward to seeing how he gets on.

You can find out later in the show.

Transport links are usually at the top of people's lists

when it comes to property.

And today's auction lot in Gillingham

certainly doesn't disappoint.

I've got my stopwatch here, and I'm going to time how long it takes me to get to the next property.

Go!

Well, the race is on to get to this lot,

and this time I think I'm onto a winner!

And stop.

56 seconds.

Get a load of that!

That is amazing. 56 seconds!

Here we are. Do you know what, I'm quite excited about this one.

The guide price?

£60,000 to £70,000.

So less than a minute to a main-line station,

with a 40-minute journey into London, is a definite plus.

However, if you prefer the car to the train,

then this place scores a big fat zero.

There's no parking readily available, and this former office

is hardly in the race for best-looking property of the year.

Let's hope it's better inside.

It's all a little bit depressing on the outside.

It doesn't look terribly inviting.

But once you're in, the biggest surprise ever, because look -

one, two...two different doors,

two different flats.

Wow!

And you can see straight away

that somebody has already started work.

Or it's been just left like this,

but it's actually in quite good nick.

It's been plastered, you've got little wires hanging out the ceilings,

there's bags of cement.

This excites me, because to find a property in this condition

is quite good news, actually.

# Give me some good news

# Give me some good news... #

And there's more good news.

This property originally had planning for mixed business and residential use,

but in 2006, permission was obtained to convert it into two flats.

The first flat consists of the ground floor and basement,

which unfortunately, we can't access today.

The second flat is on the first floor and the attic.

Planning allows for both flats to have two bedrooms.

They each also have a share of the overgrown garden at the back.

Although the quality of this work so far seems pretty good,

you should always have it checked to make sure it meets current building regulations.

But as both flats appear to be pretty close to first-fix stage,

this seems to be an unexpected bonus

for a building that was guided at £60,000 to £70,000

and from the outside at least, didn't look that promising.

It was all going so well! There had to be a fly in the ointment, didn't there?

Hmm. And it's here

in the auction particulars, I'm afraid.

Planning permission was granted

for conversion of a building

from office dwelling to form two two-bedroom self-contained flats.

But unfortunately,

permission lapsed, and so if you wanted to continue

with the work and keep this layout as it is,

I would make it my business to contact the local council first

before you count your chickens.

# Illusion

# Illusion... #

So all this completed work here might just be an illusion.

One of the reasons planning permission can lapse

is if work hasn't started within a specific timeframe.

Clearly work HAS started here,

so you would need to talk to local planners to check whether it's all valid.

All may not be quite as it seems.

Now, it's not my preferred option,

but there is a second option, and I think it could prove to be the most lucrative.

How about turning this into a single dwelling

and renting out each room individually?

The University of Kent has a campus in Gillingham

and it really is less than a mile away,

so it could be a bit of a money-spinner.

The downside to student lets

is that you need to seek all the appropriate permissions

to make it suitable for multiple occupancy.

Additionally, student lets are generally not a full year

and of course, there will be a turnover of tenants that you have to manage.

All things considered, I think I'd be picking up the work that's already been started

and keeping it as two flats.

What does a local estate agent think?

I think what would work best here would be as it seems to be laid out,

as two separate flats.

From a financial point of view,

what could generate the best return from this place,

guided at £60,000 to £70,000?

I can sell a two-bedroom flat in this area

for a price in the region of £90,000 to £110,000.

I think I could rent the property out

for a figure between £575 and £600 per month.

As a student let?

Student let, I could rent each room out

for a figure in the region of £85 to £95 per week.

Well, there's no doubt that financially, room by room,

rental may be the best option.

But in practical terms,

I'm not so sure.

Well, I think it's great to have options, isn't it?

And this little lot offers a whole multitude.

Let's see who fancied this property with potential

when it went under the hammer.

Lot 87 - this freehold refurbishment

and conversion project for two flats.

So, guide is £60,000 to £70,000.

Anyone going to pop in at £60,000 for this one?

I'm on the way at £60,000.

And 2 now. 62 I'm bid.

