Episode 34 Homes Under the Hammer

Bricks and mortar have always been a solid investment.

But in these challenging times,

you have to make sure that your purchases

don't fall down around your ears, taking your bank balance with them!

That's right, so do your research, check your finances

and you never know, you may find a real bargain in the auction rooms.

Many buyers have their own special tactics at auction.

Some sit at the front, others hide at the back,

while some choose to remain completely anonymous and bid on the telephone.

Whether it's a wink or a wave, the result's the same,

so let's see what went under the hammer on today's show.

There are some intriguing architectural features

at this mid-terrace in Newcastle Upon Tyne.

They are called corbels.

This South Wales hotel makes quite a first impression.

The smell of damp in here is horrendous!

And in Derby, this bungalow is showing its age.

A good old 1960s serving hatch!

Marvellous!

All these properties are being sold at auction.

We'll find out who bought them and what they paid for them when they went under the hammer.

Sold at 129.

Today, I'm in the North East of England

and a suburb of Newcastle Upon Tyne called Heaton.

There are good transport links to the city centre, only two miles away,

and rental properties are in high demand around here.

Heaton offers a bit more value for money

than nearby areas such as Jesmond,

and yet it's still close to the universities

of both Newcastle and Northumbria.

The street itself,

being so wide and lined with beautiful Victorian terraces,

makes it all feel rather grand.

With its guide price of 180,000-plus,

I'm hoping it's just as grand inside.

Oh, wow! We like that!

The moment you come through the front door, you're greeted by this huge great hallway -

stripped floors, nice clean cream-coloured walls.

It's a great start. A few features there...

Now, here's an interesting fact. They are called corbels.

It's not just a piece of plasterwork.

I guess in the classic definition of what they are,

it's actually supporting the weight above it.

They might only be mock supports, but that's what they're called.

Your lesson for the day!

So much for those who think watching TV isn't educational.

The other lesson here is that not all auction properties are a nightmare.

The front room is lovely and a decent size,

with lots of light.

Next door, there's a dining room, again all clean and fresh,

with those lovely floorboards.

So far, this seems too good to be true.

So through to the kitchen. Slightly disappointing.

A good-size room,

but clearly not the most expensive units in the world.

But replace them with something a bit more snazzy, or replace maybe the work surface,

put some tiling in, you'd definitely change the look and feel in here.

In terms of space to play with, it's good,

and that's just the downstairs.

Great start!

There's also a handy utility room at the back of the house,

while outside there's a yard.

It's not exactly easy on the eye, but that's a minor quibble.

Back inside, and upstairs there are four perfectly presentable bedrooms,

two at the front, one large and one small,

with a third in the middle,

and the final bedroom at the back.

Along the landing, there's plumbing aplenty, with a family bathroom,

a separate toilet and a shower room.

This is a great house -

lots of space for family bedrooms, play rooms

and no fighting for the bathroom in the morning.

So this would be a lovely family home,

but in case you haven't guessed it already,

the way to maximise this as an investment

would be to use it as an HMO -

a house of multiple occupation.

The rules and regulations regarding that vary,

depending on which part of the country you live in,

the numbers of rooms and number of floors you'd need before you need to be licensed,

but you'd still have to follow various criteria,

such as the amount of bathrooms,

the number of fridges and things like that.

You'd also have to look at things like fire escapes and a fire alarm.

Another thing to consider is if you're applying for a mortgage,

because some mortgage companies don't like individual tenancy agreements per room.

Lots to consider, but get it right

and this thing could be an absolute money-spinner!

# You spin me right round Baby, right round

# Like a record, baby Right round, round, round #

Turning the back room into a bedroom would give you five let-able rooms,

with a shared sitting room and kitchen.

As the house is in good order,

the only costs could be complying with the regulations.

Once you've established what the rent's going to be,

I think you'll be in the money and back to your roots.

That looks like damage caused by a tree.

To my mind, that, I think, is an ash.

But look at the damage it's created with this concrete here.

What I'm concerned about is not only what you can see, but what you can't see.

Have those roots gone into the drains?

Have they affected the foundations of the property?

That isn't good.

Dig down into any property, no matter how apparently great,

and you always seem to find something.

I'd definitely want to get to the root of this problem before I bought it at auction.

But that guide price of £180,000-plus

still looks attractive to me.

We asked a local estate agent for her thoughts on it.

It's a lovely period property.

The size of the rooms are great

and I think the high ceilings, as well, are lovely.

We both like this house and its condition.

But say it was titivated and made more family-friendly,

would there be any profit to be made by selling it on?

I think once the property is renovated with a new kitchen and bathroom,

the property could achieve £210,000.

My instinct says that due to the location,

this is a great student rental opportunity.

What kind of returns could this house make if five bedrooms were let?

For a student let for this property,

I think we could achieve £60 to £65

per room, per week.

Five rooms at £60 a week, that's £1,200 a month.

If you got it for anything like that £180,000-plus guide price,

that could mean a yield of around eight percent.

Well, I think this is a really good property

and delivering a lot more bangs for your buck

than you would get in some nearby areas.

A money-spinner, too, then. Let's see who agreed when it went under the hammer.

