Episode 44 Homes Under the Hammer

-Hello and welcome.

-Now, for many, buying at auction gives the chance

to get hold of properties in need of some work.

Yes, people like to put their own stamp and style on their purchases

and improve them enough to hopefully make a profit along the way.

And there's more chance of doing that when you buy your home under the hammer.

We love the buzz and the excitement of the auction room.

You can sort of sense the hope and frustration in the air.

Yes, and you never know how it's going to go until the last moment.

Will somebody swoop in and make a bid that takes you over your limit?

Well, let's see what's tempted the buyers on today's show.

'In Exeter, this tall terraced property's grotty and grubby, but I'm still a fan.'

I like the high ceilings, there's some original features.

'You'll need to pull in lots of help before you pull any pints at this pub in South Wales.'

The big question is, would you want to turn it back into a pub?

'And in Darlington, is this plot a developer's dream

or is it verging on the ridiculous?'

It doesn't look much, does it? But for a developer, this is a potential money-spinner.

'All these properties went to auction.

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

-Sold.

'Today I'm in Exeter on the banks of the River Exe.

'The architecture here is rich with history and full of character

'The cathedral is particularly impressive.

'I doubt the property I'm here to see today will be so grand,

'but it's no less interesting to those with an eye for investment.'

I'm in St Thomas, a popular part of Exeter,

and the property I'm here to see is situated on this busy road

which links through to the city centre, about a mile in that direction.

The property itself, it's a three-storey mid-terrace. It looks pretty big from the outside.

Had a guide price of £130,000 to £150,000. Let's take a look.

So, what have we got? Well, the house has actually already been converted into an HMO,

house of multiple occupation, so view it as that and it's quite interesting.

For instance, through here into the front bedroom.

It would normally be the living room. But it is exactly that, a bedroom.

You've got a little sink unit in there.

It's all a bit tired and dated, obviously,

but I like the high ceilings, there's some original features.

It smells a bit damp. It's just crying out for a bit of tender loving care.

# Just a little bit of TLC, tender loving care is what you need #

'At the back of the property is the second sitting room,

'which has also been converted into another bedroom.

'Right at the back of the house is a dining room leading to the kitchen.

'It's all very grubby and grungy,

'but this terrace does offer a great deal of square footage.'

This place has actually got a licence to be an HMO, a house of multiple occupation.

So what does that mean?

It needs things like a certain number of toilets, in the kitchen, a certain number of cookers.

Now, if you take this place on,

you'd have to adhere to the requirements of the HMO

and they are quite stringent.

You need to check with the local authority to see exactly what they are.

But the fact that it's got one is great, cos it means the local council are saying,

"Yes, this can be an HMO," and that could be a very profitable thing to own.

'On the first floor, there are three further bedrooms,

'and also a bathroom with shower facilities.

'Again, it's all a bit tired and worn, but pop on those property developer goggles for a moment

'and you can see this could be a real rental machine,

'especially since you're near a steady supply of students

'from the University of Exeter in search of accommodation.

'You can see the possibilities.

'Up in the attic, there's a sixth bedroom with a shower room.

'It's a squeeze, but it does have that essential second loo.

'All in all, three floors, six letable rooms

'and a lot of work to get it up to a decent standard.

'But if that's not your bag,

'what else could you do with this ginormous terraced property?'

So, at the rear of the property, a little courtyard area leading onto the rear garden.

It's very overgrown but it's not a bad sized space.

But while I'm out here, let's talk about the options

if you didn't want to use this as an HMO.

Well, you could convert it back into one large house. You'd need to talk to local estate agents

to find out if there's a demand for that kind of thing.

Otherwise, why not consider turning it into two flats?

You'd obviously have to get planning permission, but the good news is,

some of the neighbouring properties have done exactly that, so there is a precedent set.

I think, from a financial point of view, that could be the way to go.

'I think that if you were to pick up this property for anything like that guide price of £130,000 to £150,000

'then there could be scope for a decent profit.

'Does a local property expert agree

'that all the signs here say go?'

The destiny of the building is completely governed by

will the new owner want it to be generating income for them

or to be a capital project?

Generating income, they'll just do it up,

spruce up the bathrooms and the loos particularly,

and just get it churning over in rental terms.

Or if they're looking just for a lump of money return in one go, for me, it's the flats.

'So, if you want to maximise your profit in the short-term,

'convert this three-storey house into two two-bedroom flats,

'do them up and sell them on.

'Long-term, HMO rental might provide the best yield.

'Let's talk cold, hard cash.

'What sort of return could this property earn as an HMO?'

There's six individual rooms to be had here.

They average £80 a week.

So in a perfect 52-week year,

you'd end up somewhere between £23,000 and £25,000, depending on specification.

'And what about the best sell-on option, two flats?'

A pair of all-singing and all-dancing two-bedroom flats

ought to be worth something in the region of £250,000 collectively.

Well, it's a large house in a pretty good location with lots of options.

Do you keep it as an HMO? Do you turn it into one house? Or maybe flats?

I guess that's all down to whoever bought it.

Let's find out who that was when it went under the hammer.

'It was the last lot of the day,

'so let's see who's been biding their time before they bid.'

The guide is 130 to 150. Who'll say 140, in the middle? 140.

130.

120, won't go less... 120. At 120.

At 120. 122.

121? 121

122. 122.

123. 123. 124.

124. Have you worked out stamp?

125 is not you. 125.

