Episode 70 Homes Under the Hammer

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

in making money on property?

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

into buying their home under the hammer.

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

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

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

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

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

except by a pigeon or two.

Will a buyer save it or take flight?

In Maidstone, Kent,

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

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

And in Chesterton, Staffordshire, will this two-bed property offer a

juicy future investment for the next generation of property developers?

'All these properties went to auction.

'We'll find out who bought them

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

It's yours now, sir.

This is Manchester city centre.

A great place for shopping and nightlife.

No surprise, it attracts visitors from many miles away,

as well as the local suburbs.

While Moston was once an upmarket haven for

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

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

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

The property I'm here to see is about three miles away

from the motorway in an area with a mixture of

local housing stock and it's got a pleasant feel.

Well, this really is a lovely street.

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

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

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

the best thing you can possibly do

is buy the worst house on the best street.

HE SHARPLY INTAKES BREATH

Well, I think we've found it!

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

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

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

-OK!

-HE LAUGHS NERVOUSLY

What are we going to find?!

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

going to be a relatively impressive property.

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

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

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

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

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

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

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

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

some of the renovation works. That's good.

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

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

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

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

But it's a reasonable sized space.

Big, big chimney breast there which certainly

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

Um, right to the rear of the property then,

a small, little additional...

my guess is, some kind of extension

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

I say was, because the kitchen has gone,

obviously ended up in the skip as well. That's good and bad.

Good, cos somebody got rid of it, bad

because when it comes to getting a mortgage on this place,

the mortgage company, more often than not, is going to

want to have a kitchen and a workable bathroom.

So, huh, that could be an issue.

That said, this house is at such a level in terms of price,

you might struggle to find a lender who's going to lend that

little amount anyway, but,

as strange as it may seem, a good start.

We have explored these sort of issues before.

No kitchen can mean no loan.

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

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

Another issue is that sometimes properties are...

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

It can be difficult to get a small amount.

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

so a cash buyer might fancy this one.

Incomplete renovations always lead me to check the property for any

signs the previous owner might have hit a major issue that they

couldn't afford to deal with.

Of course, sometimes people are just too ambitious

and run out of time and energy or money.

While inside has been stripped bare,

I wish I could say the same about the garden.

There is access from the back which is a bonus

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

on the extension looks like it needs some desperate attention.

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

but the layout to me really works very well.

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

this little landing area here, a smaller bedroom there

and then your bathroom where it should be upstairs here.

Now, I say bathroom, it's a

space which a bathroom will be in at some point,

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

when it comes to mortgages,

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

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

That brings up two issues. Uh, the first one being health.

When you are looking round houses, um...prior to an auction,

perhaps just be careful.

Bird poo is generally not regarded as such a healthy thing to

swan around in, but the other thing is why is the bird poo there?

There must be birds in the loft, logically,

how did they get in there?

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

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

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

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

But the brickwork and pointing look OK.

The boarded up front window is more of a concern.

Well, here in the front room, broken window, boarded up, I mean,

it just fits in with that whole image of a house on the outside.

You know, a fairly rundown, unloved kind of place.

One of the ancillary benefits of being a property developer, and

it's hard to put your finger on, but it does drive quite a few people,

and that is that feeling that you are going to take

something which is in this kind of state

and bring it back to life, not only improving this

and potentially providing a lovely home for someone to live in,

but also improving the area.

Don't knock it. It's an important part of the whole thing.

MUSIC: "Getting Better" by The Beatles

# It's getting so much better all the time

# It's getting better all the time

# Getting better... #

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

the face of it, but this property has a few issues that I would

really want to do some preparations for,

like checking out a loan and getting someone to look at that roof.

What does a local estate agent make of it?

I think it needs the full works. Obviously, it's been stripped. Um...

the positive side of that is that it's clean and ready to go, but,

fundamentally, the property needs a complete and extensive

refurbishment to get it into a condition that's going to

attract a buyer or attract a potential tenant.

After a full refurbishment with a bathroom and kitchen installed,

how much could this property, that was guided at £30,000 to £40,000,

achieve on the open market?

Brought back to a reasonable condition,

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

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

From a rental point of view,

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

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

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

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

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

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

when it went under the hammer.

And this bidding happened towards the end of the day.

Moston in Manchester, a vacant two-bedroom

mid-terraced house,

four miles north-east of Manchester city centre.