A four-bedroom mid-terraced property

in an established residential location.

Can I ask for 180?

How about 170?

I'll take 160. I won't go below that. I need 160,000 to start.

Do I have 160 anywhere? 160, gentleman on the back wall.

162 anywhere else?

162, the lady with the blond hair, at 162.

164. 164 bid.

166? 166.

168. 170.

I'll take one if it'll help. One bid. 169.

I'll take one. 170. 171.

No? I'm on the back wall at 170,000. Gentleman in the black shirt at 170,000.

I'll take one anywhere else. I'm here and selling at 170,000.

It's going once at 170. It's your last chance.

I'm going for the second time at 170,000.

Sold to the gentleman on the back wall at £170,000.

The successful bidder who got the lot for £170,000,

10,000 below the guide price, was Paul.

He lives in Newcastle

and, along with his wife Joanne, owns and manages six properties.

I met him at the house to hear what he has planned for it.

-Paul, congratulations.

-Thank you.

-It's a great house.

-Lovely, yes.

-Tell me why you wanted to buy it.

Development-wise, we've got one further up the street and one further down the street,

and this one came up in auction

and we thought, "We need this house."

To do what with?

We're going to strip out the bathrooms and the kitchen

and we're going to go high-end, with room-only lets as a shared five-bed house.

Right. Fantastic.

Tell me more about you and the market round here.

Well, round here's mostly students, as you can tell by this property.

That's what it's been let out for previously.

But we're trying to get ahead of the game

and get more rent and more yield by going higher end

on getting professionals in on a room-only basis,

and then they share the lounge and kitchen and bathrooms together.

Paul thinks that by raising the spec and appealing to young professionals,

he can get roughly £320 per room, per month.

That's £80 more per room than if he lets to students.

I reckon he might've chosen just the right house for that job.

It's a gorgeous house.

We're going to try and be sympathetic,

as we're going to do it as a layout where we get five beds to let out,

but if we want to resell it, it's going to look like a good family home.

It's not going to look like an investment property that's been chopped out.

How are you going to manage that delicate balancing act?

Well, I think we're going to re-map where all the bathrooms are and the layout

to increase the size and add an additional bathroom.

-Oh, right.

-We don't like to have more than two bedrooms per bathroom in a house...

-Right.

..because otherwise nobody can get in.

That's the way we like to do the layout.

-So, keeping the same number of bedrooms?

-Yes.

We've done plans. We know what it'll cost to get this done as a five-bed,

with two bath and two toilets upstairs.

We also had someone in. We're getting plans done out the backyard

for a single-floor extension for another bedroom and bathroom.

Gosh! Really maximising what you've got.

Yes, so you get a six-bed out of it, with a small extension on the back. That'll increase the yield.

Paul has big plans here. Apart from upgrading the kitchen,

he also plans to reinstate the fireplaces

and, sadly for me, carpet over those beautiful floorboards

to reduce any possible noise issues.

When it comes to redecoration,

there shouldn't be any problems choosing the right colour scheme

because Paul and his wife Joanne have several other businesses,

one of them is a chemical manufacturing company

which makes, guess what...

-We make colour testers...

-OK.

-..that you can buy in the DIY shop.

-Colour testers?

-Sorry, the little tester pots you buy

when you want to change the colour on your wall.

-Oh, right!

-We actually make them.

-Oh, right! OK!

-Someone's got to!

# So you can colour my world With sunshine yellow each day

# Oh, you can colour my world With happiness all the way

# Just colour my world #

Paul is certainly nailing his colours to the mast

when it comes to investing in properties.

But with hopes of adding an extension

and with that high-end interior he has planned,

I just hope he hasn't painted himself into a corner

when it comes to the cost of this renovation.

Our budget for the internals -

the new bathrooms, the new kitchen and utility room -

-are £28,000 to £35,000 approximately.

-Wow.

I think the max for the extension,

-we're hoping it's going to be no more than 18.

-Right.

-So ploughing a lot of money in just to reap some good returns?

-Yes.

-Congratulations. Good luck with it.

-Indeed.

Sorry to see the floorboards go, but I look forward to seeing the transformation.

It'll be great.

So Paul with some very clear ideas what he's going to do with this place,

going for the high end.

Is it the right thing to do?

Will he be painting the town red when it's finished?

You can find out later in the show.

The town of Pontypridd in the South Wales Valleys

has always been a popular stop-off point for tourists

and is currently enjoying some regeneration.

A couple of miles up the road and we're in Cilfynydd,

a typical Valleys village, surrounded by spectacular hills.

And what do we have to see? Well, are you sitting comfortably,

because it's this gigantic enormous wedding cake of a building here,

a former hotel and pub.

It had a guide price of £45,000 for all this.

Can you believe it? I need a lie down.

At least there are plenty of bedrooms to choose from.

This pink palace of a hotel and pub is more Vegas than Valleys.

It was closed in early 2012

and since then,

well, it's heart-breaking to see what's become of it.

# Since my baby left me

# I've found a new place to dwell

# It's down at the end Of Lonely Street

# In this Heartbreak Hotel #

Oh, my goodness!