126. 126.

126. 126.

127. 128. 128.

129.

130. 130. 131.

132. 133.

134. 135. 36. 37.

38. 39. 140. 141.

142. 143.

144. 145.

146. 147.

148. 149.

Half? 149 and a half.

150. And a half or not?

Handbrake goes on.

150 on my left. At 150.

Think of the income that's going to come out of here,

almost whether you want to or not. At 150 once.

150 twice.

-All done? Last chance. On my left, going at 150.

-HAMMER BANGS

'It was Meg who made that successful bid of 150,000.

'She placed that final bid on behalf of her auction companion,

'her brother Jack, and their mum Ally,

'who's taking a year off from teaching maths.

'Ally met us at the house as Jack and Meg weren't free.

'She was more than happy to tell us how the sums were going to add up here.'

# Doing the math don't bring satisfaction

# No more addition now, it's a subtraction #

-Ally, good to meet you.

-Good to meet you.

-Congratulations.

So, tell me why you wanted to buy this place.

Erm, well, we've been looking for an auction property

and this one came up in Exeter,

which is close to where we live,

and it seemed like what we wanted. Needs a lot of work.

But it was specifically one at auction you were looking for?

Yep. We've been looking for one at auction for some time.

-Why is that?

-You can get a bargain,

-bit of a challenge, bit of a risk.

-Right.

-OK. So is this something which you do?

-We have bought one other house

which we've developed, but that was not at auction.

-Right.

-And that's not quite finished yet.

And it's something we're hoping to do, yes.

-So what's your background?

-I'm still a full-time maths teacher but I'm on a gap year.

My headmaster gave me a gap year,

and during that year, it was an idea to buy a property and do it up

-and now I've bought a second property and resigned.

-Oh! Oh, wow!

# Doing the math

# Is bringing you down

# Gravity and time will put you back in the ground #

'It's not just her career she's changed.

'Ally and her husband sold the family home to finance her new career.

'They're currently living in a boarding house in the grounds of the school

'where her husband's a house master.

'With her maths skills, the budget should be a breeze,

'but she's just one half of the development team.'

-I'm going to be doing it with my son, Jack.

-Yes.

His background is, he graduated two years ago with a degree in construction engineering management

and just at the time when all the companies dropped their graduate schemes,

so he's really excited about it.

-A real practical project for him to take on.

-Yeah.

He sees it as a sort of learning opportunity as much as anything.

-Right.

-And hopefully, when he gets some money behind him,

-he can carry on and do it himself.

-A great opportunity for you and him to work together, as well.

-Yeah, that's the challenge.

-Oh. Is it?

We have slightly different views on things, but having done the one house that we've nearly finished,

we're sort of coming to an agreement on what I can do and what he can do.

-He has much higher standards.

-Oh, does he?

He likes to do everything perfectly because that's the way he's been taught

and he can't really see the profit margin at the moment, because it's my money.

'Well, it's good to hear that Jack does want to demonstrate his newly learned skills

'and put into practice what he's learnt.

'But it will be down to his mum Ally to do the maths.

'She would prefer to convert the terrace into two flats,

'but that would require planning permission,

'so she's in the process of having plans commissioned. Why two flats?'

First we thought we would keep it HMO and let it,

but I've spoken to a letting agent that says council will probably

not renew the licences come 2016 cos they're trying to get away from multi-occupancy.

'Ally and Jack have a £40,000 budget and a five-month timescale.

'That might be a bit tight when planning permission's involved.

'However, a maths teacher and a construction graduate

'must be a bit of a dream team for a property-developing future.'

-And then what next for you?

-Er, two years is the sort of time plan,

because we come out of the boarding house in two years

and Lee, my husband, will retire in four years.

Hopefully, as I say, do it for two years,

Jack's made enough money, he can do it himself

and we'll retire and play golf.

-Well, congratulations.

-Thank you very much.

-Good luck with it.

-We look forward to seeing how you and the family get on.

-Thank you.

So, will former maths teacher Ally

get the numbers right on this place?

Well, with the help of son Jack, maybe.

Something tells me there's going to be a bit of a... between them two.

Jack absolutely wants to do it right at any cost,

Ally trying to keep a tight rein on the budget.

There's lots to be done. It all relies on that important planning permission.

What will happen? You can find out later in the show.

Today I'm in the Rhondda Valley in Wales

in a village called Penygraig.

The name gives us a clue to its history.

Penygraig means "head of the rock" and it was a mining village.

But these days, with good transport links into Cardiff, well, it's home to commuters.

'With the capital city of Cardiff only 45 minutes away,

'you can access city life very quickly.

'But if you prefer a less hectic pace then there are facilities in the town of Tonypandy

'less than mile down the road and the lovely valley views of Penygraig.'

Well, the property is not far from the centre of the village and it's on this busy road.

Now, it's mostly residential buildings around here,

but I've got my eyes on something a little different today.

This rather large old pub.

And I'm just in time, too, because I could really do with a lovely refreshing drink.

'This building's very interesting and a pub for sale always intrigues me.

'Even more intriguing, the guide price of £10,000.

'Yes, you heard me right. Ten grand!

'Hm. Let's find out if there's a reason for that.'

Well, I think it's obvious I'm not going to be having a nice, cool, refreshing drink in here.

I certainly can't smell any beer. There are no peanuts hanging up.

Goodness! Look at the state of it!

There's glass everywhere, you can see it's been broken into.

