Episode 66 Homes Under the Hammer

Hello. In today's market, it can be difficult to get

your own piece of house heaven.

Whether it's large or small, auctions are a great place to start.

So, follow us now as we meet three brave buyers

who bought their homes under the hammer.

If you choose to gamble and place a bet on property,

you may want to go to the auctions.

The atmosphere is electric and the action, well, it's fast and furious.

Here are the properties we're featuring today.

'This tiny Carlisle terrace leaves me a little lost.'

What's this?

Where am I now, then?

'And I'm also trying to find my bearings

'at this seaside cottage in Kent.'

Slightly bewildering.

Is this the front?

The back? I don't know!

'And could a very low guide price on this three bed semi in Derby

'mean trouble ahead?'

Could it be just the location on this road that's the problem?

Or is there more?

All these properties have been sold at auction.

We'll find out who bought them and what they paid for them

when they went under the hammer.

It's going to be sold...

# Come with me

# My love

# Into the sea

# The sea of love... #

I do like to be beside the seaside and this lovely stretch

of sandy beach is Minnis Bay in the village of Birchington in Kent.

Just up the coast from Margate,

it's a popular place for pensioners and families alike.

I wonder if today's auction lot will be a similarly sunny proposition.

The property I am here to see is just a five-minute drive to the

beach, so already I am excited and I know it's worth a look.

First impressions, though, slightly bewildering. Is this the front?

The back? There's off-street parking here,

which is fantastic,

but is this also your garden?

I don't know!

What I do know is there's two bedrooms

and it had a guide price of £75,000-£80,000.

Apparently, this used to be the rear of the property, until it

became commonplace to have a car,

and the frontages were switched.

Useful to have the parking, for sure,

particularly as this cul-de-sac is a tight squeeze.

It's a bit of a luxury to have a downstairs loo

in a two-bedroom property,

but my guess is this would have been the outside toilet originally,

because this is an add-on.

But I'd keep that. I mean, that is a bonus.

And look at this lovely kitchen! A great space.

These old-fashioned '50s units are fantastic, I love them.

And, over here, you've got this sort of fireplace area.

It's been utilised and made into a cupboard.

Storage heaters, so there's no gas central heating here.

Whoever takes this on might want to change that.

But there's certainly enough room to have a little table to eat in.

And, disappointingly, this lounge is on the small side.

Could do with being bigger.

But, there's a way you can get around that.

I'm just wondering, if this wall isn't a supporting wall,

it would be well worth knocking down,

because then you could eat into all the lovely hallway space

and really, really utilise that.

Rumpled carpets. What does that mean?

Somebody's obviously been having a little bit of investigating time.

Let's have a look and see what's going on.

Now, look. You can see one of the floorboards is cracked.

It looks like signs of woodworm.

I'd certainly get that checked out.

And it's worth noting whether or not these floorboards are salvageable.

But back to my original question -

is there a back garden?

Well, I'm pleased to say yes, there is.

And look - a really pretty garden too. It's not terribly private,

but it wasn't ever meant to be,

because, originally, this was the front garden.

You can see because the lane is along there

and you'd walk up your pathway,

but it's great to have any amount of outside space, and look -

some really pretty little flowers over there too.

# If I woke up in the morning and the world was back to front

# There was sunshine in the evening and the moon came out for lunch... #

Off-street parking and a pretty cottage garden -

both good selling points.

Things are looking up.

And, er, talking of up, upstairs the two bedrooms

are a pretty decent size and there's a family bathroom.

All of it is looking tatty, tired and a little bit dated,

but as we know, not all old features should be dismissed out of hand.

This is the smaller bedroom of the two,

but it's what's behind here that I'm really excited about.

Ta-da-da! The big reveal.

Oh!

Now look at that.

To pull back a piece of hardboard and see such a lovely,

cute little fireplace like that.

You know what - period features in any property make such a difference.

That's a really nice surprise.

So far, we have a bit of period character,

a pretty garden and parking,

but I think this house needs a lot of work -

central heating, a total rewire,

a new kitchen, bathroom, windows

and that's before you think about knocking down walls and so on.

I reckon you'd need to get it for something around the guide price

of 75-80,000, because the work is going to cost a pretty penny.

On the plus side,

I really think this house has a lot of potential and I like it.

Does the local estate agent agree with me?

I think with this type of property, looking at its condition,

it would be a case of modernising kitchens and bathrooms,

making the most of the original features

and bringing it back cosmetically.

I wouldn't start doing any major works to it, because I think

then you're over-capitalising on the type of property that it is.

With that in mind, what would its potential resale value be?

I think with renovation carried out,

you're going to be looking at round about £120,000.

Well, as I thought, if you were looking to resell,

that valuation means you'd definitely need to get it

for around the guide price of 75-80,000,

because I reckon you'd not see much change

out of 20,000 for the renovations.

Would a rental see a better return?

I think this property would rent out very easily

and I think you're going to be looking at round about

£600 per calendar month.

Not a big money maker, but a lovely home a stone's throw

from a beautiful beach in an affordable part of the world.

Let's see who went for it at the auction.

Lot 64 is the house for updating in a good location.