The smell of damp in here is horrendous!

I'm even scared to breathe in.

This is probably the worst smell I've ever had to smell since I've been doing this programme.

You can see the damp, you can see the ceilings are falling down.

I mean, look down here. There's mushrooms growing!

It's just wet underneath your foot.

The place is vast. I mean, it's in a terrible, terrible state!

Look at the ceilings. I mean, when you think about it,

this is the ground floor

and I know there are three floors,

so for this ceiling to have come down,

the water must've just been pouring through.

It's just quite a lot to take in.

# Ooh-ooh, that smell

# Can't you smell that smell? #

The furnishings and carpets are ruined.

They're sodden and rotten.

But the bar could be salvageable.

This place is big, though. There's the pub and games area,

plus a kitchen out back.

On the first floor is the hotel reception where, rather than a warm welcome,

I'm greeted with that familiar stale stench of damp.

There's also the hotel restaurant, function room and dance floor,

so there's certainly no shortage of space.

Despite the smell, I'm very excited to be exploring this property.

But the more I see, the more the harsh realities hit home.

It's a tough economic climate to be starting up a bar and hotel business.

Being a publican is a tough business these days,

with 16 pubs a week closing across the country

due to diminishing trade and high costs.

On top of that,

the premises had its licence revoked before it closed

so reapplying for that is another hurdle to jump.

It's quite possible someone could make this business work and turn it around,

but it's not as simple as "turn on the pumps and see the pounds roll in."

If a new licence is not approved by the local council,

the bar may be the only dry thing in here.

Anyone thinking of trying to reopen this as a hotel

needs to speak to the council pronto.

On the floor above are five hotel rooms

and a two-bedroom apartment,

previously used as manager's accommodation.

Now, what to do with this auction lot...

Returning it to a habitable hotel is one way to go.

And another is, of course, what about turning this whole place into flats?

Mm... You could get a sizeable number of units out of this place,

but they'd be a hard sell

in an area where houses are cheap and mortgages are hard to come by.

And rental - I'm not sure it would be worth the time, effort

and, most importantly, money.

This is no straightforward renovate-and-rent-out or do-up-and-sell-on.

This project requires careful consideration.

But bearing in mind it was guided at £45,000,

this hotel is a whole lot of property for that price.

We invited the auctioneer who sold it

to give his opinion of it.

A residential redevelopment, in my view,

is completely unfeasible in today's market conditions.

The funding is as rare as hen's teeth,

and I think getting a bank to fund a development

where the end value of your flats is probably the same,

if not less, than the average terrace house,

why would you buy a new flat when you can buy a refurbished house?

It doesn't make sense.

What about the hotel bar business?

What if a property developer did it up

and rented it out to an experienced publican?

I think, potentially, if you were to do this properly,

and by doing this properly

I mean providing a tenant with a satisfactory rent-free period to get him up and running,

providing a cheap rent to make business feasible,

there's no reason why, in two or three years' time, you could produce a good market rent

which will enhance the capital value of the property.

Oh, my! Rent-free period? Two or three years' time?

This is no get-rich-quick scheme, but a long-term investment

with no guarantee of financial rewards.

This is a staggeringly large property for the £45,000 guide price,

and it offers up loads of options, but all with their own issues.

It doesn't seem like much as an initial investment,

but whoever takes this place on

needs to have plenty of cash to splash

and imagination to make it work.

Let's see who that was at the auction.

Moving on to lot number eight,

the substantial hotel premises in a roadside location.

Who is going to start me off,

ladies and gentlemen, at £35,000

to get things moving?

Don't be shy. I know you're all here. Thank you. 35,000, sir.

I'm at the reserve of 35,000.

If you're interested be quick, because I'm going to sell for 35,000 if I don't see anybody coming.

Thank you. 36. And seven. Seven.

Eight. Nine. 40. Thank you. And one.

41. And two.

43. Four. Looking for 44 off you. 44. And five.

Looking for 45 off you, sir? I've got 44 standing at the back.

45. Thank you. 45. And six.

45 on you, sir. 45,000, I've got.

Any advance? I'm going to sell it to this chap here.

Are you going to give me half? 45 and a half. And six.

46. Half?

OK. Back to you at 46,000. 46,000 I've got?

46,000 I'll sell it at. Be quick. 46,000 I've got.

Are you sure? Are you all done? 46,000 on you, sir.

It was David who made that successful bid of 46,000.

He's an experienced property developer,

although this will be one of his larger projects.

Today, he's accompanied by his son Gregory,

who has recently joined the family business.

How does David feel about his purchase?

# Well, I'm tickled pink to think

# That you are mine #

David and Gregory, congratulations. You've bought yourself a big pink palace!

How did you find this and what inspired you?

Well, we had the catalogue through, and we were looking for a number of properties,

and we went to view six properties for that particular auction.

Greg didn't come along to this one.

What did you think on the viewing day? Was it in this state? Was it worse?

There was water coming in through the roof. It was raining so water was pouring in,

but I thought that worked to our advantage

because a lot of people would've been put off.

They would've been put off. And also by the stench!

I mean, it really does smell!