15,000.

£15,000.

15 right up the back.

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

25?

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

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

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

32 in front.

33 sitting down. 34, sir?

34, standing up. 35? 36. 37.

No? At 36, standing up.

A new bidder right at the back.

Thank you. At 37, sir.

I've got 37. I need 38.

39.

40, sir?

41.

42.

43.

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

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

43 I need.

Will you give me 43?

He is. 43 and a half, sir?

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

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

It's yours now, sir. Well done.

# Going, going, gone! #

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

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

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

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

-David, good to meet you.

-Good to meet you, Martin.

-Congratulations!

-Thank you.

What was it particularly that appealed about this place?

The fact that...

..it's a good street...

is very attractive.

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

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

-is a good result.

-Somebody's obviously done a bit of work.

What are you going to do with it?

Pretty much everything.

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

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

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

-new everything, really.

-Do you get personally involved in that?

It's my little building firm that will do the work.

# Do you know the master builder? #

Well, the property's going to need considerable building work

to fix the roof and replace the ceilings and the plaster,

but what about the layout?

Is David planning any changes?

Upstairs, I think, is fine.

Downstairs, there is an issue with the kitchen,

where I'm going to put the kitchen.

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

There are a dozen arguments with tenants about damp and cold, and

I think it would be better to retreat into this main body of the house.

-Mm-hm.

-Take out these chimney breasts...

-Right.

-..front and back.

It would give us a nice regular shape for a proper kitchen.

Removing any chimney breast requires structural advice.

Reinforced steel joists could be needed to support the house.

David's builders will remove the chimney breasts upstairs as well.

But even with the extra space that will create,

he doesn't plan to convert it into a three bed property.

He'd rather keep two decent-sized bedrooms.

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

He really focuses on how energy efficient

and comfortable his properties are.

People think terraced houses are very cosy.

The problem is the front and back walls.

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

and bring them up to modern insulation standards.

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

plasterboard on the inside of the walls.

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

but it will just make the room so much warmer.

And warm tenants are happy tenants.

I like David's approach.

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

and make his tenants happy.

# Oh happy day (Oh happy day)

# Oh happy day (Oh happy day). #

Sometimes landlords only think of bottom line and it's not

good for tenants or the quality of the property in the long-term.

# Oh happy day. #

-So what is the budget for the work?

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

-Listen, congratulations. Good luck with it.

-Thanks very much.

Looking forward to seeing how you get on.

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

A solid house in a nice area.

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

You can find out later in the show.

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

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

Nowadays, Maidstone locals are much more likely to use the M20 motorway

and the train line that gets you into central London in under an hour.

Top that with the lovely town centre and the house prices sitting

around the national average, it is certainly somewhere to take a look.

On a weekday afternoon, Maidstone is buzzing.

Plenty of shops and cafes and a really nice busy vibe,

which gives the impression the town is blooming.

Let's hope the housing market is as bright.

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

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

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

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

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

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

I'm going to check it out.

The well tended communal gardens are a bonus.

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

So good first impressions.

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

One of the first things I notice, storage heaters.

We will come back to that a little later on.

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

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

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

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

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

You could put some sofas there and there.

And kitchen, again, really small.

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

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

but it could be a nice cosy place to live.

Now, one word of caution.

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

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

without first obtaining the freeholder's permission

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

I would want to make the kitchen bigger

and some of the windows, well, they certainly need attention.

But on the whole, I reckon do the basics and hey presto,

you've got a nice home or a good little renter.

Now, back to something we saw earlier.

So, storage heaters versus gas central heating. Verdict?

Let me sit down.

Storage heaters are notoriously unpopular and might put people off.

They can be expensive to run and difficult to control.

They are also pricey to replace if they break.

Between £200 and £500 each.

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

At least a few thousand pounds.

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

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

I would definitely look into the cost of switching

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

and get these heaters working nice and effectively

for whoever ends up living here.

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

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

# You've got to warm up

# You've got to warm up. #

It's not a large space to heat and being sandwiched

between other flats will help massively with insulation.

But there's another issue I think it would be unwise to ignore.

This flat has a short lease.

Not a worryingly shortly lease,

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

Mortgage companies should not have an issue lending

with the current length but the lower the lease gets,

the more expensive it is to extend,

and it will put subsequent buyers off.