Oh, look over here. Look. We've got some old photographs here.

You can see, this is what the place looked like many, many years ago.

Beautiful on the outside. A really lovely-looking property.

Sadly, on the inside, there are no redeeming features.

You've got an awful lot of work if you want to turn this back into a pub.

But the big question is, would you want to turn it back into a pub?

'Behind the former bar is another large room.

'Plus the pub's kitchen and toilets.

'But everything's been vandalised so it's going to need a total refurbishment.

'Upstairs there's the remainder of what was a bathroom

'and three good-size bedrooms, which provided the accommodation.

'Although this is described as a hotel in the auction catalogue,

'I think that with it being so small, you really have to call it a pub.

'Everything has long since checked out.

'But right at the far end of the first floor, there's a pleasant surprise.'

And then we come into this large space.

Now, I think this would've been another function room, complete with its own bar.

But look at this wonderful old ceiling. Now, this is the nicest redeeming feature I've seen so far.

I know this building dates back to the 1800s, but that is beautiful!

Now, I've been chatting to some of the locals today.

They've been telling me that pubs in this area are just not doing well.

There's a real chance you will not be pulling enough pints here to make a profit.

But you could think about converting this into flats.

But you'll have to get that vital planning permission

and that comes with its own pitfalls.

# Rules and regulations

# Rules and regulations #

'Apart from planning permission, you'd also have to obtain change of use

'from its current business, ie, A4 use as a public house to residential.

'The outside is also in a dilapidated condition

'with little outside space, as the back of the property faces the hill.

'Also, there's no customer parking.

'But one bonus point is that there's a separate access door to the first floor.

'To find out more about the options for this lot,

'that went to auction with that amazing guide price of £10,000,

'we asked a local property expert for his opinion.

'Can he see any merit in reopening it as a pub?'

I don't think it could be returned to that

because of the current climate,

public houses are closing down within the valleys,

like everywhere else in the country. I think the only option would be

to convert it to residential, which would mean flats.

'Might the local council have any objections?'

The problems they might face is that any residential property now,

new build or conversion,

the local authority look for parking facilities.

That would be the main issue, the parking facilities,

and the lack of the outside space.

'If the new owner was successful and obtained planning permission

'to convert the property into flats,

'how much could a one or two-bedroom flat be worth?'

Once renovated, I would estimate, for resale purpose,

that the flats would be between £35,000 and £40,000 per flat.

'That could generate around £160,000 if four flats were built.

'What about the rental income?'

A one-bedroom flat, per calendar month, would be approximately £350.

A two-bedroom would probably be approximately £390 per calendar month.

Well, you've really got to look past the devastation in here.

But this pub does have so much to offer.

You're going to need some cash to throw at it, but more importantly,

you're going to need to know what kind of development or business is going to work in this location.

One thing's for sure, though. With that guide price of only £10,000,

I think this one might have pulled in the punters when it went to auction.

Let's see who will be calling last orders from now on.

It's lot number seven in the catalogue, the former public house.

A lot of potential there. Who's got 20 to start me?

Let's see 15,000 to get going.

15 I'm bid. Thank you, sir. At 15 on the telephone.

16 down here, thank you.

And 17 in the back. At 17.

'There was a phone bidder and lots of interest.

'We rejoin the auction a little later.'

At 32. 33? 33 for the lady.

Try one more. Is it 4? 34 I'm bid, thank you. At 34.000.

5 can I? 5 for the lady.

6. 36. At 7 for the lady, 37.

38, he's come back. 39. 40 I'll take in the back.

At 40,000. And 1 will you, madam?

1. 41 for the lady close to me.

At £41,000. Yes or no?

2. Thank you. It was just in time, too.

43.

At £43,000, are you all done?

-At £43,000.

-HAMMER BANGS

Sorry, can't wait all day. Yours, madam, at 43,000. Thank you.

'That final bid of 43,000 was made by Andi, on the right here,

'a gardener from Essex, and her partner Cath, who works in administration.'

# All men are gardeners

# In this life #

'The couple live in Essex but Cath's originally from this area.

'They're not totally new to the property developing game.

'As their last project was to convert a local pharmacy into flats,

'I get the impression they didn't pick up this place to start pulling pints.'

-Congratulations.

-Thank you.

-Tell me, why did you want this pub so much?

Because, erm, before we were going to buy this place,

we were buying another place and we got gazumped at exchange,

so I quickly looked on the internet and we saw this pub,

so we rang the agent and we said, "When's the last viewing?"

and they said, "Tomorrow," so we quickly had the day off work,

we came down and looked at it, so we decided to go for it.

So we had another day off work the next week and went down to the auction.

-Cath, how well do you know this area?

-Really well.

I'm from Pontypridd, which is about two miles.

It's quite a nice area and properties are really cheap,

-so it's an ideal place to buy.

-What do you want to do with this?

Because, oh, boy, it needs an awful lot doing to it.

We've got to go to planning for it,

but hopefully we'll be turning it into flats,

two two-bedroom upstairs and hopefully three one-bedrooms down here.

Why have you decided to convert this into flats and not reinstate this as a pub?

We're not in the pub game, we're in the turning things back into residential

and flats and renting them out.

So you have got a long road ahead. You've got to get planning, build it.

How much research have you done?

We have spoken to the council about change to residential use

and they said they won't tell you outright

but they said they can't see any problem in principle.

'Cath and Andi hope the planning process will take around four months

'with a further eight months for the build itself.