Where do you want to start me? Start me at 70?

£70,000 straight up. At 70, I'm on the way. And 2.

72.

And 4. 74.

And 6 at the back. 76.

And 80.

80, and 2.

-And 4...

-This lot was in high demand

and we rejoin the auction as bidding reached £113,000.

113, and another fresh place. 114.

And 15.

And 16.

116? 116 he has.

And 17, it's against you.

Keep with it. 117.

118.

At £117,000, make no mistake, it's going to be sold

if you don't bid again.

For the first time, then, at £117,000.

If you're sure you're all done, third and final time at £117,000.

It's yours, madam, at 117,

-and that's F462...

-The final bid of £117,000,

£37,000 over the top end of the guide price,

was placed by Michelle.

# Michelle

# Ma belle

# These are words that go together well

# Ma Michelle... #

She's already had a lot of DIY expertise,

having renovated her own houses, and now she's decided to try

building a career in property development.

I met her at what will be her second development project

to find out more.

Michelle, congratulations.

You must be so pleased, because this is a lovely little cottage.

Yes, thank you very much.

I'm really looking forward to starting work on it.

What took your eye? Why did you want to buy this?

I just thought it was a very nice property.

It wasn't your standard two up, two down.

I saw lots of scope, lots of areas that would be interesting.

OK, let's talk about how much you paid for it on auction day

and what you think this house is worth.

It went quite a way over the guide price, really.

And were you prepared for that on auction day?

Yes, two minutes before the bidding started,

I wrote a very shaky top price on the image...

-Which was?

-115.

-OK!

So I nearly stopped there and I think it was a lady

that was bidding against me went up to 116

and I thought, "Oh, it's only 2,000,"

so I just went for it.

I think the top value of it is 150-155,

so it is quite tight in there,

and if I discovered something pretty awful, we could run up to that limit.

In which case I'd just keep it as a holiday home!

No, no, no, that's not the idea of you doing this, is it?!

I know, I know.

So why are you doing this?

Well, a bit of a...

Bit of a career change, if you want to call it that,

and I had two part-time jobs.

The three-day-a-week job was not a fantastic payer,

so I decided to give that up and go into property development

by buying properties at auction, doing the work, which I really enjoy,

and having my own business, effectively, plus, hopefully,

making some money along the way.

# I've made up my mind

# It's time for a new beginning

# A new beginning now... #

'Michelle is hoping to make some money,

'but she knows that even though it's a great house and a lovely location,

'the margins could be tight after what she paid at auction.'

The estate agent thought this could be worth 120,000 if done up

and the average price around here is £137,000.

So, what is she planning to do and most importantly,

how much does she think she'll spend?

I'm hoping to have about a £15,000 spend on it.

It's going to be very tight.

I'm seriously going to have to shop around.

So where are you going to start spending the money?

Well, there's things that have got to be done immediately.

We have no central heating here, it needs a complete rewire.

The roof is in serious need of attention.

Let's talk about improvements, I mean, this is quite a small room.

Is there anything in here you can do to make it better?

Yes, absolutely.

Because of the changearound and this now being

the back of the house as opposed to the front,

there's no need for the hall that exists at the moment

or the front door,

so this wall will be coming down to make this into a living-room diner.

That will make such a huge difference to this room.

-Yes, absolutely.

-I'm just really worried about your £15,000 budget.

I love your ideas, I think it's going to be super.

I think you're going to fall in love with the place,

-you might not want to sell it, but for £15,000...

-Mm.

..hopefully you've got a lot of friends in the trade

and a lot of people that can help you out?

I have, I have got a lot of help.

It's just a case of getting down to it.

There's areas that I have no choice,

I have to have the professionals in to do it, there's no option,

but the rest of it is down to me, me and my friends.

-Are you excited?

-Yes, I can't wait...

Well, tomorrow, we will be starting, so I can't wait to get going.

-How long do you think it's going to take you?

-I hope three months.

-Really?

-Yes, that's right.

-Michelle, good luck, it's been lovely meeting you.

-Thank you very much.

-Thanks.

Mm, Michelle is right - the profit margin is tight,

but it doesn't mean this won't be a great project for her

to cut her teeth on,

even if there aren't buckets of cash at the end.

You can find out how it all goes later in the show.

Today, I'm in Carlisle, hub city for Cumbria and the north of England.

Famous for lots of things - the castle, the railway station,

lots of connections with Romans, but it was also a really important

manufacturing base for cotton, and Shaddon Mills here

was one of the biggest mills, and that chimney,

at 305 feet tall, was once the tallest in the world.

# You can't make a living in a cotton mill... #

This mill was built in 1836 and the luxury flats that

it currently houses are a far cry from the factory floor

that once saw 8,000 people employed in the cotton trade

and all these people needed somewhere to live.

Well, these properties would have been built to house the mill workers

and it's obviously not a very long commute.

Mostly two-up, two-down terraces,

but in this case I am here to see a one-bedroomed property.

The guide price was £20,000 to £25,000, which is really low.

Let's find out why.

-DOOR SQUEAKS

-Oh, just a bit of post then!

So, through the door, a little entrance area there.

Somewhere to hang your coats -

always good - and then into the front room.