So my advice would be to just bite the bullet,

fork out the cash and get it sorted.

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

When it comes to property, it's all too easy to get carried away

with the buying and all the fun things like kitchens and bathrooms.

But you really can't ignore the less glamorous stuff

like the legal side and the safety requirements.

So when it comes to that lease, don't be a lazybones. Get it done.

# Lazybones

# Sleeping in the sun. #

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

I think this could be a good one

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

Does a local estate agent agree?

I think it's in good order. It's compact accommodation.

It's not big, but then it's not pretending to be big

and it's ideal for your first home.

Any improvements the new owner wants to make

to that spatially challenged kitchen and replacing the windows

and changing the storage heaters will all cost a fair bit.

I can't see where else you could add value.

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

I would suggest it's probably going to achieve

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

And the potential rental income it could generate?

Once renovated, I would imagine this property letting

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

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

which would rent very well.

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

95, we go to now.

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

So what are we going to say on that one?

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

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

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

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

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

65. 66.

And seven. 67. And eight.

68. And nine. 69.

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

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

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

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

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

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

74 for the second time.

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

You've bought it. F552.

The successful bidders, paying 74,000, were Stuart

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

# I've found a new baby

# I've found a new boy

# That sweet talking baby

# Is my pride and joy. #

The couple are both police officers

and already have a one-year-old daughter.

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

-Lindsey and Stuart, congratulations. And congratulations.

-Thank you.

-When is your baby due?

-A week and a half.

Wow! So we better get on and do this interview! How are you feeling?

-OK.

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

So whose idea was that then?

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

We just thought, the banks are a bit rubbish,

so we'd see what we could find.

We looked at auctions for well over a year

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

So we just went for it.

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

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

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

What is it about this flat that you like so much?

Why do you think this is a good investment?

Because it's Maidstone, we know the area really well.

We rented our first flat just across the road.

So we are of the opinion, if we would live somewhere, other people will.

Local knowledge is always good when developing property

and who knows an area better than a local?

Well, maybe a local police officer.

What are the similarities between a policeman and a property developer?

A bit of a Jack of all trades really.

As a policeman, people call you for all sorts of weird stuff and you end

up having to deal with a various range of things, just like here.

You are a bit of a Jack of all trades and master of none.

But I get left alone here. No-one comes to hassle me in the property.

# Leave me alone

# Stop it

# Just stop talking doggin' me around. #

Well, being a police officer obviously is very hard work

if property developing seems like peace and quiet by comparison.

So now he's taken down the flat's particulars, what's the verdict?

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

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

The communal areas are really well maintained.

-But things like the windows probably need replacing.

-Yes. We have looked at getting double glazing.

We've just obviously got to get permission.

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

What about things internally in the flat?

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

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

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

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

They're going to need a gas supply and Stuart's checking out

with the freeholder to see if there is gas already in the block.

The couple live only 10 minutes away and as Stuart works shifts,

he plans to refurbish the flat on his days off.

And during their previous refurbishments,

they discovered a great way to keep the costs down.

Because we always go for a set standard, we know exactly what kitchen we use.

Because we do the same kitchen, it's quite handy

because I've still got worktops left over and things like that.

-So it takes down a lot of the cost.

-How much have you got to spend here?

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

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

-The majority would be on the windows.

-Wait a minute.

What about the kitchen and the bathroom? All in the £3,000 budget?

Already priced up the kitchen and got it all sorted.

That would be one of the lowest budgets I've ever heard of on this show, can I tell you.

-Between £3,000 to £5,000?

-Yes. I think it will be manageable.

Others have done it as cheap but rarely including bathroom, kitchen and windows.

They'll need an Aladdin's cave of left over bits.

# When I find Aladdin's lamp some day. #

And the couple are hoping that this first purely investment property

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

So what is the timescale?

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

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

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

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

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

It's been such a pleasure meeting you today.

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

-Thank you.

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

How fantastic! But that budget, are they serious?

You can find out how it all goes

and when the baby arrives later on in the show.

Coming up in Staffordshire - two bedrooms, a bathroom upstairs,

a decent downstairs layout. Maybe I can have a day off.

Back in Kent, did the new arrival scupper Stuart's carefully laid plans?

Stuart was going to come up here even if I was overdue

and get it all done and everything would be great.

But first, we head back to Manchester and has David stuck to his mantra?