'So if all goes according to plan,

'in around a year, they'll have two flats upstairs, which they'd like to sell on,

'and two or three flats downstairs, which they'll let.

'They've budgeted around £90,000 to £100,000 for the project.

'But as with their timeframe, they know there could be hold-ups and unforeseen issues.'

One big downfall with this property as far as I can see is there's no parking.

Now, how are you going to overcome that?

Well, opposite there is a big public car park,

so we're hoping the council will let the people park over there.

We've got one parking space at the top of the hill where the outside door is on the top floor.

But our architect's going to have to try and get round that how he can, really.

'Although Cath and Andi have converted a commercial property into flats before,

'they're stepping into the unknown with this build,

'particularly as they've got no plan B

'if they fail to get planning permission.

'What's more, they live four hours' drive away

'and both have other jobs.'

When are you going to find the time to do this? Because you've just told me

you had to get the day off work to go to the auction and to view the property.

When are you going to actually find the time to do this and how involved are you going to be?

Well, we'll be coming down every weekend.

I mean, we've been coming down nearly every weekend for two years, doing the other places we've done.

We have got a couple of builders that are going to be doing a lot of the structural,

putting up the walls and all that. We've got a plumber and an electrician.

But basically, all the rest, all the bathrooms, all the flooring,

all the tiling and the kitchens we do ourselves.

-So who's got the eye for the interior design, then?

-Cath, probably.

I mean, we do choose things together,

but I sort of say, "That would be nice."

And I say, "OK." THEY LAUGH

'I really admire the couple's can-do attitude and hands-on approach.

'When they come up from Essex, they'll stay over

'in one of the flats they've converted in the pharmacy.'

Is this purely a money-making venture for you?

Yes, it is. Neither of us have really got much of a pension, I'm self-employed,

so we're seeing it, really, that if in 18 months' time

we've got quite a few properties rented out,

it'd be like an income and we can perhaps cut down to a couple of days a week,

I can just do a couple of days gardening instead of five days gardening.

Good luck with this. I've got my fingers crossed for you. I hope you get the planning permission.

-And congratulations.

-Thank you.

-Thank you.

Andi and Cath have got a plan, they've got the cash,

but are they really going to achieve what they want on their budget?

And they don't have planning permission yet.

Now, we already know the parking issues may make that a bumpy road to travel down.

Have they taken on too much?

Will that pub shine once again as a modern flat development?

You can come back later on in the show and find out.

'I go to see a really small plot of land in Darlington.

'And I mean really small.'

This is it. Yeah, really. No, really.

'In Penygraig, Wales,

'it wasn't just the beer that went flat.'

It was just one massive room upstairs and one downstairs

and then we just put the walls up where they needed to be.

'And we return to Exeter, where mother and son found the perfect balance.'

I did some of the work, Jack did most of the work.

'Let's make our way back to Exeter now.

'That's where I viewed this three-storey mid-terrace,

'which had a guide price of between £130,000 and £150,000.

'It had been converted into a six-bedroom house of multiple occupancy, an HMO,

'and was in what could be best described as a right old state.

'On the plus side, though, options galore. Keep it as an HMO

'or restore it to a single house or convert it into two flats, subject to planning, of course.

'The property was purchased at auction by former maths teacher Ally

'for £150,000.

'She planned to turn the terrace into flats

'and her son Jack, a construction engineer graduate,

'was hoping to put his skills to good use.'

-He has much higher standards.

-Oh, does he?

He likes to do everything perfectly because that's the way he's been taught,

and he can't really see the profit margin at the moment because it's my money.

'So, might the conflicting approaches

'of Jack's quest for perfection versus Mum's pursuit of profit

'lead to family fisticuffs?

'Well, ten months later, we're back to find out if these opposing views

'have met in perfect harmony.'

# Right now

# Oh, yeah

# In sweet harmony #

'The property is looking fantastic

'and Jack's pursuit of perfection is putting a big smile on my face.

'But first, unless the trend for a shower in the living room has passed me by,

'I'm guessing Ally's plan for a pair of two-bedroom flats was kiboshed by the planners.'

Unfortunately, Exeter City Council have very strong rules

on how big each flat has to be

and it didn't come up to their measurements,

so we could've had a one-bedroom and a two-bedroom,

but the amount of work it would've taken for the return, it probably wasn't really worth it.

'So, they stuck with plan A and kept it as a house of multiple occupancy.'

Really, in the end, we just turned it back into a six-bedroomed HMO

and we put en suites in four rooms,

a new kitchen, new bathroom,

erm, knocked a few chimney breasts out, did the garden.

Basically, just a full refurbishment.

'Ally, there is nothing basic about this refurbishment.

'The kitchen/diner has undergone a top-to-bottom transformation.

'It's now a great communal space that will bring the occupants together and be a social hub.

'By removing the partition wall and chimney breast,

'it feels much larger.

'The addition of patio doors leading to the now easily-maintained garden

'is a major plus.

'Ally's son Jack is a construction engineer management graduate.

'He's been a tremendous driving force here,

'doing most of the work himself, apart from the plaster work and the electrical and heating engineering,

'which required certified tradesmen.'

I did some of the work, Jack did most of the work.

He's a workaholic.

He's just been here seven days a week. He's been amazing.

He's done all the hard graft.

I've basically just done some tiling and some painting.

So, yeah, I couldn't have done it without him.