65.

65, 67.

And 70...and 2.

72 and 4.

£74,000.

And £76,000.

78, may I say? 78.

Up to 80...and 2.

82. It's against you at 82.

84. 86.

86...88.

And 90.

At £90,000...and 2.

And 4.

94...and 6.

96.

And 8...98.

And 100?

Go 99. I think it's like an ice cream. 99, can I say?

99. One more?

At £98,000 I've got. 99 anywhere else?

If not, £98,000 for the first time...

98 for the second...

Third and final time at £98,000.

Yours, sir, at 98.

So for £98,000, the new owner

of the Gillingham property is Sean.

He lives just under an hour away in Tunbridge Wells

and this will be his second development project.

-Sean, congratulations.

-Thank you.

Lovely to meet you. So why did you want to buy this property?

The price was definitely a factor

and I had a look at the legal documentation

from the website on the property.

It sounded at least interesting.

Interesting enough to come out and view it,

which I did.

So when you say you viewed it,

did you come inside and have a good look around?

I wasn't able to come inside

to the property, because it was... I think "mortgages not in possession"

was the term...

-So you weren't allowed to view the property - is that what you're saying?

-No.

-You couldn't get inside?

-I couldn't get inside.

-I could just view as best I could from the outside.

-Now, when you stand outside the front of the property,

you do not for one minute

think that it will be like this.

This is vast.

It goes on for days.

Were you shocked when you came in here for the first time?

Were you pleased?

Yes, I was... I was pleased, yes.

-Pleasantly surprised?

-Yes.

Obviously, it's not perfect

and obviously, it's been a work in progress, but yes, definitely.

Well, at first sight, it IS a pleasant surprise.

But I'm still not sure that what you see is what you get.

Hopefully, Sean will help me work it out.

Currently, as it stands, is this one dwelling

or is it two flats?

As it stands,

the work has already begun to turn it into two flats,

and it's quite advanced,

so it is essentially two self-contained flats.

But have you now got to go back to the council and reapply for that permission

because it has lapsed?

From the information they've given me so far,

as it stands,

if it's just a case of finishing off

the work that needs to be done so that it becomes two self-contained flats...

But obviously, as we can see, it's not finished yet,

so what sort of budget have you got to finish the work?

At present, I have...

-maybe £35,000.

-OK.

Once Sean has definitely got the green light from the council on the building status,

he'll employ a team of builders to finish the work,

which he expects to take three to four months.

Have you ever done anything like this before?

Well, I just have a flat in Tunbridge Wells,

which I've renovated

and let out.

So it was...

It was a smaller project than this is going to be, but...

but that's about it.

Is this going to be your main job? Are you currently working?

I'm not currently working on another job.

I've done a number of main jobs in the past.

I worked as a chef.

Um...

Did teaching English as a foreign language.

I worked on a helpdesk, IT support.

So varied! And now here you are, property developing.

Yeah, that's the plan.

Sean, good luck with this project.

-I can't wait to see the outcome.

-Cheers.

-Well done. Thank you.

I think Sean's got himself a pretty good deal here.

This could turn out to be a real cash cow,

if things go his way.

But the big dark cloud that's hanging over this property

is the issue of planning.

How will it turn out?

You can join me later in the programme

if you want to find out.

Coming up... In Ilkeston, Derbyshire,

this lot could be twice as nice.

One property that was formerly two.

That could be double the profit, perhaps.

We return to Gillingham in Kent

to find out if Sean's gamble has paid off.

I would consider buying a property

without looking inside again.

But first, it's back to London

to see what Charles got for his money.

It was all a conscious decision to take it to a high spec.

It was in the West London area of Hammersmith

where we came across this first-floor, one-bedroom flat,

located in an elegant Victorian building.

The flat was, well, small

but in perfectly reasonable condition.

Decent bathroom, a serviceable kitchen

and it came with a long lease.

But its location meant it came with a hefty price tag.

Guided at £225,000, it was sold at auction

for £254,000 to London-based banker Charles

as an investment property.

But I had barely seen it.