Warm tenants are happy tenants.

Back now to Moston in Greater Manchester and an auction lot

that appeared to be the classic redevelopment property.

The worst house on the best street.

It caught the eye of David,

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

even though it had no kitchen or bathroom.

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

Somebody's obviously done a bit of work.

-What are you going to do with it?

-Pretty much everything.

It's going to need the roof fixing and the pigeons removing!

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

New kitchen. New bathroom. New electrics. New plumbing. Everything, really.

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

and not all of it was about cosmetic changes.

David likes to ensure his properties are energy efficient.

So what we will do here is put insulated plasterboard

on the inside of the walls.

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

But it will just make the room so much warmer.

It's now 18 weeks later and what was originally

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

# Look how far we've come

# Look what we've made

# Started from nothing

# Building

# Brick by brick by brick by brick

# Brick by brick by brick by brick

# Brick by brick by brick by brick

# Brick by brick by brick by brick

# Brick by brick by brick by brick

# Brick by brick by brick by brick. #

So here is the big change of layout downstairs.

The kitchen was behind me in the outhouse.

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

It needed the taking out of that big chimney breast to make a nice

regular shaped room for kitchen cabinets. Look at it.

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

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

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

A great space for white goods and laundry

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

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

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

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

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

The pigeons have been evicted from the roof

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

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

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

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

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

It's quite a fiddly thing to fit. This has got to come off.

The skirting boards have got to come off and then be put back afterwards.

As soon as we did this, it's made the house much warmer and much drier.

We've done it in this room, and at the back of the house.

David has numerous buy-to-let properties in his portfolio.

And he's passionate about providing warm,

eco-friendly houses for his tenants.

And he must be applauded for that.

Now it's been cleared,

there's a decent-sized bit of land out the back.

Add a pot or two and maybe some trellising

and it will make a great barbecue area. Now onto the money.

How much has the refurbishment come in at?

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

It has crept up towards £20,000.

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

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

and we've upped the spec a little bit.

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

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

it takes his total investment to £63,000.

I spent a lot of money on this house

and there's been a lot of work getting it into a state

that will be easy to maintain, easy to look after, no hassle.

I think in 20 years when my children are managing this house,

this will still be child's play to run this house.

# Child's play...

# Child's play...

# Child's play... #

What will two local estate agents think of the transformations

David's made?

I like the property. Nice and clean.

Everything's been done to a good standard.

They've kept it quite simple.

But what they've done, they've done well.

Very impressed, actually. It's nice and bright and it's clean.

It's been refurbished to a good standard.

-Very impressed.

-I like what they've done as far as moving the kitchen.

That's a good idea. It gives you a nice big open kitchen.

I think it's achieved the right balance between it'll be something

that's manageable from the landlord's point of view,

easily maintainable.

But I think it'll also attract a tenant because it is clean and bright and fresh.

How much do the agents think the property is now worth?

More than the £63,000 that David's invested?

From a sales point of view,

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

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

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

and £12,000 before taxes and expenses.

Is that in line with his expectations?

No idea, really, what the house would sell for.

It would probably be 20, 30 years - it will be my children who'll be

interested in what it's going to sell for, not me!

Well, I did say David thinks in the long-term!

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

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

It's in very good condition.

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

£500 per calendar month.

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

market's obviously very strong at the moment.

So I would expect to achieve a rental figure

of between £450 to £500 per calendar month.

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

Yes, I think that's roughly in the right ballpark

for what this house would let for. Yeah.

David has already agreed to slightly less than that figure.

But there's a good reason for that.

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

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

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

And negotiated a tenancy with me.

A little bit less than the market rate,

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

I think the thing that's given me most pleasure is just seeing

the neighbours' reaction

as this empty, derelict house has been restored

and that the street is back to what it should be.

This house has gone well. I'm very pleased with it.

Very pleased with the result.

A success story in Manchester, then.

Will we find another here in Chesterton, Staffordshire,

just outside Newcastle-under-Lyme?

What am I here to see?

Well, it's a property that started out with a guide price

of £39,000 plus, which was amended to £45,000 on the day.

Now, that does happen quite often

and it's something that's worth looking out for.

The property itself...was this - it's a two-bedroom mid-terrace.

Let's take a look.

-DOOR SQUEAKS

-Oh! Squeaky door!