A slightly dated sort of fireplace area

with a gas fire that'll obviously want to be checked out.

We've obviously got some kind of central heating,

which is good, and...

Right, then.

-That's it for the downstairs!

-HE LAUGHS

One up...one down, perhaps.

Well, that's about the fastest tour of a downstairs I've ever done,

but behind me is a good-sized front room.

Lose the '70s brickwork fire feature

and there's even more space to play with.

If the double glazing and that porch do their job,

the room should be well protected from street noise,

the question is - where are the rest of the rooms?

# I'm going to ask and you're going to tell... #

-Right.

-HE LAUGHS

Upstairs you've got a very big landing and then, presumably,

through here is...

the bedroom.

What's this?

Where am I now, then? Cos this is...

That's where that room downstairs ends

and then you've got this bit here, which has got a loo

and continuing on through here into...

..the kitchen...

I mean, it's all a bit shoddy, but more importantly than that,

I feel like I've entered The Twilight Zone.

TWILIGHT ZONE THEME PLAYS

Clearly half of the downstairs is missing...

..perhaps in another dimension.

And speaking of dimensions, the layout is very awkward

and you could say pokey.

A good-sized bedroom at the front, plus a family bathroom

and an ample kitchen, but rather a lot of room taken up

by the landing and stairs, which feels a bit of a waste.

There's also seemingly some attic space to consider.

If the downstairs has been stolen,

maybe there's a chance to pinch more space up top.

I think I need to go outside

and try to get my head around this one.

Now, I've been walking around the rear of the property here

for about five minutes,

trying to see where the rear of the property is

because this is a road which goes up the back.

You can see the row of the terraces over there,

but there's this construction - some commercial units,

looks to me like a hairdressers there and all these other buildings,

which means you can't actually see the back of our property,

but over there somewhere there must be what's known as

a flying freehold. Literally, our house extends over

some of the rear of some of these buildings here.

Well, OK, that brings up all sorts of issues.

Who owns the rights to that flying freehold?

Can you develop that flying freehold?

Do you own the space above the flying freehold?

It's something which may not be a problem,

but something you definitely need to check...and check again.

Hmmm, flying freeholds don't always mean trouble,

but in this case, I'd be especially wary.

If the commercial unit below were to lie empty

and fall into disrepair, you could find yourselves

hovering over a horror story.

# Panic on the streets of Carlisle... #

'Well, let's not panic JUST yet, a local property expert

'has come to offer a cool eye over the prospects here.'

My first impression of this property...

It's quite unusual, it's a different layout.

Certainly, it was probably one house at one time,

now there's a commercial element downstairs,

which isn't part of the property any more.

So, it's over two levels, but it's big,

it's spacious and it's got lots of potential.

The only downside I can see to this property is the fact that there's only one bedroom.

Your lounge is downstairs as well,

so it kind of turns it into a bit of a maisonette, really.

So with the right kind of planning and, you know, imagination,

you might be able to rejig this property

and perhaps even turn it into a two-bed.

'That's an interesting option

'and certainly one worth considering if you can find some space.

'Would it be worth the effort? What does he think it would sell for?'

As a resale value, once the property's been refurbished

to a high standard, if it was left as a one-bed property,

I would expect it to achieve between £50,000 and £55,000

and if it was redone into a two-bed property, I should expect it

to achieve probably between £70,000 and £75,000.

'And how about rental values?'

If this property came to the rental market as a one-bed house

or maisonette,

it should achieve £375 per calendar month approximately

and as a two-bed,

you should hopefully achieve around £425 per calendar month.

Well, it's a quirky property that definitely needs some thinking about

and some legal issues you certainly need to consider,

but think about the guide price, the location and the potential...yeah.

It's a good one, let's see who agreed

when it went under the hammer.

One-bedroomed terrace property with combi gas central heating,

PVC double glazing... Who's here for this?

Got to be 15 here, 15 at the back.

At £15,000, stood.

And one, 16. 17, 18, 19, 20.

20 I've got. 21, 22, 23, 24.

New position, 24, seated at the back. 25.

Bit early for halves, give me 25, you might get it. 25.

26. 26 I've got, 27.

27 I have, 28. Half.

28 and a half. 29.

Half. 29 with you.

First time... 29 the second time.

At £29,000 then... Third and final time, all done, all out?

Well done, sir, can I have your paddle number, please?

'Sticking with it all the way to that successful £29,000 bid

'was Keith.'

'Now retired, Keith has a small rental portfolio

'and this one was bought jointly with his son.

'I met him at his new property to find out more.'

-Keith, great to meet you.

-Hello, Martin.

Congratulations.

Tell me why you wanted to buy the place?

The price interested me at the start of it and so I came

and I had a look, and I was intrigued with the possibilities.

-INTRIGUED by the possibilities?

-Absolutely, yeah.

There was two options.

One - it could be developed as it is,

renovated, spruced up, getting rid of all of this sort of stuff

and a new kitchen, bathroom, and so on...

That's boring and I tend not to do boring, so, I thought,

"Well, how can we...

"First of all, how can we develop it as a two-bedroom?"

Right.