I came in just as they were closing the door, so really it was a 30-second round.

And just make sure that the ceilings weren't coming down

and the building wasn't falling down.

-So you spent over a quarter of a million pounds on 30 seconds' glance?

-Yes.

Well, despite the quick visit, Charles had done his homework.

He knew, for instance, that there was some work to be done

on the communal areas of the flat

and that he would incur additional expenses.

But even so, he felt that not only could he improve the flat,

he could improve its value as well

and that either on the rent or resale market,

there was money to be made.

So, armed with a flexible £20,000 budget,

he hoped to have the work completed in two months.

Now, just under four months later,

we're back to see how he's got on.

Is Charles looking at a successful outcome?

We've really carried out a complete refurbishment.

We have new floors.

Completely new bathroom.

Replaced all doors,

all skirting boards,

all door frames.

Basically, everything you can see in the property

is now new. Nothing has been carried over from before.

So it's all looking good.

But Charles's key aim was to improve the kitchen.

And it certainly looks as though he's achieved that.

Well, here we have the kitchen.

On the right-hand side, there was the large built-in cupboard

that houses all the pipes -

gas pipes, water pipes coming in,

the gas meter, electric meters.

Taking up a lot of space,

so that has come out and been replaced by a tower cabinet

that is now part of the kitchen itself.

We have, obviously, the work surface here with the sink

and the hob and oven,

with a built-in dishwasher here.

Drawers...

full-size washing machine

and a built-in microwave.

Very well-equipped kitchen

in what is not an enormous space,

but I think we have maximised that.

And the result... I think it looks very good.

I'm very pleased with it.

The flat really has come together,

and the work was in fact completed in two-and-a-half months.

Has Charles enjoyed the process?

Yes, it has been fun.

It's been great fun.

Um...there have been a few times

scheduling all the different trades

has meant a tremendous lot of different people working through here, but it's gone very well.

I had a very good team of builders,

who have produced a fabulous result.

They're all craftsmen in what they do.

And the result is what you can see.

Charles's role was just to oversee and check the finish of the work,

and, of course, to provide the funds to pay for it.

The budget... I think initially

I said the budget would be around £20,000 to £25,000.

I have gone over £25,000.

And that really was a conscious decision to use

higher-quality products - things like the oak floor,

higher-quality appliances.

We did replace, in the end... All the windows were actually refurbished as well.

We did replace all the skirting board and door frames.

We're probably round about the £27,000 mark,

so I'm not unhappy with the budget.

We didn't have any nasty surprises

and it was all a conscious decision

to take it to a high spec.

A £27,000 spend on top of his £254,000 purchase price

takes Charles's total outlay, without fees,

to £281,000.

There's still the cost of work to the communal areas in the building to come -

something in the region of £5,000 to £10,000.

So can this still add up to be a wise purchase?

What do two local estate agents think?

Coming back today, the owner has done a brilliant job on the property.

The standard of finish is fantastic.

I particularly like the quality of the bathroom suite

that he's put in, with the tiling, together with the kitchen.

It's really nice to see somebody's done such a professional,

well-finished, high-quality job.

The standard of the work that's been done looks to be pretty good,

on first impressions. There's nothing that's obvious

that needs to be done or needs attention.

So I think the refurbishment is pretty much 10 out of 10.

Well, top marks for the finish.

But with a current outlay of £281,000

on this one-bedroom flat,

plus potentially a further £5,000 to £10,000

for the work on the communal areas,

can Charles expect to see any profit if he sells it on?

I would put it on the market for round about £310,000

and I would expect to obtain offers very close to that.

In the current market, I would recommend an asking price

of between £310,000 and £315,000

and would expect to achieve offers close to that.

Those are certainly the figures I was expecting.

I will get some other agents round

and see what they think.

I would have thought a minimum of 310.

That does give me round about a £20,000 profit.

Yes, as Charles says,

he could expect a pre-tax profit of around £20,000-plus.

But he's currently undecided whether to sell or let the flat.

I would expect to obtain a rental

of between £1,300 and £1,350 per calendar month.