Get a bit of lubricant on that for sure.

Now, first thing I notice,

up the stairs, a high, elevated position - we like that in a house.

It sort of means there's less chance for potential rising damp.

It also gives a nice sort of... I just like elevated positions.

And also the possibility of a cellar.

We'll investigate that in a second.

Straight through the door, squeaky as it is,

into your front living room area. Nice to see stripped floorboards.

They need a bit of a sand, but we like those.

cellar, fingers crossed. Yes,

looks very positive.

So get that waterproofed, damp-proofed down there

and a very useful extra space. I do like these high ceilings.

They've got a reasonably new central heating system.

Stairs up to the bedrooms there, so that's a very traditional layout.

And continuing into the rear of the property, you've got the kitchen.

It's long, it's thin and it doesn't have any modern units.

But it's a useful space and, all in all, yeah...starting point,

big ticks.

Yes, it does tick all the boxes,

but the word that leaps into my head is "shabby". Nothing too wrong.

The layout's OK.

And I'm taking it as a good sign that there is no bathroom

at the end of the kitchen.

It's going to need updating, but there are some features

worth keeping and some decent space to work with.

It's not "Wow!" but it's also not "Whoa!"

So, onwards and upwards.

Well, up here, two bedrooms, both a good size.

This is the one at the front of the property,

and in here I notice the house has got double glazing, which is good.

However, lots of condensation on that.

And one thing which is bad about double glazing,

it does tend to almost hermetically seal a house,

and if it's left unoccupied for a while

it can lead to all sorts of damp problems.

So one of the first things you should do when you take over

a property, open all the windows and just let the fresh air flow around.

Up here, though, two bedrooms, and I do like this layout.

More often than not in these kind of houses,

you would expect the bathroom and loo to be out the back.

But as you can see, past the bedroom on the left there you've got

a bathroom and a separate loo, so that is really good news.

And this place is a bit of a TARDIS, isn't it?

The front doesn't look all that big, but inside, loads of space.

# Steamy windows

# Ain't nobody can see

# Steamy windows

# Coming from the body heat. #

Well, steamy windows or not, one thing that's clear to see

is that this is a good-sized house, albeit rather long and narrow.

And that's due in part to the two-storey rear extension that

accommodates the bathroom upstairs and the kitchen downstairs.

Which is great for the inside space, but not so great for the outside,

which is now not much more than a small yard and some outhouses.

But nevertheless, I think there are more pluses than minuses here.

What does a local estate agent make of the house and its current layout?

The bathroom is upstairs, which is

a real plus point for a terraced property.

However, I would make the bathroom and toilet into one,

make it more compact,

and also reconfigure the shapes of the bedrooms,

which would leave easily enough space

for a small third bedroom,

which would make an ideal nursery or an office.

Hm, that's interesting,

but would it be financially worth going through all

the effort of creating a third bedroom

on a house that was guided at 45,000?

In this property's current layout, if refurbished and redecorated

to a good standard, I'd confidently place this on the market for £70,000.

If the upstairs layout of this property was reconfigured

so there was a third bedroom,

I would place this property on the market for £75,000-£80,000.

That £80,000 has certainly got my attention!

What about rental potential?

In its currents two-bedroom layout,

I would place it on the rental market for £425 per calendar month.

If the third bedroom was added,

I would place it on the rental market for £475 per calendar month.

Well, adding a third bedroom would require considerable

structural alterations and one of the bedrooms would then be smaller.

I think keeping this in its traditional two-bed layout

might be easier.

So, a straightforward enough property in a decent location

with a good guide price. A no-brainer, really.

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

Lot number 13 - it's a mid-terraced house, two-bed, part modernised,

double glazed. Gas central heating.

Bathroom is upstairs.

Guide price amended to £45,000 on this.

Can we get going at 30? 30, right in the middle. At £30,000.

35 can I say now?

At 30,000... 35 standing left. At 35.

40 in the middle? 40 in the middle.

45 standing left.

40,000. I'll go in ones if it helps.

It does - 41. 42.

43? 43.

44...

At 44,000.

44,500.

45... 45 in the middle.

And a half?

New bidder, 45,500.

46.

46,500.

47?

No? Still with you in the middle.

£47,000. Another 500 anywhere else?

If not, 47 once...

47 twice...

Third and final time, at £47,000.

You bought it. Well done.