Hopefully, we'll get people in to start cleaning the pub within a couple of days.

The carpets are absolutely sodden at the moment,

there's mould growing everywhere,

the furniture's absorbed the water that's been coming through,

so hopefully, by the time you come back,

it'll be a lot cleaner and a lot sweeter-smelling.

-Gregory...

-Yes.

-When you saw this place for the first time,

-did you think your dad had gone mad?

-A little bit! I knew he didn't pay that much for it.

I walked in and I was like, "Wow!" I couldn't believe how big it was. It was amazing.

"Wow"? Well, that's one three-letter word.

Others could be "yuk" and "run".

That water coming in would've had me heading for the Welsh Hills.

The lead has been stolen from the roof,

which has caused the deluge.

David sounded optimistic about drying it out.

He must have his rose-tinted specs on.

The big question for me is, what are you going to do with it?

Plan A would be that we turn it back into a pub.

If we can find somebody that's willing to rent the place from us,

then look to bring food in and then the hotel side of things,

get the function room open upstairs,

get weddings, anniversaries, that sort of thing in, into the place.

If it doesn't work as a venue, what we'd like to think is Plan B,

we could get planning permission and build some flats here.

David does know the local market

and seems confident that the residential apartments are a good backup plan.

I hope he's right.

-Do you work together as a father-and-son team?

-It's quite a new thing, actually.

It only started this year, but Greg now works with me on a Tuesday and a Friday,

so he's in two days a week.

He's done agricultural college, which has got no connection at all with us,

but his mum and I decided that he would go out and do whatever he wanted to do for a few years

and then we'd try and tie him into the property side of the business,

and that's really what we're trying to do.

How's it working out for you?

It's a different world to what I've known and I love it.

-Are you learning a lot from your dad?

-A lot. I've done a Landlord's Accreditation course, as well,

so things like that really does open your mind to it

and teaches you a few different things.

This is one big exciting project. Thank you so much for talking to me.

-Good luck with this.

-Thanks, Lucy.

-Thank you.

-Thank you.

-Gregory, Thank you.

-Cheers.

David and Gregory have a monster project here.

I think the least of their worries is getting the carpets clean!

I really, really hope they find someone with the vision to make this venture work

because I would love to think this could be a busy, bustling boozer once again.

You can find out if that happens later on in the programme.

Coming up, this two-bedroom bungalow in Derby

is in serious need of updating.

It's almost straight out of a museum, isn't it?

In this damp-ridden hotel in South Wales,

things now smell a lot better.

Since we stripped everything out and we put all new back in, the smell has just gone.

But first, in Newcastle Upon Tyne,

it's good news for Paul's mid-terrace.

We've got tenants moved in before it was finished.

We head back now to Heaton in Newcastle,

where earlier we saw this four-bedroom terraced house

that wasn't shabby, grubby or rundown.

In fact, it was nice, bright and spick-and-span.

I reckoned you could move straight in as a family home,

or with a few tweaks, make it a house of multiple occupancy for the student market.

But Paul had other ideas.

He and his wife Joanne already have some other business interests,

including a chemical manufacturing company, making paint pot samples,

as well as their property portfolio

that includes two other houses on the same street as this latest purchase,

so Paul knows the area and the market.

Around here's mostly students on the let side.

We're trying to get ahead of the game

and get more yield by going high-end on getting professionals in.

Converting the rear reception room into a bedroom and adding an extension on the back,

Paul planned to turn this place into a six-bedroom house in three to four months,

all on a budget of £53,000.

So when we return seven months later,

has he managed to turn this place into,

well, more than a tester pot of gold?

With the beautiful living room and this excellent kitchen,

Paul has so far achieved an amazing look to the property -

modern, tasteful

and with a fantastic finish all round.

I hardly miss those exposed floorboards!

And Paul has added that extra dimension to the house.

This is the new extension to the house. It's split into two rooms.

We put the bathroom at this end, with a double shower, WC and a sink,

and then there'll be a walkway through to the back bedroom,

a double bedroom, with a couple of windows in.

We put a skylight in the bathroom so that natural light comes in.

This is at the back of the house,

so whoever gets this room is going to be on their own

and it's a nice, private environment.

Hopefully, it'll be finished in two to three weeks.

Paul has also changed that rear reception room into a bedroom,

with gorgeous decor and cool furnishings.

Upstairs, Paul has applied the same style

to the four bedrooms.

In addition to the quality of these rooms,

the loos and shower rooms don't disappoint either.

There was originally a very small bathroom within this bedroom,

which you got access via the landing.

We've blocked that off, moved across

and stole the space from this side where there was some small cupboards

and built this bathroom in place of it, which is a bit larger.

We've done this on the front. On the back, we've increased the size of the family bathroom

and stole space again from the landing.

The layout is not much different to what it was. All we've done is added this small bathroom on.

There's no real other difference. It's still a wide landing, so I'm quite happy with it.

The original loo has also had a top-notch makeover.

So when the extension's complete, this will be a six-bedroom home,

with three bathrooms and a loo, too. Perfect for the rental market.

Paul project-managed the renovation,

leaving the works to his team of builders.