If we're putting the property on the rental market,

I would recommend an asking price

somewhere in the region of £1,300 per month.

I think those are the figures I was exactly expecting to hear.

I mean, I think when it comes to it, I might expect to do a little bit better than that.

We'll see in the coming weeks.

£1,300 per calendar month

would generate a yield of around 5%.

Is that enough to tempt him to keep it as a long-term rental?

I'm tempted to keep it, because I like the property.

The location is so good.

And it would be a property that would be a very easy place to live.

This is Ilkeston in Derbyshire,

a town close to both the cities of Derby and Nottingham.

Once a major player in the steel industry,

you can still see clues to its illustrious past

in some of the architecture in the town centre.

The property I'm here to see is only a short bus ride away from here

on the edge of Ilkeston, on an estate known as Cotmanhay.

Well, like many places, the property market in Cotmanhay

has been through some tough times in recent years.

But that said, the property that was up for auction

sounds to me like it could be a good deal.

It's these houses here -

they're actually two semi-detacheds which have been converted into one.

The guide price was £68,000.

I'd love to look inside...

but there's a slight issue.

I can't get in. Better go round the side.

# Gonna build a big fence

# Around my baby

# Oh yeah

# Build a big fence around my baby

# So they can't steal my baby from me... #

This rather forbidding fence and a messy garden

don't exactly scream "kerb appeal".

I hope the inside will be more welcoming.

Now, I have been told that this property

until recently was used as a family support centre.

So, originally two houses, knocked into one.

What are we going to find?

Well, through the side door there

into a fairly sort of...

if you like, commercial-style kitchen space.

But straight away, nothing too untoward in terms of damp or...

Structurally speaking,

it all looks pretty good.

Through here, a rear sort of...

Well, I won't call it a living room -

it's just a space there.

Um...hallway area...

I mean, it all seems quite - what's the word? -

quite utilitarian right now,

because it was a functional space.

Up until then, fairly standard, though, I suppose.

Until you get to this point,

where the two houses have been knocked into one.

The good news is that, clearly to put them back into two,

would really mean just blocking that up and then sorting out things

like kitchens and bathrooms.

Because in this side you've got basically a mirror image.

Stairs up to the bedrooms and bathrooms there,

more rooms at the back, another kitchen area there.

Front door on either side here.

You get the kind of idea.

Um...one property that was formerly two...

That could be double the profit, perhaps.

# What I've been saying

# Has been so true

# Everything is twice as nice Between me and you... #

Yes, this could be twice as nice,

because, quite simply, there's two of everything here.

Two kitchens, two lounges,

two bathrooms

and three bedrooms on each side.

Yes, there has been some adaptation

to make the rooms more suitable for office space,

but it really wouldn't take too much

to turn this one lot back into two semis.

Well, out at the rear of the property...

first thing you notice... Ah, yes -

music from the right, music from the left. It's obviously quite a lively area,

but noisy neighbours can be an issue.

It's something you should definitely bear in mind,

especially when you come to see properties.

But out at the back here, what have you got?

A garden? No! It's certainly low-maintenance.

Lots and lots and lots of Tarmac.

Again, alluding to the property's previous existence.

The problem with this is...

Well, it's great if you've got about 15 cars to park,

but for normal people who want a garden,

it's actually going to cost quite a lot of money to get this taken up.

But just doing that, suddenly you start to get back

into this whole thing of converting this back into what it should be,

really, which is two semi-detacheds.

I certainly wouldn't underestimate just how much the outside of this property

is going to eat into any budget,

and that's before you spend anything on the garden.

# Can you dig it?

# Oh, yeah... #

Removing the concrete and fencing at the front

is also going to cost a pretty penny,

which definitely has to be factored in.

What does a local property expert think?

Does he "dig" this double lot?

First impressions of the property are it's typical of a property owned

by a local authority.

It's been well maintained, it's been basically modernised,

it's been rewired, it's got a modern heating system,

it's got new double-glazed windows.

All the basics that you would want to build on.