'So, did Ally's preference for a less expensive renovation win out

'over Jack's desire for top-quality workmanship?'

There was the occasional clash of philosophies

over how we did things.

I'm pleased because his philosophy is right.

We know that everything is as it should be,

so we haven't bodged anything or papered over any cracks.

So, yes, there's been the odd clash, but he wasn't in control of the budget.

'Ah, the budget. Ally had £40,000 and a ten grand contingency.

'But did Jack's perfectionism come with a hefty price tag?'

We finished up with £45,000 we've spent, almost exactly. That's including stamp duty

and the fees. So, yeah, I'm pretty pleased with it.

'If you add that £45,000 to Ally's £150,000 purchase price,

'it makes her total outlay £195,000.

'And despite taking three months longer than the five they'd hoped for

'to complete the renovation, surely both mother and son are happy.'

We're very pleased with it.

It's looking really smart. It's very easy to maintain.

We're looking forward to letting it, really.

We invited two local property experts to give us their opinions.'

The standard of the work is exceptionally high.

They haven't left any stone unturned, they've gone to town on everything

from the fitments, the paint,

the skirtings, you name it, they've done it.

They've paid really good attention to detail here.

It's been done really nicely. The en suites are a really high standard.

It's just a really nice property.

'As this is an HMO property,

'when it comes to resale, it would make more if sold as a going business concern.

'So, how much did these estate agents believe it could achieve,

'bearing in mind Ally's total spend of £195,000?'

As the property stands today, being vacant,

you could probably put this on the market for in the early 200,000s,

maybe up to as much as 210,000.

But once fully let and all the rooms are full,

I'd expect that figure to go upwards to maybe £225,000 to £235,000.

As it is, being empty,

it would probably sell for about £220,000.

If you were to put tenants in it and then sell it on,

I'd probably value it at about £235,000.

'That top figure for a fully tenanted house would mean

'a pre-tax profit of around £40,000 for Ally and Jack.

'But if it were empty, ie, vacant, between £5,000 and £25,000 profit.

'However, that's not the plan here, as Ally intends to let the rooms.'

On a room-by-room basis, per calendar week, you could expect to achieve

somewhere in the region of £100 for the ones which have an en suite facility,

and for the ones that don't, maybe a fraction under.

I think rental-wise, it would rent out for about £85 to £100 per week,

depending on the size of the room.

'Those weekly figures would translate into just under £2,600 per calendar month for all six rooms.'

I think that's sort of in line with what we were thinking.

It's quite a good return if you multiply it by six,

and then by 52.

'But you do have to bear in mind that student lets are not always 52 weeks of the year,

'so that needs to be factored in. But on a 52-week basis,

'that would give her around £30,000 per annum.

'That's a possible yield of 16 percent!

'So is Ally happy with the outcome?'

Yes, it's been a good project. I'm pleased with it.

I'm glad it's over.

'I'm in the northeast of England today in the historic market town of Darlington.

'There's a lot of investment going into the town these days

'from colleges, local businesses and multinational companies.

'That means improved prospects for employment and for the housing market.'

Well, I'm close to the centre of Darlington

in an area called Eastbourne.

Good local amenities, shops, schools, et cetera.

And I'm here to see not a house but a plot of land.

And this is it! Yeah, really. No, really.

The guide price, £15,000 plus.

'Hm. To be absolutely clear, the plot of land we're talking about

'doesn't include this generous expanse of grass over there.

'It's just this small rectangle here.'

Now, you're probably thinking, "I've strolled past plots of land that look almost identical to that

"and I've never considered it to be a building plot."

Well, it takes vision. Somebody had it. What did they look for?

Well, it's flat, it's got easy access to the roads,

it's got residential properties all around it,

and most importantly, they made the decision to try and get planning permission.

That was successful. So, suddenly this little plot of land that could be anywhere

just happens to be very valuable.

# Don't you let

# The green grass fool you

# Don't let it

# Change your mind #

'It may look like any common or garden patch of grass,

'but put a new build here and it's likely to sell or let very quickly, perhaps even before it's finished.

'This busy road wouldn't suit everyone,

'but someone's going to love the fact that the bus stop

'will be right outside their front door.'

So, what could possibly be built on this fairly small plot of land?

What do you think? A one-bedroom? No, not one.

A two-bedroom? No, not two!

A three-bedroom detached house, believe it or not.

How are they going to do that? Let's take a look at the plans. Well, a fairly basic design,

but it's functional, it works.

That's the outside. Here's how it sits on this plot.

You can see the plot here. Basically, downstairs...

Literally squeezing in here. These are the existing houses all around it.

Downstairs you've got yourself a lounge and a kitchen. They've managed to squeeze in a WC.

And then upstairs, you've got the three bedrooms.

They've even managed to squeeze in an en suite! Unbelievable. And a family bathroom.

There you go. Those are the plans.

Absolutely extraordinary.

'Hm. Yeah. The crucial aspect about these plans, though,

'is that they have been passed.

'And as they're surrounded by other houses,

'the chances are that it will have easy access to essential utilities,

'like gas, water, electricity and drainage, which will cut down on build time.

'So, at that guide price of £15,000,

'what does a local property expert think of this building plot?'

Most people would walk past a piece of land like this and not realise its potential.

A developer would look at this land and think to himself,

"There's a good resale value in it."

One of the benefits of this plot is that the planning permission

has already been accepted, so anyone buying this plot now

would be able to build pretty quickly on it.