The property is already starting to pay its way.

We've actually got tenants moved in before it was finished.

They were quite happy to move in before we'd finished the property.

But if that's what they want to do, they're paying the rent, we're not going to say no.

So we have three tenants in already and another three to get in.

Paul's hoping that the rental market for young professionals

will make this a long-term, big-time earner for him and his wife Joanne.

And talking of time, other business projects delayed the start,

but the renovation was completed in four months, as planned.

But how did his anticipated spend

of £53,000 on the extension and refurbishment cope?

Overall, it'll cost about £38,000 for the refurb,

and the extension has come in on budget at 15.

It's no surprise that Paul has achieved this on budget,

as he already has two properties on this street done to a similar level.

But for him, the best part is still to come.

The last bit is when I put the numbers on the door.

That's when I know I've done my job, it's finished and you move on.

Time to find out from two local estate agents

if Paul has worked his numbers out correctly.

We begin with the estate agent who saw the house before work began.

It's a fantastic house. It's amazing. I love what he's done.

Personally, I didn't think it needed a great deal done to it beforehand,

but the extension to the back with the vaulted ceiling,

using that outside space,

I'm very impressed.

It's in really, really good condition.

The standard of finish is exceptionally high.

Very good quality. I particularly like the bathrooms,

the work that he's done in there.

Paul bought the house for £170,000.

Add on his renovation costs of £53,000,

and he's so far spent a total of £223,000.

With tenants already in, though,

is he getting the best out of this house?

I think he should be asking 400 to 410 pounds

per room, per calendar month.

I would recommend marketing the property at £375 to £400

per room, per calendar month.

We're getting £430 a room for the three we've already let,

and we see no problem in getting 430 for the other three.

If Paul manages to get that for all six bedrooms,

he'll have an annual rental income of just under £31,000.

That would mean a whopping yield of around 14 percent.

For Paul, this is a long-term investment,

but if he did decide to sell on,

the estate agents reckon he could achieve a figure of between 220 and 230,000 pounds,

which would give him a £7,000 profit.

With renting it out easily outgunning the resell figures,

it's no wonder that he sees the future in lettings.

And he already knows where to make his next purchase.

Basically, to buy more of the same of this.

The format's all set up. We've done two exactly like this now,

so moving forward, just keep doing the same thing.

If we change, we'll hit issues that we didn't know about before

so we're all for an easy life!

Today, I'm in Derby in the East Midlands,

a city known for its rapid growth during the Industrial Revolution.

Well, at the height of that time, when the city was getting very overcrowded,

the more affluent members of Derby society moved to the suburbs

to places like Mickleover and Littleover here.

And Littleover is just a little over two miles from Derby City Centre,

ideal for a quick commute!

There are also plenty of useful amenities

in the shopping area known as Littleover Village.

Well, not far from the schools and the village,

with its shops, pubs and restaurants,

is the property I'm here to see.

It's this. It's a two-bedroom detached bungalow.

At a guide price of £100,000,

it looks pretty good from the outside.

Yes, this looks well-maintained from the outside.

The pointing looks good and the roof seems OK.

Of course, in this lovely dry weather,

you can't tell if the guttering is up to scratch,

but it all appears pretty promising so far.

So, what kind of layout does this particular bungalow have?

Well, actually fairly standard.

Into a little entrance area here

and then all the rooms lead off from here.

Two bedrooms at the front of the property, half-decent size, a bathroom here.

You've then got your main living area here.

So pretty standard, all in all.

This room, though, I think has great potential.

Lovely little feature here -

a good old 1960s serving hatch!

Marvellous!

Now, you may not want to keep that, probably not,

but it gives me an idea about opening that up,

maybe even considering some kind of extension perhaps.

At the very least,

put some lovely big sliding patio doors in here,

you've then got the living room area opening out onto the garden,

and that would be lovely.

# Oh, wouldn't it be lovely? #

I really do like the layout of this property, I think it works well,

but opening up the kitchen and living room to the garden

would add a whole new dimension to this bungalow.

# Oh, wouldn't it be lovely? #

There's an added feature through the back,

a time machine of sorts.

The kitchen is...

Well, it's almost straight out of a museum, isn't it?

This is probably untouched

since it was first put in in the 1960s.

It's, er, an absolute classic.

The good news is, there is a reasonable amount of space.

I like the fact that you've got lots of windows.

As I said, one of the things you might want to do is knock through there.

But all in all, it's a good-sized space.

Just wrong era!

# Flower power will grow and grow

# Flower power, let the people know

# There's peace on earth

# We'll love until the end #

If you're a fan of vintage,

this decor is definitely up your street.

I reckon most people would want to modernise it

and whoever bought it will certainly need to get the wiring looked at

and brought into the right century!

But one thing that'll never date is a lovely garden

and that's exactly what this place has.

Look at the size of the garden!

You've got this bit here, with a flowerbed, a greenhouse and more grass over there.

Absolutely marvellous. What isn't good news is this...

It's a garage

and you don't have to be a rocket scientist to figure out it's made of asbestos.

So that needs to go.

It needs to be taken away by a specialist firm

because obviously, it is definitely a health risk.