But I think the most likely and the most profitable

option for someone looking to buy this as an investment,

as a development opportunity,

is to put the property back into two semi-detached houses,

as it was originally.

I think that would be the lowest-cost option,

and there would be a ready market for the two semi-detached houses you'd be left with.

So we're all in agreement, then.

With the whole lot guided at £68,000,

and providing planning permission was granted

to convert it back into two three-bedroom semis,

what could each of the houses sell for in the current market?

Renovated to a good standard

and made attractive with nice modern up-to-date fittings,

I think they would sell for round about £80,000 each.

What about rental?

There's a strong rental market in this area

and I would expect that each property would achieve

£450 rent per calendar month.

If those two properties went for

anything near that £68,000 guide price,

and the renovation budget was sensible,

they could offer an excellent yield and steady income

in a market where houses are hard to sell quickly.

Well, an interesting and potentially lucrative project, this one.

But it all relies on getting that planning permission

to convert it back into two properties,

and keeping a tight rein on the budget.

Let's see who fancied taking it on

when it went under the hammer.

Lot 28 is a pair of three-bedroom semi-detached houses,

used over recent years as a community office.

68? 65?

Thank you. £65,000 is the opening bid.

At £65,000.

66.

67.

67. 68?

68.

At 68. 69.

£69,000.

At 70.

At £70,000.

71. 72?

72.

73.

74.

£74,000.

75.

76.

77.

78.

79.

£80,000.

81. 82.

83.

84.

85.

86.

87.

£86,500.

87.

£87,500?

£87,500. 88.

£88,500.

89.

And a half.

£90,000.

500.

91.

And a half.

92.

£92,500.

93, sir?

93.

£93,000, against you.

At £93,000 once...

twice...

third time...

Yours at £93,000. Thank you.

So, for £93,000,

the successful bidders for the former office

were Nottingham-based couple Dave and Zoe.

Dave owns a car-dismantling company,

while Zoe's just finished training to be a social worker.

They've recently started a small property-developing company together.

Zoe joined me at the property

to tell me more about their second business purchase.

-Zoe, great to meet you.

-Thank you.

-Congratulations.

-Thank you.

Tell me why you wanted to buy

-this property?

-We were looking at a few.

We've done a few of our own houses up

and we wanted to start doing it as a business.

-So who's "we"?

-Me and my partner, Dave.

-Right, OK.

And did you both have property experience?

We've both done ones up that we were living in previously.

And we've bought what was previously his grandma's house

-and did all that up from scratch.

-Right.

When did you see the property?

-When we got the keys!

-No!

Yeah. It was my 30th birthday party the day of the viewing.

We did send somebody and they took photos,

so we'd seen it on photos but not actually seen inside the property.

-So you were too busy partying?

-Yeah!

Did it turn out to be a good birthday present?

Yeah. Yeah, we was quite pleasantly surprised

when we walked in last Thursday.

# Happy birthday to you

# Happy birthday to you

# Happy birthday... #

I'm glad it was a pleasant surprise for Zoe,

but it's not an approach I'd recommend

when you're spending £93,000.

At present, this is considered an office block,

so what are their plans for it?

We're hoping, because it was originally two houses,

it won't be too much trouble to get planning to put it back to the two houses.

Right. And with a view to what?

-To sell them.

-OK. What about the idea of renting them out? Is that something you've considered?

No. It's not.

We want to sell them.

Have you gone into the numbers in any great detail, in terms of how much it'll cost?

We did the homework before we went to the auction. Read the legal pack.

On the legal pack, it said we had to pay the council selling fees and solicitors' fees and stuff,

so we worked that into what we were willing to bid for it.

Um...and we're hoping to spend about 12 on each.

Um...so, hopefully, we'll make a decent profit.

Roughly how much do you think you might make? What might they sell for?

We're looking at having about 60 in each, 65 in each,

and putting them on for 75.

So Zoe and Dave have thought through the numbers carefully here.

And it just shows you the value of reading the legal pack.

The hammer fell at £93,000,

but they had to stump up another £2,412

to cover the council fees.