We'll shuffle things around upstairs so that what is now the kitchen

at the back, at the extended flying freehold, will become a bedroom.

-Ah.

-This down here becomes a bedroom.

Right.

I'll turn the stairs 180 degrees round, leading straight up,

that frees up the whole of the upstairs.

It's all studding, so it will knock out

and that will become an open-plan living area.

There's plenty of windows, so there'd be plenty of light.

Where the bathroom is now we'll put the kitchen,

knock that wall out

and it'll be completely open-plan with the stairs leading up.

MARTIN LAUGHS

Quite a plan, yes?

Huh! Let's just run through that again!

He's going to turn the stairs round...

use the downstairs as a bedroom...

open up the top floor and form a kitchen-diner...

And he's going to make the old kitchen a second bedroom!

Oof, I'm exhausted just thinking about it!

Not a lot of people would think THAT through in the way you have.

I've developed quite a number of properties.

Myself and me wife have been enthusiastic self-builders

-since the 1980s.

-Right.

We've now self-built our own house three times.

Not the same house, you understand?

Three different houses, which gave us something of an asset base

and then when things collapsed in 2007-2008,

there was a lot of fire sales around and so we took advantage

and renovated them and rented them out.

-This is now number nine.

-Right.

'Over the last four or five years,

'Keith has focused on building up a rental portfolio,

'but he feels this property

'might be more suited to the resale market.

'He plans to be on-site all the time and hopes to have the work done

'in 10 to 12 weeks and on a budget of £10,000 to £12,000.'

So who's going to do the work?

I have a number of guys that I use for the heavyweight work.

I am a qualified electrical engineer.

And you will be monitoring it as it goes along, will you?

-I'll be here every day, ten hours a day...

-Right, wow.

..I'll be here.

-Listen, congratulations.

-Thank you.

Good luck and I'm looking forward to see how you get on.

Right, thank you.

Well, it's a quirky property that really needed someone

with Keith's kind of imagination to make the most of it

and I think he's come up with some really good ideas.

How will he get on and what will it be like when it's done?

You can find out later in the show.

Coming up, you'll be amazed at how this house in Derby

is transformed from black... to bright.

Back in Cumbria,

have Keith's complicated plans come crashing down?

When we took it out... Actually it collapsed

and it was the wall holding the roof up.

But first, we return to Minnis Bay on the Kent coast

and the nearby seaside village of Birchington-on-Sea.

It was here we found a two-bedroom end of terrace house

filled with hidden charm and character features.

Dun-dun-dun-da! The big reveal! Oh!

'But with an outdated kitchen, bathroom, decor,

'no central heating and signs of woodworm in the floor,

'it was going to need

'a comprehensive renovation throughout.'

'It was bought by Michelle for £117,000

'as her second property development project.'

-Why are you doing this?

-Well, a bit of a...

A bit of a career change, if you want to call it that

and I had two part-time jobs

and the three-day-a-week job was not a fantastic payer

so I decided to give that up and go into property development

by buying properties at auction, doing the work which I really,

really enjoy and having my own business, effectively,

plus hopefully making some money along the way!

'Yes, making money. That was the bit that concerned me.

'Michelle paid £37,000 over the top end of the guide price

'and was hoping to complete a radical renovation for £15,000.'

Armed with her DIY skills and help from a builder,

she planned to transform this tired two-bed terrace

into a lovely home in just three months.

Five months later, we are back with Michelle to catch up

on progress at her little house by the sea.

Well, I do like what I see.

Gravel drive, new double glazing, it's been reroofed,

there's a proper porch area.

That's more like it, Michelle!

This is the living room and we did make a big change here.

We took the old front door out

and put a little window in there to let more light in.

It has made it into a really nice, big living room and dining room.

Plus we opened up the fireplace, which is open.

It's ready either for a wood burner or an open fire.

Where the old...the original sash window was, French doors have

gone in but we've kept the height with the window at the top

and as you can see, it is sunny today and it is a very,

very nice, comfortable end room.

Which, thanks to those French doors,

leads directly out onto the newly fenced, tidied-up garden.

And what about the other downstairs room, the kitchen?

The kitchen, of course, needed completely replacing.

It had a 1950s' kitchen in it. Everything was rotten.

Everything had to go and we needed a new functional kitchen in here.

I really wanted to keep the old fireplace here

and we've managed to fit in a unit into the base

and once it's tiled round I think that will look really, really nice.

We took out the cupboards that were under the stairs here to make

more space and more room.

We all need storage, of course, so it made sense to do that as well.

And with the downstairs cloakroom completely reinvigorated,

Michelle's definitely maximised space downstairs.

And upstairs?

The two bedrooms are looking great

and you can now see that period fireplace in all its glory.

Gone are the old storage heaters,

to be replaced by central heating throughout.

The bathroom may be short of a tile or two

but it's not far off from being finished so someone has been busy.

I had a local builder

that I came across whilst going to get fish and chips, actually.

The house opposite had scaffold up and I asked them

who the builder was so he and his team came in

and did the major work, the roof and the driveway

and some of the internal walls coming down as well.

I had three days a week to work here, which I was very strict about.

I had very, very long days here.