The risk comes from the volume of asbestos fibres in man-made materials

like this cement, which can cause serious lung conditions.

If the asbestos is undisturbed and not damaged in any way,

it shouldn't do you any harm, so you could leave it.

But the garage will degrade over time

so if you keep it, you need to monitor it.

Getting rid of it might be costly,

but it is a job that needs to be done safely

and the asbestos disposed of according to the regulations.

Then you could maybe get the deck chair out.

I like this bungalow, guided at £100,000,

but would it be worth spending money on?

We asked the auctioneer who sold it for his thoughts.

Everything is dated. But structurally, it's sound -

it's water-tight, there doesn't appear to be rising damp -

so you're not going to spend a lot of money on it

but you can transform it fairly readily.

What would that work add in resale value?

If it's renovated, possibly with a conservatory on the back,

I think you could probably get its value

up to about 155, 160,000 pounds.

What if the owner decided to let it?

Rental value when renovated,

I would think would be between £500 and £525 per calendar month.

Well, it's a lovely residential area

and bungalows like this are perennially popular.

Yes, there's stuff to be done, but I reckon this was a very popular lot

when it went under the hammer.

Detached bungalow, two double bedrooms,

driveway and garage.

Scope for upgrading and improvement. 98 to start me.

98. 95.

95. Got you. Thank you.

£95,000. 95,000. 96, someone else? 96 is bid.

96. 97?

97. 98. 99.

100.

101. 102.

This auction lot went quite slowly, so we rejoin the action a little further down the line

when the bidding reached £116,000.

116,000.

And 500? 500.

117? 117.

500.

118?

118.

118? 500?

119?

119? 500?

At 119,000, once...

Now 500.

120? 120.

120. Is that certain?

120,000, once, twice, third time...

You've got it. 120. Well done.

Well, they got there in the end! That final successful bid of £120,000

came from husband and wife Sean and Cheryl.

Sean's a self-employed builder and Cheryl is his company secretary.

They've been married 24 years and have three kids.

Don't worry - they aren't going to try and fit them all into this groovy 1960s bungalow.

They've bought it as an investment.

Let's meet them and find out if they're going to turn this Swinging '60s decor

into something a little easier on the eye.

-Cheryl, Sean, lovely to meet you both. Congratulations.

-Thank you.

Tell me why you wanted to buy the bungalow.

Well, initially, it was Cheryl's mum and dad,

-they were looking for a bungalow for their later years.

-Right.

They asked me to come up to give them a few pointers about what needed doing

and they decided it was too much for them.

-Oh!

-You know, with the work that needed doing,

I just thought I'd take a punt at it.

I went to the auction and I ended up with it!

So, you started out with no intention whatsoever of buying a bungalow?

-No!

-THEY LAUGH

Talk about impulsive!

It's not every day that you leave the house and come back with another.

So, what was it about this place that made them bid at the auction?

I liked the size of the garden, the layout. It's a nice area.

-We only live a five-minute walk away.

-Really?

So it's quite convenient, if we get spare time, to come and do work on the house.

-So, have you told your mum and dad that you've bought it, then?

-Yes!

-What did they...

-THEY LAUGH

-What did they say?

-They're pleased about it!

But as Sean said,

the garden was too large for them to be handling

and there was too much for them to foresee what it would look like in the future,

so they're going to look elsewhere.

Is there any possibility that, when you've done it up and they come back and see it,

-they might change their mind?

-There's always that possibility!

We'll have to wait and see.

-Tell me what you're going to do.

-A complete rewire,

all the plumbing's going to have to be done again, new boiler, new kitchen, new bathroom,

and I think I'm going to be making this into another bedroom to make it a three-bedroom

and extending out that way four metres, hopefully.

-So, you wouldn't need planning permission?

-Not for four metres, no. Anything above.

-Right.

That's a good idea. So then it would become a three-bedroom bungalow. Mm.

With a view to what - renting it or selling it?

I think what I'll do first is put it on the market

and see what sort of, you know, what comes back.

If it doesn't come off,

-I'll hopefully rent it.

-Right.

And what will your involvement be, Cheryl?

Erm, making cups of tea, probably!

Well, that will save on the catering costs

which, any builder will testify, is the crucial part of any job!

I just hope she remembers the biscuits.

As he's a builder, Sean's going to handle most of the work himself,

but they are going to call in a specialist to get rid of that asbestos garage.

How much have they got in mind to spend here?

Initially, I thought ten, 12,000 for just the kitchen, the bathroom and the electrics and that,

but if I am going to extend it,

-obviously there's a bit more costings there.

-Mm.

I've got to wait for my architect to come back and let me know what we can do

and work out how much it's going to cost.

I think, with making it a three-bedroomed, it might sell quicker.

What's the sort of timescale for getting it sorted?

Hopefully about six months.

-Congratulations.

-BOTH: Thank you.

-Good luck with it.

I look forward to seeing how you get on.

Well, they didn't intend to purchase it,

but I think Cheryl and Sean are fairly pleased with this bungalow.

Good ideas in terms of the extension.

They must keep an eye on that budget

to make sure they don't drive it above the ceiling price of properties around here.