They're planning to spend no more than a maximum of £12,000 per property,

inclusive of all the fees.

They hope to make £10,000 to £15,000 on each house

and to complete the project in six months,

using contractors to do the work.

So tell me what you're going to do. What's the plan?

Redecorate everywhere.

New kitchen, new bathroom in each.

Obviously, brick the archway up between the two houses.

Obviously, decorate, paint the bedrooms,

put new carpets, flooring down.

And then in here, we were hoping to take the door

and the window out and put some French doors onto the garden.

Oh, right. OK.

Now, we are surrounded by a bit of a security zone, aren't we?

With the fence and the...

Lots of concrete or Tarmac out the back.

What are you going to do about all that?

The fence will go. We'll leave it up in the meantime

while we're doing the houses, because it's good security.

But we're going to take them out and re-fence all the way round.

And in the garden, we're putting decking down,

taking the rest of the Tarmac up and putting turf down.

-Right.

-And a driveway on each at the front.

-Right. Well, congratulations. Good luck with it.

-Thank you.

-Look forward to seeing how you get on.

-Thank you.

Well, Zoe and her partner have certainly got work to do

to turn this into two houses, as they were originally.

But it all relies on that planning permission,

and it seems to me like their budgets and potential profits are a bit tight.

I certainly wouldn't have ruled out the rental option.

Find out if they change their plans

and how they get on later in the show.

Hmm. The plans and dreams seemed promising at the time.

But have those dreams come true?

Time to go back and find out.

If being close to a main-line station

and having local shops on your doorstep are your criteria,

then this property in Gillingham in Kent would have fitted the bill.

Although it did not boast the most elegant of exteriors,

this former office held a few surprises inside,

with quite extensive work to convert it

into two two-bedroom self-contained flats,

already underway.

But with planning permission for the conversion now lapsed,

no available parking and little outside space,

it did come with a few potential pitfalls.

Despite only viewing it from the outside,

Kent-based property developer Sean

thought it was worth taking a chance,

so he bought it at auction as his second renovation project

for £98,000.

Third and final time at £98,000.

Currently, as it stands, is this one dwelling

or is it two flats?

As it stands,

the work has already begun to turn it into two flats,

and it's quite advanced,

so it is essentially two self-contained flats.

But have you now got to go back to the council and reapply for that permission

because it has lapsed?

From the information they've given me so far,

as it stands,

if it's just a case of finishing off

the work that needs to be done so that it becomes two self-contained flats...

# Come back and finish what you started

# And don't you leave me hanging on... #

So provided Sean did get the thumbs-up from the local council,

the plan was to finish what had been started

and end up with two self-contained flats.

He hoped that with a team of builders,

a 35-grand budget

and three to four months' work,

he could complete the flats, ready for the rental market.

Now, seven months later,

we're back to see how he's got on.

Outside certainly looks more appealing,

with new rendering and paintwork.

And inside we're met with two doors.

What's behind them?

What we've got on offer here is two three-bedroom flats.

Yes, two three-bedroom flats

with the downstairs flat's three bedrooms on the ground floor.

One decent double...

..and one large en suite

which still has some work to do on it.

Sean's decided to change what was intended to be a study

into a third bedroom.

But the big surprise in this flat is off the front reception room,

where there are now stairs leading down to the basement.

# Oh, now tell me where can you party, child, all night long?

# In the basement Down in the basement, yeah... #

Wow! I couldn't even get down here when I visited.

# In the basement

# Down in the basement... #

And just look at all this space.

# You can jam and still be safe

# In the basement

# Down in the basement, yeah... #

The basement was originally just a storage area.

What we've done is we've got a bathroom now,

a utility room, kitchen area,

nice white bevelled brick tiles, woodwork tops.

So we're really pleased with what we've achieved here.

Yes, I think this basement area is great.

There are still a few bits and pieces to finish off,

but Sean has already put the flat up for rent

in anticipation of completing it in the next few weeks.

How's the second, upstairs, flat progressing?

Well, it's looking pretty good,

with a large and bright reception room...

..two bedrooms...