Learned very quickly what I'm capable of and what I'm not capable of.

I was definitely the builders' navvy for most of it.

And there was a lot more navvying to be done than Michelle first thought.

The timbers on the downstairs of the house needed replacing

at the back of the house and the front of the house,

mainly because there had been damp issues which had led to woodworm.

It was one of those big jobs that needed doing.

A lot of timber to come out but once the new timber had gone back in,

fresh timber, and the woodworm had been treated, that was job done,

new floors down and we moved on with the rest of the house.

Now, I loved this house

but I did think renovations here would not be cheap.

Along with the flooring there was a new roof,

chimney pots, guttering, a rewire, a replumb

and I'm wondering how did Michelle's budget hold-up?

My £15,000 original budget is probably the cosmetic budget

and then there was the building budget that went on top,

which practically doubled it.

So really, I had a final budget of the purchase price and all

of the building works and materials of £150,000 and that was it.

I was not going to go above that at all.

Well, I'm glad to see she set a limit on her spend.

Even at £150,000 all in, she might be close to the ceiling price

for this type of house in this area.

What did two local estate agents think about

what she has achieved here?

The look of the property is in keeping with the cottage.

They have really worked hard to maintain the details

such as the cottage kitchen and the front of the property,

with a gravelled front drive.

I think it's a really nice job.

It's done to a reasonable standard.

I don't think there is a great deal more you could do

to a cottage of this size and style.

Yes, Michelle might have maximised the potential of the property

but with a total investment of £150,000,

has she breached the ceiling price for the house?

I would recommend marketing this property at £140,000.

I think, in the current climate,

we would be looking to achieve between £145,000 and £150,000.

Hm. It's very low. Very low. I was pretty disappointed.

Oh. Originally Michelle had hoped to sell this on

but it looks like plan B might be the order of the day here.

I would rent this property for £625 per calendar month.

Rental value on a property like this is between 590

and £615 per calendar month.

I know rents are very high at the moment

so we will probably put it out for rental

because I need to recoup some money to bring it back

to what I actually spent

and when we actually get to that level then it will go on the market.

Even a monthly rental income of £590 per calendar month would see

an annual yield just below 5% so that's not bad.

But since we visited,

Michelle has finished the house and put it on the market at £170,000.

A great first step in her property developing career.

It's been as if I went on a building course, doing absolutely everything.

And I'm very much the wiser. Looking at it from that point of view,

with what I've actually learnt, I feel as if I've gained massively.

Perhaps not in pennies but certainly in experience

and when this is eventually sold, we will move onto the next one.

From a seaside getaway to a centre of industry.

The car industry, to be precise.

Here in Osmaston, about a mile and a half from Derby,

the Rolls-Royce factory employed generations of families.

Now there are regeneration plans for that iconic site

while the car manufacturer itself has moved to a new premises nearby.

An industrial town it may be but you wouldn't know it

strolling here in the park known locally as Top Park.

Well, it's lovely to have this park on your doorstep,

especially when you are also quite close to Derby city centre.

Maybe that's what tempted someone at the auction

because the property I'm here to see is close by.

It's just as well you have got the park nearby

because as you can see, the property sits on a very busy main road.

Still, the guide price was very attractive. £38,000 plus for this.

A three-bedroom semidetached. That seems very low.

Could it be just the location on this road that's the problem

or is there more?

You know the answer already, don't you?

If something is too good to be true, it generally is.

And in this case, this house has been, sadly,

very badly fire-damaged.

You walk through the front door and it is just...

That is not the wallpaper, it is black.

Everything is black, there is soot everywhere

and it has actually been cleaned so you can imagine

what sort of a state it was in before that happened.

Let's try and look at the layout. It's nice.

A big entrance area there.

Stairs up to the bedrooms there, a nice sized front living room.

These are nice properties when they are not like this.

Kitchen at the back. That's already been stripped out.

That was obviously damaged. All the ceilings. The door frames.

This was obviously a very serious fire when it happened

but again, it is a good sized space.

Through to your rear living room area

and most fires have a sort of epicentre, if you like, and I think,

judging by the state in here, this is it.

A lot more damage and in fact, not only the floor... Oh, my word!

Not only the floorboards been very badly damaged, there,

but look up there at those joists.

That's the issue with fire damage.

It can be superficial but it can be quite seriously structural.

The walls can even buckle and until you start ripping things off

and getting rid of what's here, you're not really going to know.

It's sad to think this was once someone's pride and joy.

Let's hope someone can transform it back into a home

but it's not going to be easy.

I recommend getting in a specialist

with knowledge of fire-damaged properties.

I don't think you can underestimate the problems

that might be hiding here.

Sometimes with fire-damaged properties,

the damage is limited to one room.

That often happens with chip pan fires,

as long as they are caught quickly, it's just the kitchen that's damaged

and the rest of it is smoke damage.

In this house you get the impression that

it's a bit of a miracle that it's still standing at all.

For instance, come into the bathroom here and look at this.

Wow! The fact it is a white suite probably makes it more pronounced,

and white tiles, but that is extraordinary.

As we said before, it's not only what you can see,

it's what you can't see.

For instance, in here, one of the bedrooms...