'What kind of resale value could there be?'

Looking at the plans that have already been agreed,

if they do go ahead and build a three-bedroom detached house here,

I think it would be worth £120,000 to £125,000.

'If the plot sold for near its guide price of £15,000,

'then depending on the build costs, there could be a healthy profit to be made here.

'What about the rental potential?'

I think the rental value could be worth anywhere between £550 to £575 per calendar month.

Well, it doesn't look much, does it? But for a developer, this is a potential money-spinner.

Most importantly, it's flat, it's got potential access to all sorts of services

and it's got that all-important planning permission.

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

We're going to go to Darlington. This is a building plot

with planning permission for the erection of a three-bedroom detached family-size home.

Can I ask for 15,000 to start?

OK, somebody start me at 10. 10,000 on the second row.

£10,000 bid. Do I have £12,000 anywhere else?

I'll take one from anywhere. One bid.

11,000. 12. No?

New bidder in the centre at £12,000. 13.

13 bid. 14. 14.

15. 16.

17. 18.

19. 20.

£20,000 bid. 21?

Gentleman in the middle with the blue shirt, £20,000.

I'm selling once at 20. This is your last chance.

For the second time at £20,000.

-HAMMER BANGS

-Sold, gentleman in the centre of the room at £20,000.

'That successful bidder, who got the plot for £20,000, was Kriton.

'He runs a family-owned property development business

'with up to 60 properties in their own portfolio.

'They also manage another 60 on behalf of their clients.

'He's been on the show before when we saw him renovate

'this semi-detached house in Brandon near Durham.

'I was keen to find out his plans for the plot.

'But first, let's get out of this downpour.'

# Get in, get out of the rain #

-I thought it was a bit more sensible to meet here rather than the plot.

-OK.

-But tell me why you wanted to buy it.

-We'd been after a plot of land for some time.

We, as a business, do a lot of refurbishments,

so we buy a lot of properties from auction

and they're generally in a pretty bad state and we refurbish them.

My guys have always wanted something that's flat and square and easy to build. So that was number one.

The second part, we wanted more exposure to Darlington,

cos there's a great rental demand in Darlington.

That's a great area, it's very close to the train station,

and whether we decide to keep it or sell it on, it'll always have a good, steady market.

'Kriton certainly seems to have done his research about the area

'and is confident about the demand for this new build.

'You would never guess that this is a relatively new career for him.

'In a previous life, he was a high-powered executive in the music industry,

'living with his wife and family in California.'

-I came back from Los Angeles about five or six years ago.

-Right.

-And found myself jobless.

-Right.

The company I worked for in London

didn't want me to live up in North Yorkshire

-and have an office in London.

-What were you doing?

-I was in the music business.

I headed up a big digital division for one of the big five music companies.

-Oh, wow! What, in Los Angeles?

-Yeah.

-That sounds very rock'n'roll.

-It possibly sounds more rock'n'roll than it actually was.

It was in the early days when nobody really knew what it was.

iTunes hadn't even been established then.

So we were sort of pioneering it along with Steve Jobs and his team.

-Really?

-Yeah. It was fun.

And then property, from being a record executive?

Well, we had some property in London, which we rented out while we were in LA,

and again, we released some money out of that property in London

as a deposit to buy a house in LA.

So that's us got two.

And the rental easily more than covered the mortgage on the property in London.

And then so we used a bit more of that money to buy another property.

And then suddenly you're on the ladder. And we just made a decision, my wife and I,

-about 2005, 2006, we're going to really do this properly.

-Right.

So, sold the house in London, sold the house in LA,

and just got a lump of capital together and got started.

'Since that career-changing decision,

'Kriton, his wife and brothers have built up a successful property business.

'But making it that has meant watching the pennies,

'even when buying a potentially lucrative plot like this for £20,000.'

You were happy with what you paid for the plot?

I'm a Scotsman. How can I be happy with what I paid?

I would've liked it maybe £2,000 or £3,000 less,

but I sort of had an idea about,

and other people said that's a reasonable, fair price.

And, as well, I've got the planning permission, I've got a set of drawings,

-so maybe I shouldn't be too greedy.

-No. It's all good.

-Yeah, it's fine.

'He'll use his regular tradesmen to build the new house,

'which will blend in with the surrounding properties.

'He's reckoning on a build cost of £40,0000 and a turnaround of four months.

'But even before a brick's been laid,

'the unbuilt property is attracting interest.'

-Is the idea to sell it on or to rent it out?

-I know three investors that want it,

because it's a good quality investment and it's a nice one to have in a portfolio.

-But because of that, we might decided to keep it ourselves.

-Right.

I know my young brother's quite keen on putting it into our portfolio, so that'll be another discussion.

We really look forward to seeing it all finished.

-Good luck with it.

-Thank you.

-Nice to meet you.

Well, Kriton clearly knows what he's doing,

but this is his first venture into developing a property from scratch

and that can throw up all sorts of issues.

How will he get on? Will there be a house here when we return?

You can find out later in the show.

Now, finding good tradesmen is the key to getting properties done up well and on time,

but some people choose to do it themselves to maximise their profits.

So have our buyers been getting stuck in

or just stuck? Let's find out.

'Back now to Mid Glamorgan and the village of Penygraig in the Rhondda Valley.

'Just outside the village, on a busy road, this former pub

'was bought at auction for £43,000 by Andi, on the right, and her partner Cath.