..a kitchen and bathroom on the first floor...

..and then there's a fabulous large double bedroom on the top floor.

Apart from the extended timescale,

it all seems to have gone to plan.

The planning permission was still existent.

The works did need to have been commenced within three years

of when the approval was granted.

And the works had actually started,

so I didn't need to reapply for fresh planning permission

for conversion into two flats.

It wasn't all plain sailing, though.

Some of the work that had been started

had to be changed, as it didn't meet current building regulations.

This meant re-insulating the loft

and it also turned out the basement wasn't adequately damp-proofed,

so boarding and insulation had to be removed,

then reinstated once it was damp-proofed.

All this delayed the project by three or four months.

But did Sean keep to his proposed 35-grand budget?

I spent £48,000

on this project,

so I have gone over budget on it,

and I've also tried to get the work done to a good standard throughout.

£48,000 on top of a purchase price of £98,000

will take Sean's total outlay, without costs and fees,

to £146,000.

So has this gamble paid off for him?

What do two local estate agents reckon?

Having looked around the flat today, I think the changes

are quite startling, really.

It was in a very bad state

and now it's been done to a very high standard.

The owner's done a cracking job. There's still bits to finish,

but the standard of the work is very good.

Sean is looking to let both flats out.

But having invested £146,000

to complete the two flats,

could he see a return for his investment if he sold them?

Each flat would resell

for around £95,000 to £100,000.

The ground-floor flat would sell for between £85,000 and £90,000.

And the top-floor flat,

we'd be marketing at £85,000 to sell it for £80,000.

Those are quite pleasing results.

I would have made a reasonable amount of profit there.

Yes, potential pre-tax profit between £19,000 and £54,000,

if he sold both flats.

But at present, it's the rental market he's more interested in.

The top-floor flat would rent for £695 per calendar month,

and the ground-floor for £725 per calendar month.

I think each flat would rent for a figure

of between £600 and £650 per calendar month.

I think those figures are slightly low,

just from the point of view that I'm already marketing the flats at £800.

And I might well come down to about £750.

Even a monthly rental of £750 per calendar month for each flat

would mean a potential annual yield above 12%.

So it may have been a bit of a gamble, not seeing inside,

but it sure paid off for Sean.

Will he take that chance again?

I would consider buying a property without looking inside again...

for the correct price, sure.

It'd be a calculated risk, just like this one.

It was in the Cotmanhay area of Ilkeston in Derbyshire

that we first came across a lot rather lacking in kerb appeal.

Surrounded by high fences, this former family support centre

was in fact two semi-detached houses,

linked into one by an archway on the ground floor.

Despite being last used as an office space,

it still had two kitchens,

two bathrooms

and was structurally laid out as two three-bedroom houses.

So it wasn't hard to see that, provided planning permission was granted, turning it back

to two properties wasn't going to be too problematic.

# All right, and it's coming on

# We've got to get right back to where we started from... #

Undoubtedly, the biggest challenge was digging up the car park at the rear

and restoring it to a garden of some kind.

However, with the prospect of two houses in one lot,

there was the potential to double the return.

That's what Nottingham-based couple Dave and Zoe thought,

having bought the lot at auction for £93,000

as their second development project.

When did you see the property?

-When we got the keys!

-No!

Yeah. It was my 30th birthday party the day of the viewing.

We did send somebody and they took photos,

so we'd seen it on photos but not actually seen inside the property.

-So you were too busy partying?

-Yeah!

Did it turn out to be a good birthday present?

Yeah. Yeah, we was quite pleasantly surprised

when we walked in last Thursday.

Well, not quite a textbook approach to viewing an auction lot,

but some birthday present!

And with Zoe just qualified as a social worker

and partner Dave owning a car-dismantling firm,

they planned to contract out the conversion work.

They hoped to turn the one office

into two homes within six months, on a budget of £12,000 per property.

Now, nearly six months later, we're back to see

if they've got their house party started.

# I'm coming up

# So you better get this party started

# I'm coming up

# So you better get this party started... #

Well, it does seem as though they have turned

this single office into two houses successfully.