And there are three bedrooms that are a good size.

You can't criticise the layout of the house.

But in this bedroom here,

in that corner, that's above the worst of the damage downstairs

and from here you can think that's fine,

but I bet if I put my weight on it - and I won't - I would go through.

So again, it comes back

to not really being sure how bad things are.

So it's not a project for the unwary.

It's not just the fabric of the building

like the lath and plaster, you do have to think about the utilities

and how the wiring and plumbing have been affected.

I'm hoping the outside at least might be unscathed.

Well, the rear of the property,

the good news is there is a half decent sized garden

but you can't get to it because this huge great pile of rubbish,

which is a shame

because I would like to go down there so I could take a look

at the roof and see if that has been damaged by the fire.

Really, with this kind of property,

unless you absolutely know what you're doing,

you do need to employ the services of a proper structural engineer

who can give you a report on its condition.

So this house, with a guide price of £38,000,

does come loaded with issues and problems.

We asked the agent who sold it what he thought of it.

You know, the more I look at this house in its present condition,

the more I think you are dealing with just a shell of a property.

I think it's a wholesale renovation project.

I don't think there is anything, really,

you can salvage from what is here.

And that would mean having to factor in

a considerable refurbishment budget.

Even if you got it for anything like that guide price of £38,000,

the question is could you ever get your money back?

Whatever, ultimately, is spent on it,

let's just assume it has been brought up to a good standard,

on today's market, it is highly unlikely

to have a value of more than 85,000 to £90,000.

Rental value, about £525 a calendar month.

Well, every property has a value, no matter what state it's in

and that's certainly the case here.

If you can get this at the right price,

there would still be money to be made

but a lot of people, I'm sure, would have been put off

by their first reactions.

Let's see who wasn't when it went under the hammer.

Lot number three, 38 on the guide price.

38 is bid on the telephone, thank you.

At £38,000. 39? 39 is bid.

40,000? 41, 42, 43,

44, 45, 46...

'This problem property was certainly attracting a lot of interest

'and we rejoin the auction as bidding reaches £59,000.'

At 59,000... 500?

59,500. 60, Sir? 60,000.

500, again? 60,500. 61?

61.

500? 61,500.

62, sir? Now or not?

62,000, once, twice, third opportunity.

GAVEL FALLS

Sold to the lady, 62,000, thank you.

Sorry 61,500.

'The auctioneer's not the only one to be confused.

'Although it looks like the 61,500 bid was made by Beebee,

'she was actually being prompted by her son, Taj,

'who was hidden from view.

'And it was construction student, Taj, here on the right,

'who met us at the property with his friend, Hassan,

'who is a quantity surveyor.'

-Hassan, Taj, good to meet you both.

-You too.

-Congratulations.

-Thank you very much.

-Right, how are you with a paintbrush?

-Not very good.

-Not very good, to be honest.

Tell me why you wanted to buy this place.

-To be honest, the reason we bought it was because of how badly damaged it was.

-Right.

The fact that it was so damaged,

we thought, "Yeah, it will be a project for us."

We could learn in the future, as well.

We thought we'd get it cheap, as well.

The more damage the property has got, we'd pay a cheap price.

That's one of the reasons why we purchased it.

'Well, I wouldn't exactly say this was cheap.

'He ended paying £23,500 over the guide price.

'So why did he pay so much?'

The auction is very nervous because

I, initially, wanted to go 10,000 below

and then when it came down to it,

I got excited and started bidding even more and more and more.

At that point I didn't use my head. I thought, you know, I just want it.

You got auction fever.

-Basically, yeah.

-I just wanted it.

-I got worried.

-After I thought, "Did I get the right price, or not?"

Then I factored in all the prices and thought,

"Yeah, it should be all right."

'Oh, dear, I do hope Taj is right about the numbers.

'We've seen people go too far in auctions before

'and this is a classic way of getting into trouble.

'This is his first project and Taj has paid £61,500 for this house.

'The top price the agents thought he could make on resale is £90,000.

'Given the state of this house,

'and the need for specialist expertise, I'm worried.

'He has at least got Hassan to advise him

'and he knows a builder who will carry out the work

'but they haven't actually finalised those all-important costings.'

So did he give you a ballpark what it's going to cost?

He was saying around the 15,000 mark.

-10 to 15,000 we're talking here.

-To do what?

Brand-new gas central heating system, rewiring as well.

Partially plastered, especially the main room where it caught fire,

and the majority of the house skimming

but, ultimately, before we can even do that

there is no gas meter, or electric meter.

We do not know how long that's going to take.

The reason why we're saying that much only because...

What do you mean "that much"? What about "that little"?

That little.

If you'd paid a builder, that you didn't know,

they would definitely go in the 20 to 25 range.

-We've got our own builders.

-The builders are our friends...

You know, we help each other out.

-Mates rates?

-Exactly.

-Absolutely, yes.

That's the reason why we went further into it.

If we had not had our business,

I would have backed out a long time ago.

I wouldn't even have considered it.

-Congratulations, a few challenges ahead.

-Absolutely.

-But well done, you. We look forward to seeing how you get on.

-Thank you very much.