You can find out how they get on later in the show.

Well, the time has come, let's go back and find out how our buyers have got on.

Let's see how they're doing.

It's time to return to this hotel and bar

near Pontypridd in South Wales,

which had a guide price of £45,000.

It was once a thriving business,

but now it was just teeming with the severe stench of damp.

Intent on restoring this local landmark to its former glory

were property developer David and his son Gregory.

They paid £46,000 for it at auction

and hoped it could once again attract tourists and village residents.

However, just before the hotel closed its doors for the last time,

it'd lost its licence to sell alcohol.

There was no guarantee a new one would be granted this time round.

But David and Gregory had options.

Plan A would be that we try and get the place going again as a good pub,

then look to bring food in and then the hotel side of things.

If it doesn't work as a venue - Plan B -

we could get planning permission and build some flats here.

This pink palace had lots its lustre,

so let's hope it's not still down in the dumps.

# Blue hotel

# On a lonely highway #

We're back one year later

to find out if David and Gregory have plumped for Plan A or Plan B.

There's not much change on the outside

so let's take a look inside.

It's Plan A all the way.

The father-and-son developing duo did get the alcohol licence for the hotel from the council,

so it won't be long until pints are being pulled

behind the bar.

David's away, but Gregory's here to give us the lowdown.

In the beginning, there was a lot of water ingress.

The first thing we did was put the roof on, cleaned the inside

and then new carpets throughout, new electrics, new lighting,

a massive redecoration program's gone under way

and it's just looking a lot different.

It's looking a lot better and smelling a lot better, too!

There was a bad smell.

When I was clearing it, definitely the smell got worse!

But since we stripped everything out and put all new back in, the smell has just gone.

# The way you smell so sweet

# You know you could've been Some perfume #

On the first floor was the hotel restaurant and function room

and it was in a sorry state.

Now it feels much lighter and brighter.

We've had a new ceiling put in, a new floor has gone down, as well.

The decoration is changing also -

a lot lighter colours -

because the main events that we want to go on are weddings,

so obviously quite open and a nice feel about it.

We're about 50 percent complete,

so another couple of weeks now and hopefully things should be ready to go up there

and we'll be able to have our first event.

Two weeks? Wow!

The renovation of the hotel only began three months ago,

as Gregory and his dad David were waiting

until they had the alcohol licence from the council.

Their team of tradesmen have made impressively quick work of it so far.

The priority was given to getting the bar and function suite ready,

so work is yet to begin on the five hotel rooms on the top floor.

Originally, David estimated the total renovation cost

to be between 50 and 60,000.

So, how much have they spent?

So far, we've spent just under 30,000,

but by the time we finish with the five letting rooms,

it should be about £40,000 spent on the building.

Father and son have certainly worked at keeping their renovation costs down.

Add the £40,000 projected spend

to the original auction purchase price of £46,000

and they'll have invested a total of £86,000.

Even though this has been Gregory's first property development

since joining his dad and the family business,

the responsibility for project managing the renovation has fallen on his shoulders.

It would appear he's making his dad proud.

My father's been away for quite some time,

so I've been managing things while he's been away.

And it's...

It's a lot more than I thought has gone on here! I wasn't expecting it to be this much.

It's my first project on my own. We've done a couple of projects since this, which I've completed.

This one isn't quite complete yet, but, er,

it's looking good so far.

David are Gregory are not publicans, they're property developers,

so they've found a tenant who will rent the premises

and run the bar and function suite.

So, is it time for the father-and-son team to get the pink fizz out?

We asked two local property experts

for their thoughts on the work so far.

What a lot of property for the money.

Amazing! An amazing space!

They've done a really good job with the work.

It's in keeping with the age of the building

and it's very sympathetically done. It looks really good.

It's an absolutely fantastic building. It's a great size. Erm...

It offers lots of opportunities.

It could be a good viable business.

Well, they seem impressed so far,

but will this investment of £86,000 be rewarded with bubbles

or bounced out of the bar?

What do they think it would make if resold as it is?

This is a very difficult question.

There are so many pubs for sale in South Wales,

over 150.

As it stands, I would probably put a value of about 90 to 150,000 on it.

When it's completed and it's earning revenue,

that's a different story.

Once fully renovated, I think the property could resale for about 50,000.

I don't think there is much profit to be made

because there are a lot of large similar properties within the Valleys areas.

Those valuations mean either a profit of 64,000

or a loss of 36,000.

The estate agents have wildly differing views on the prospects for the property's current value.

The higher valuation was given because the estate agent believes the licence adds significant value,

making it more desirable for rental.

The only thing that's really certain is the uncertainty

in this economic climate.

What could it be leased for?

Lease-wise, I think the first people that come in

wouldn't pay more than £30,000 a year.

If I was to rent this property out,

I would look to achieve between nine and 10,000 per annum.

Those differing values represent just how volatile the market is.

However, the good news is that this father-and-son team already have a tenant.

So, what did they manage to get?

I think the values were quite good. I agree with the higher valuation,

purely because we are renting it out for 26,000 per annum.

That gives David and Gregory a whopping yield of just over 30 percent.