'The couple live in Essex and have previously converted a pharmacy in the village into flats.'

-How well do you know this area?

-Erm, really well.

I'm from Pontypridd, which is about two miles.

The properties are really cheap, so it's an ideal place to buy.

'They had ambitious plans for this derelict former pub.'

Hopefully, we'll be turning it into flats,

two two-bedroom upstairs

and hopefully three one-bedrooms down here.

'They were going to have to get planning permission

'and lack of parking could've been a problem with that.

'But they hoped the conversion would be finished in about a year.

'They'd set a tentative budget of £90,000 to £100,000.

'They had builders, plumbers and electricians standing by

'but were going to do the bathrooms, kitchens and tiling themselves.

'But it was two years later that we met Andi, Cath and their dog, Ronnie, back at the former pub,

'which has been converted into five flats.

'There are two flats on the first floor.

'Both have large kitchens/living areas.

'I'm really pleased they've retained that wonderful ceiling in the former function room.

'Both the flats have two bedrooms.

'And the derelict washing facilities have gone from this

'to this.

'But as Andi explains, the building had to be taken right back

'and started all over again.'

When we first came in here, the place had been vandalised,

so we had to completely clear everything up.

And then we started taking down the walls,

it was just one massive room upstairs and one downstairs.

Then we just put the walls up where they needed to be.

But everything was governed by the windows,

because obviously you can't move the windows,

so that governed the sizes of the rooms.

'The layout on the ground floor has completely changed.

'The three flats are beginning to take shape.

'It's taken a lot longer than they thought.

'Planning was the main issue, with parking being the problem.

'Their application was submitted and rejected twice

'before they appealed and had it approved

'when it was agreed the eight parking spaces the flats needed

'could come from the public car park opposite.'

It was actually 11 months from buying it to getting the planning permission.

Then we had to get building regs.

So far, we've probably been building about seven months.

'The upstairs flat at the far end of the property has separate access

'out onto the winding road on the hill next to the property.

'Although the building's been gutted and largely rebuilt,

'some original features have survived.'

Well, the vaulted ceiling is still there. It's in the lounge in the other flat.

When we took some of the boarding off the walls, we've opened up fireplaces,

like this one, which we didn't know were there, so we've kept as many of those as we could.

The banisters, they're the original ones.

'Their initial team of builders left after a few months,

'so Andi and Cath had to find replacements.'

We just got other trades in to do the work, some other builders,

and got a plumber and an electrician and just carried on.

We've been stuck in from the very beginning, anyway, because we did all the demolition

you know, to begin with, while we were waiting for planning permission.

'Back home in Essex, Cath works in administration

'and Andi's self-employed as a gardener.

'While she's up here, Andi stays in a flat she and Cath own in the pharmacy they converted locally.

'But that's about to change.'

Flat five, which is the one with the vaulted ceiling,

we're actually keeping that flat for ourselves

and then we're moving out of the flat we've already got here and we're renting that out.

'Well, I can't blame them, as it looks like it's going to be a lovely flat when it's finished.

'Are they still looking to sell the other second-floor flat?'

We don't think we're going to sell any of them now.

We've more or less decided we're going to rent them all.

But it's the same amount of flats rented out, it's just that we're moving into there,

cos it is a nice flat.

'The project took longer than expected, so what about the finances?'

We are over-budget. I would say, so far, we've probably spent 115.

And there's probably another couple of thousand yet.

'With the 43,000 they paid at auction,

'that takes their total investment to around £160,000.

'We invited two local property experts

'to take a look at the conversion.

'It's quite a change from the derelict pub it was two years ago.'

When I first visited the property a couple of years ago,

it was in a very sorry state.

It had been vandalised and it was very dangerous.

The transformation has been nothing short of spectacular.

It's obviously still a work in progress,

but judging by the current condition of the property,

they will make great first-time buyers or buy-to-let investments

-ready to move into.

-The utilisation of space has been very good.

The character features in some rooms have been kept.

Overall, the appearance is excellent.

'How much could the flats sell on for?'

I would assess the two-bedrooms to be in the region of £35,000

and the one-bedroom would be in the region of £25,000.

For the one-bedroom flats, we'd look to market them for £25,000

in order to achieve between £20,000 and £25,000.

For the two-bedrooms, we should be looking to market them for £35,000

in order to achieve between £30,000 and £35,000.

'Well, if the three one-beds do achieve £25,000

'and the pair of two-beds £35,000,

'then if all five flats were sold,

'Cath and Andi could reap £145,000.

'But that's 15 grand less than the £160,000 they'd have invested.'

I think they're a bit low on the prices there, but we're not selling at the moment, anyway.

'What about the rental potential?'

For the one-bedroom flats, we should be looking to achieve

in and around £325 a month,

and for each two-bedroom flat, around £375 per month.

The two-bedroom flats, £375 to £400 per calendar month,

and the one-bedroom flats, £325 to £350 per calendar month.

'In fact, Andi and Cath have already let one of the two-bedroom flats

'for £425 per month

'and hope to achieve more than the agents' valuations

'for the one-bed flats, too.'

We're happy with the 425 and we will be asking 390 for the one-beds,

which because of the amount of interest we've had,

I don't think we'll have any problem renting at that price.

'Of course, this is a long-term investment for the couple

'to generate income for them when they retire.

'But what are their immediate plans?'

We are going on holiday next. We're going to Spain for ten days.