-Good to see you.

-You too.

Well, for anybody this would be one heck of a challenge

and, despite his enthusiasm, I wonder if Taj is maybe wondering

whether he's taken on a little bit too much here.

Even with the help of Hassan, mates rates and friends,

I still worry that £10-£15,000 budget ain't going to be enough.

You can find out how he gets on later in the show.

Well, the moment of reckoning has arrived.

Have those property gambles paid off or have our buyers backed the wrong horse?

Let's go back and find out.

'It was in the Cumbrian city of Carlisle

'where we first saw a rather intriguing one bedroomed terraced house.

'On the outside it looked no different from any other property in the street

'but step over the threshold and you were greeted

'with just a single downstairs room.

'Whereas, upstairs was twice the width and had a bathroom,

'kitchen and bedroom.

'Mm, yes, this was a case of a flying freehold

'where half the downstairs space

'was owned by a commercial property next door,

'leaving half the second floor floating in freehold space.

'Even so, this upside down "L" of a place

'was bought for £29,000 as a joint venture

'between former science teacher, Keith, and his son, Alex.

'With several properties under his belt,

'it was down to Keith to organise the work

'and project manage the renovation

'and Keith was a man with a plan.

We'll shuffle things around upstairs so that what is now the kitchen

at the back of the extended flying freehold

-will become a bedroom.

-Oh...

-This down here becomes a bedroom.

-Right.

I'll turn the stairs 180 degrees around,

leading straight up.

That frees up the whole of the upstairs where the bathroom is now.

We'll put the kitchen, knock that wall out

and it'll be completely open plan with the stairs leading up.

Quite a plan, yes?

'Yeah, quite a plan!

'And Keith hoped he'd complete his mission to totally reform this

'into a two bedroomed open plan swish pad

'for just 10 to 12,000 and in a timescale of just ten weeks.

'Well, now 12 weeks later, we're back with Keith

'to see if he's realised his plans.

'Well, the outside's looking smart.

'New double glazing and reroofed.

'Inside...

'Yep, the downstairs living room is a bedroom

'and not only that it's en suite, to boot.

'But what will we find climbing up the newly positioned stairs?

'Yes, it looks like Keith's got that open plan living he was hoping for.

'Although it's not completely finished, it's well on its way.

'And with the kitchen turned into the second bedroom,

'he's made amazing use of the space.

'And that's not all,

look what he's done in the loft space.

'Oh, I do like it when a plan comes together.'

There was one little wrinkle that I came across

and it was that when you have these odd stairs

that you see behind, what's called alternate stairs

where you step alternately,

if that leads up to a toilet

then the building regs say that that must not be the only toilet in the property.

That really then meant I had to put an en suite downstairs.

We've done that, I've then been able to put a small laundry room

downstairs so that was the one thing that changed, really.

'So not only did he solve the toilet dilemma,

'he found a way of turning it into a plus

'but one thing Keith couldn't do anything about

was the flying freehold which wasn't described properly

on the title deeds and had to be resolved

before the sale of the house went through,

which delayed Keith's start time by nearly a month.

It's taken two months to do this.

That's been two months of seven days a week,

10-12 hours a day,

with myself and a great team of guys that I've got to mention -

Al, Dan, Mike, Stewie and Tom.

We wouldn't have been able to make this work without them.

Thanks to them.

Two months to do all these changes is pretty impressive,

but it wasn't without the odd hitch or two.

We had some interesting times, because this here behind me

was a structural wall.

We had to remove that and put a three-metre steel beam in.

The day we did that, the wall above it,

when we took it out, actually collapsed.

It was the wall holding the roof up, so that was an interesting morning.

Ooh.

Luckily Keith was already planning to reroof the house,

so apart from creating a lot of mess,

this slight mishap didn't lead to any additional expenses.

But with all the changes, did he really keep to his budget?

We were initially going to spend 10-12.

It's come in at 21.

Keith made a calculated decision to spend £21,000 on the house,

but having originally bought it with son Alex for 29,000,

has a total spend of £50,000 plus taxes and fees been value for money?

What do two local estate agents make of this now two-bed property?

It's been a very clever conversion.

The open-plan aspect of the property's a really good idea.

Of course, in creating the bathroom space up in the loft area,

as it were, actually gives it that nice loft feel to the property.

It's all good.

My first impression of the property is it's nice and light throughout.

It's modern - lovely modern kitchen been put in.

Also, the bathroom and the toilet downstairs,

which is good with the second bedroom as well.

Keith and his son are keen to sell this one on,

so what might they get for the house they've invested £50,000 in?

My advice would be to put it on at an asking price of £70,000.

I think the resale value of this property will be £65,000.

That's about what I expected. Yes, I would have...

I like the sound of the 70,000 one, obviously.

Yes, £70,000 would see a nice pre-tax profit of £20,000.

The agents also thought rental values in the order

of £400-450 per calendar month should be possible,

which would generate a healthy annual yield above 9%.

so what does Keith plan to do next?

To sell this, obviously.

We already have the next project lined up,

so we can't rest on our laurels.

We've got to move on to the next project. Onward and upward.