Amazing!

The renovation of this property, from derelict and damp-ridden to its former glory,

has been Gregory's first job for the family business,

and it's great to see how he's thrived on it.

I would definitely do it again. It's been quite a big undertaking,

but I've enjoyed it and I'm looking forward to the rest of my future.

Now it's back to Derby,

where Sean and Cheryl bought this two-bedroom bungalow for £120,000.

It had a distinctively vintage feel to it,

but was a solid little property,

with room to extend out into that large garden.

Tell me why you wanted to buy the bungalow.

Well, initially, it was Cheryl's mum and dad,

-they were looking for a bungalow for their later years.

-Right.

They asked me to come up to give them a few pointers about what needed doing

and they decided it was too much for them.

-Oh!

-You know, with the work that needed doing,

so I just thought I'd take a punt at it.

I went to the auction and I ended up with it!

So, you started out with no intention whatsoever of buying a bungalow?

-No!

-THEY LAUGH

They saw its potential for a profit

and grabbed the chance to pluck this property from the 1960s

and make a few pounds while they were at it.

So let's catch up with them nine months later

and see how they've got on.

The headline here is that Sean and Cheryl have extended the bungalow,

making a lovely big kitchen.

And by taking a bit of the old sitting room,

they've created a third bedroom.

Each room has been redecorated and refloored,

with windows replaced where necessary.

The bathroom has all been replaced with a brand-new suite.

It looks clean, modern and fresh.

But the main difference is down in the kitchen.

Top marks to Cheryl

for helping choose those fixtures and fittings.

We kept it quite neutral,

but we had the black tiles in our old house

and I always thought they looked really effective against the cream units.

But other than that, we just like to keep it neutral, a nice clean effect.

It's brighter, cleaner, more modern and much bigger.

The garden was plenty big enough to accommodate the new extension

and I'm particularly pleased to see that the old asbestos garage

is a thing of the past.

Out here, we've got the patio.

There was a lot of work involved because we had to raise the grounds to get it level.

It's worked out really nice. I'm very pleased with it.

You can sit out here and have a cup of tea in the evening, or a meal even.

Where I'm stood is where the old asbestos garage was.

I had to get three professional guys in to remove it.

But since then, I've had an asbestos training course myself

and, in future, I'll be able to remove any asbestos garages myself.

At least that'll save him money on future projects.

Sean has done most of the work himself, apart from the rewiring,

which he got a certified electrician to do.

Cheryl was never going to get involved in the labouring,

but beyond her ideas for the kitchen,

has she kept to her promise of providing the workers with tea?

She has. She's kept us all watered and fed!

That was one of the biggest jobs - keeping all the lads here when they were here.

They all appreciated her bacon and egg sandwiches!

Taking on a project like this can often be the source of arguments for couples.

So, have there been any argy-bargies between Sean and Cheryl?

-No, I don't think we've had any disagreements, have we?

-No.

Most of the time, Sean's doing the building work

and I'm just making drinks and producing catering, so...!

But, no, I think we've got on quite well, haven't we?

-We're never together long enough to have an argument, are we?

-No! We're far too busy!

It sounds like a good way of avoiding arguments - keeping out of each other's way!

Did he manage to get it all done

in the six months that he thought it would take?

We didn't actually start it for three or four months because of work commitments,

so if we had started when we initially come in,

we probably would've been right on the timescale,

but because we started later, we got finished later,

but the timescale of six months was right.

Sean originally set the budget at 10 to 12,000 pounds

if he didn't do an extension.

But he has now managed the whole project for 30,000, which isn't bad at all.

Now that the work is all complete, it's ready to be put up for resale.

I've got a viewer this afternoon

and it's going on the market on Friday.

Hopefully, once we get a few people inside the door,

they might snap it up.

Indeed they might. But how much could they hope to sell it for?

Let's ask two local property experts

what they think of the work done and the value they've added.

I think it's a lovely property.

It has been refurbished to a high standard.

Lovely and neutral. It would suit every taste.

The property has been finished to an exceptionally high standard.

What catches my eye is the lovely kitchen-diner,

ideal for maybe someone that's got a family.

What about that all-important resale value, then?

Remember, they paid £120,000 at auction

and £30,000 for the work,

making a total outlay of £150,000.

If I were to value this property to go onto the market now,

I would recommend an asking price of between 185 and 190,000.

In my opinion, if the property was to be placed on the open market,

I would suggest an initial asking price of £200,000,

to achieve in the region of £190,000 to £195,000.

-That's very good.

-Very pleased with that.

They have every right to be pleased with this.

That top valuation of 195,000

would give them a profit of £45,000, minus tax and expenses.

This was their first time at auction and they hadn't even set out to buy it.

So, will we be seeing them at an auction again?

We really want to reinvest the money into another property,

to hopefully do the same again.

It's gone really well. We'll have a bit of a rest

and then, hopefully, we'll go back to auction

-and start all over again.

-Mm.

That is all we've got time for.

Yes, we hope we've inspired, stimulated and maybe excited you!

-Join us next time for more Homes Under The Hammer.

-See you then!

-Goodbye.

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