And then we come back, we've got to get this finished off

and get rented out and get some money coming in.

'We're back in Darlington, where earlier I checked out this rather odd little plot of land

'which sold at auction for £20,000 to Kriton.

'He runs two property investment companies

'and one property rental company.

'The plot had full planning permission for a three-bed detached house

'which was very much part of its appeal.'

-Tell me why you wanted to buy it.

-We'd been after a plot of land for some time.

We, as a business, do a lot of refurbishments,

so we buy a lot of properties from auction

and they're generally in a pretty bad state and we refurbish them.

My guys have always wanted something that's flat and square and easy to build.

'Well, let's hope it was as simple as Kriton made it sound.

'He estimated a build timescale of four months.

'But it's now just over one year since we had that chat.

'Has this plot with a plan been transformed into a property with panache?

'Well, Kriton lost the plot

'and from a patch of grass has sprung a modern house

'with a large lounge, kitchen and WC on the ground floor.

'Then upstairs, a family bathroom and three bedrooms, as planned.

'Plus an en suite for the master.

'It looks great. So, was it straightforward?'

We've really enjoyed the new build.

I think everybody involved has learned a lot, I've certainly learned a huge amount.

One of the nicest things we learned is, on a new build, everything starts off square.

You know, it's all right angles, it's nice and easy from that perspective.

I think the biggest thing we've learned on a new build

is just how much legal requirements there are.

From your sound testing, to your roof work,

to your windows, to your insulation, there's a much higher requirement involved in that

than there is with a refurbishment.

'Peaks and troughs, then. There were problems with the paperwork

'which took around eight weeks to iron out.

'By that time, Kriton and his team had to concentrate on other projects,

'so this one went on the back burner for a while.

'But once work began, it was all go.'

Well, from the time we actually broke ground to lay the footings, it took 20 weeks.

'That is mighty impressive and just goes to show that sometimes building from scratch

'can be quicker than a refurbishment. And it really helps

'to have a dedicated team on side and on site.'

It was all local contractors.

There's a young chap who's currently one of our tenants, he's a ground worker,

so we set him a target of a week to dig the foundations

and lay all the footings and he achieved that in five days.

We then recruited a team of bricklayers,

all of whom were semi-retired, the oldest one being 71.

They actually put the structure up, from the footings to roof level, in three weeks.

Says a lot for the grey revolution, doesn't it? Which I'm getting pretty close to myself.

But, no, they were absolutely tremendous.

Non-stop, eight hours a day. Best bricklayers we've ever come across.

'Well, you know what they say. Teamwork makes the dream work.

'All that's left to do here is to put in a boiler and carpets,

'but those decisions are being left to whoever moves in.

'Everything else looks new and fresh and I like the fact

'that Kriton managed to squeeze in a small back garden here, as well.

'The whole experience has got him ready and raring to go for the next one.'

Our watch word's going to be that the land has to come with plans already signed off.

We don't want to go and purchase a piece of land

then waste many, many months getting architect's drawings, et cetera.

So we're looking out again for another project ready to do.

'But before he does, let's find out how his budget panned out.

'He had aimed to spend £40,000 on the build.'

Well, the land cost £20,000

and we've spent £50,000 on top of that.

I would say about £25,000 has been on materials,

about £5,000, £6,000 on regulatory stuff with the land registry,

certificates, et cetera, and the rest on labour.

'So, a total outlay here of £70,000.

'What do two local estate agents have to say?'

I love the fixtures and fittings,

I love the kitchen, I think the units are superb,

and I love the facility that the main bedroom's got en suite.

I think, in terms of the size of the plot,

he's done a fantastic job of building this.

The room sizes, the layout, absolutely sits perfect on the size of the plot.

The kitchen looks great, the bathroom's great,

and to put an en suite in the bedroom, again, fantastic.

Outside, perfect. Perfect for those people who are not keen gardeners

but somewhere to have a barbie and sit of an evening with a beer or a gin and tonic.

'Well, let's just hold off raising our glasses and talk numbers for a moment.

'If Kriton were to let this property,

'what would the estate agents estimate price-wise?'

The rental value of this property I would say is between £500 to £550 per calendar month.

My recommended rental valuation on this property would be £525 per calendar month.

For a property like this, so close to the station,

and based on what we rent our other properties in Darlington,

I'd be expecting a higher figure and I think I would get it.

'Even if the rental's at the lower end of those estimates,

'it would still yield over eight percent.

'Whilst Kriton's not completely ruling out rental,

'the house is on the market and his preference is to sell.

'What do these local experts suggest it could sell for?'

My recommended asking price on this property

would be offers invited in the region of £110,000.

I would value this property at £110,000 to £120,000.

The property's currently being marketed by an estate agent in the town at 115,

with a view to accepting any offer over 107, 108, so they're absolutely spot on.

'Those estate agents' valuations would leave Kriton a well-earned pre-tax profit

'of between £40,000 and £50,000.

'Is it time for him to take an equally well-earned break now?'

I am having a holiday. I'm finishing off a stable at home

for a little girl who's getting a pony.

We've just finished another big property which is about 30 miles north of here.

We've purchased two more properties

which we'll start work on the middle of next week.

And then it just keeps going and keeps going and keeps going.

That's it for today's show. Make sure you join us next time

-for more properties that sold under the hammer.

-We'll see you then.

-Goodbye.

-Goodbye.

Subtitles by Red Bee Media Ltd

.