And there wasn't going to be any resting on laurels or

otherwise here in Derby, where we first saw a three-bed semi.

From the outside, it looked OK.

But inside, there were clear signs as to why this was

guided at £38,000 plus.

Yes, this property was badly fire damaged,

but how badly was quite hard to tell,

with layers of black soot covering everywhere.

It was bought by Taj, seen here on the right,

a university student studying property construction.

As this was his first development project,

he had sensibly roped in his friend Hassan, who is a quantity surveyor.

Perhaps less sensibly, Taj hadn't seen inside the house,

and so got a little carried away on auction day.

The auction is really nervous, cos I initially wanted to go 10,000 below.

Then when it came down to it,

I got excited and started bidding even more and more and more.

At that point, I didn't use my head. I just wanted it.

You got auction fever, we call it.

MUSIC: "Fever" by Peggy Lee

And that auction fever meant he went £23,500 over the guide price,

and paid £61,500 for the fire damaged house.

But he hoped he could renovate the house on a budget of just

£15,000 and a three-month timescale.

Now, bang on three months later, we're back with Taj to see

if he's brought this house back to life.

MUSIC: "Phoenix From The Flames" by Robbie Williams

That's more like it. This house certainly lives again.

There's a new soot-free kitchen and front lounge.

But what about the room that was the source of the fire?

When we came three months ago, all this was black. The ceiling was...

The joists were sinking down, they were black and they were burnt.

We had the impression that the fire had gone elsewhere

and damaged the rest of the joists.

We thought we had to do a lot of work.

We actually got really lucky at the end,

cos we only had to change the joists.

It didn't affect the walls, it didn't affect anywhere else structurally,

so all we had to do was change the joists, plaster it and paint it.

Taj also got certificates for all the plumbing and electrical work,

and was advised on the structural changes by his friend Hassan,

who is a qualified quantity surveyor.

In a case like this,

I'd always recommend you seek professional help and advice.

Assessing fire damage is definitely one for the experts.

In this house,

once Taj and his team were happy the house was structurally sound,

it was full steam ahead with the renovation -

with new electrics, plumbing, plasterwork

and a cosmetic refurb from bottom to top of the three-bed house.

Remember the state of that bathroom? Well, just look at it now.

Taj used tradesmen where necessary,

but most of the work was done by friends and family.

While they concentrated on the inside,

it was down to Taj to tackle the garden.

A lot of my time went on this actual project

of getting this garden cleaned up.

I'd say around about two weeks of nonstop taking all the rubbish out.

We had to use shovels, we had to use a gardening machine.

I would say most of my time actually went into that, yeah.

Well, I wouldn't say the garden's quite the finished article,

but it's greatly improved.

While Taj laboured inside and out, how much help was Hassan?

I relied on Hassan mainly on the main work, like the plastering.

Although it cost me way less to change the joist support,

that's because only Hassan gave me the thumbs up.

Without him, I would have ended up spending £1,000 not knowing.

I was just OK-ing things with him.

He did play a major part in it.

So Hassan mentored Taj through his first development.

With university studies and doing up the house,

I'm sure he appreciated any help he could get.

Having paid slightly over the odds to buy the house,

it was imperative that he stuck to his proposed £15,000 budget.

Because we got our friends and family involved,

it was more of a subsidised cost.

They did the work for me,

so I in return, in the future, will do something for them.

They still got paid, but it was just a lot cheaper.

Because of that, it cost us 13,500.

A £13,500 spend on top of his £61,500 purchase price

takes his total cost to £75,000 before taxes and fees,

but using family and friends to do the finishing off work

to save money doesn't always pay dividends.

What do two local estate agents think?

My overall view of the renovation programme,

the makeover on this property is that

it's probably the most economic make over I've ever seen.

I think it's been done on a very tight budget,

which perhaps makes sense for this type of property in the market

that it's going to go into.

First impressions of the property would be a little shabby.

I think it would have to go to the rental market,

because the finish isn't really good enough for the sales market.

That would detract from the value quite considerably.

Ah. Well, when it comes to getting a really good, slick finish

on a property, it's often worth getting it done professionally.

So in this case with all Taj's hard work, as it stands,

unless he accepts a lower price, rental might be the only option.

So what kind of rental values could it achieve?

I think this property would let overnight at £495 per calendar month.

If this property was put on the rental market,

we'd be looking at £450 per calendar month.

That's not bad.

£450 per calendar month would generate a 7% annual yield,

so that would be OK.

But what does Taj think about those rental figures?

I don't think we'll be renting it, because we can get

the money from the profit and we can just move on to the next project.

If we put it on rent, it's a more slow process.

Yes, but unless he does some additional work

on the finish of the house, in the current resale market,

his £75,000 investment is unlikely to sell.

If he could find a buyer, at best,

one of the agents thought he might break even.

So where does that leave Taj and his property developing career?

This won't be a full-time career, if you know what I mean.

I've only got X amount of money. I wouldn't be able to do it full-time.

This would definitely be a part-time career.

Well, whether you're a seasoned property professional

or a complete novice,

join us next time for more stories from the auctions.

Yes, make sure you tune into Homes Under The Hammer.

-Goodbye for now.

-Goodbye.