How long did it take to get the ball rolling?

Forever. It took four months.

There was an issue with the Highways Agency.

Because we're on a corner,

they were worried about the height of the fence we were putting up

to block people's view as they were coming round the corner, so...

we had to put more plans in and pictures.

So once they eventually got the green light from the planners

and blocked up the passageway between the two houses,

it was just a case of making them into homes again.

It certainly seems like they've done that

in the left-hand property, with a fully-fitted kitchen,

complete with all mod cons.

There's a bright, welcoming lounge,

which now has patio doors out to the raised deck area.

While upstairs, the former office spaces have been transformed

into three refurbished bedrooms.

The formerly tired bathroom area

is now a modern family bathroom.

So, property number one is looking great.

What about next door?

Obviously, they're very similar. Both have the same layout.

We just went for different wallpapers.

Both similar colours that we've used,

just different sort of patterns on the curtains and the wallpaper,

just to make them a bit different.

You wouldn't want to be living next door to somebody that's got the exact same house as you!

With carpets still to go down

and a few snagging issues to be sorted,

property number two - the right-hand semi -

is a little behind its neighbour.

But it's nearly there, and with a smart new kitchen...

..those three bedrooms...

..and, again, a modern bathroom,

it's all looking pretty good inside the properties.

But perhaps the biggest challenge was changing the car park

into two gardens.

Because the doors are a lot higher than the level of the garden,

they had big horrible concrete steps

down to the Tarmac.

So we decided that really we'd have to put something up high,

so you could come out onto the decking.

Plus, there's quite a nice view out the back,

so, because the decking's quite high, you can sit and enjoy the view.

So the garden turned into a bigger task than expected.

Despite this, they're still on track

to complete the work in a six-month timeframe.

But did they also manage to stick to

their budget of £12,000 per property?

We ended up at 18, in the end.

A lot of it was on the garden,

just the sheer amount of getting rid of all the Tarmac and stuff,

that we underestimated.

And just making the properties to a higher finish

so they stand out a bit more on the market, to sell them quicker.

So an outlay of £18,000 per property

takes their total costs to £36,000.

Having bought the lot for £93,000,

their total spend without costs and fees

is £129,000.

What do two local estate agents

think of their two-for-one refurbishment?

I think the renovation that's been done on these properties

is just right for the type of properties they are

and the market they'll be in.

I think what's surprised me about the refurbishment particularly

is how much space has been found outside.

There's now a big driveway area for off-street parking.

There's a large garden at the back

and now it's been landscaped, it looks really spacious.

My overall impression of the properties is good.

The one next door, that is finished to a very good standard,

and, more importantly, the customers that it's aimed at

will be very impressed with the level of refurbishment that's been done.

Yes, they've certainly made them into two lovely homes,

and are hoping to sell them on.

But if they couldn't sell them quickly,

how would they fare as rentals?

These properties would let overnight

at a rental figure of around £500 per calendar month.

If I was going to rent these properties out,

I would expect to achieve around £500 per calendar month for each property.

They're good amounts. We'd be happy at that.

But obviously, our priority is to sell them first.

£500 per calendar month for each house

would generate an annual rental yield of over 9%.

But Zoe and Dave are keen to sell them

and get a return on their £129,000 investment.

My opinion is that the open-market value of each property

is now around £85,000.

If I was putting the properties on the market today,

I would expect to achieve £80,000 for each property.

I'm really pleased about that. That's what we estimated.

We've had them valued and we're putting this one on the market this week at £84,950.

And the other one will go on the week after.

In fact, since filming,

they've had an offer on the finished house of £83,000.

So if they manage to achieve that figure on both houses,

that could mean a potential pre-tax profit

of £37,000.

So, what's next?

We've already bought our next property,

so as soon as we've finished next door, it'll be straight on to that one.

Well, that's it for now. We'll be back next time

with more dispatches from the front line of property developing.

-We'll look forward to seeing you then.

-Goodbye for now.

-Goodbye.

Subtitles by Red Bee Media Ltd