So, for £47,000,

this two-bed terraced house in Chesterton was bought by Phil.

Phil lives locally and this was his first investment property purchase.

-Phil, good to meet you.

-Thank you.

-Congratulations!

Tell me why you wanted to buy this house.

I'd got some money to put into a property or something like that.

I've got two young children and they could find it very hard to get

on to the property market in years to come.

So they could start young, let it out and, hopefully, it could be

a step towards helping them in the right direction in future.

How old are they?

-I've got a six-year-old daughter and a four-year-old son.

-Oh, wow!

-Really starting them young, then!

-Yup.

Well, there's nothing like planning for the future.

And though this was actually Phil's second choice on auction day,

as first property development projects go,

this really isn't a bad one.

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

New kitchen, new bathroom,

new doors, skirting,

architraves, and replaster and decorate throughout.

OK. How much of it are you going to do yourself?

I'm hoping to do quite a lot myself with a bit of help from some friends.

What do you do? What's your job?

-I own a construction company.

-Oh, all right!

-HE LAUGHS

-That shouldn't be too difficult, then!

No, I bought it to sort of fill my evenings

and weekends with a bit of a hobby, really.

OK, right.

So none of the construction stuff, doing this and that,

-fazes you at all.

-None of it, no.

That's why I had a brief walk-through.

-There's nothing here that fazes me at all.

-Right.

Yeah, no problems with any of it, really.

-I've got friends in different trades that can help me out.

-Right.

-But you do construction as your day job...

-Yeah.

Mainly the commercial side of stuff more than domestic.

What, shops, offices...?

-Yeah, industrial units, flooring and all that sort of stuff.

-Right, OK.

So you do that as your day job and evenings and weekends you're going

to be here getting hands dirty doing plastering and electrics

and plumbing...

Yeah, I've done my own house, worked on my sister's house,

worked on girlfriends' houses.

Yeah, there's been a long line and this is the first one

I've done for myself as an investment.

Yes, there's no doubting that this should be pretty

straightforward for Phil.

If he hasn't got the skills for certain jobs,

he knows a man who can.

I think the only real challenge will be doing a full-time job

and working on this at evenings and weekends,

especially when you've got a young family.

of course, he is doing it for them,

so I'm sure they'll be grateful to him in the end.

What's the timescale?

I'm hoping to have it turned around in six months,

which I don't think is too unrealistic, really.

-How much money do you think?

-I've got a budget, roughly, of £10,000.

Not stuck with any particular budget,

but I'm hoping to bring it in for less than that.

So any changes to the layout?

What about the back, the kitchen area?

I'm going to keep the traditional layout.

I don't want to start doing anything too big.

No walls to be moved, nothing like that.

Just literally turn it round and sort of renovate it, modernise it

and see if we can get it rented or sold.

Well, congratulations!

-Good luck with that.

-Cheers.

So, Phil starting his own property investment portfolio

with this place. Or is he doing it for his six-and-four-year-old?

I wonder what property prices will be like when they've grown up.

Food for thought.

In terms of this place, yeah, not too much to do

and I'm sure he'll be just fine. But you never know.

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

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

toward success.

But the second stage is just as important -

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

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

We are back in Maidstone in Kent.

Earlier in the programme, Stuart and his wife Lindsay

paid 74,000 for this one-bedroomed flat

as their first investment property.

-Why do you think this is a good investment?

-Because it's Maidstone,

we know the area really well.

We rented our first flat just across the road,

so we're thinking if we would live somewhere, other people will.

The couple are both police officers.

Lindsay was on maternity leave with the couple's second baby,

due in a week and a half.

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

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

What about things internally in the flat?

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

Hoping to replace that with a combi, and either make an open plan kitchen

or at least make the kitchen larger by removing that.

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

But he did have some leftover units from a previous refurbishment

he was going to use.

And the timescale?

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

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

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

And look at the lovely flat that Stuart has successfully

delivered as well!

# I'm going to watch you shine

# Gonna paint a sign so you'll always know

# As long as one and one is two

# There could never be a father

# Loves his daughter more than I love you. #

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

replaced in the bedroom and the hallway.

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

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

Just general paintwork, skirting boards and ceiling,

and new windows installed.

We had new heaters, electric heaters installed.

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

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

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

so we couldn't change the system.

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

Apart from replacing the windows,

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

The airing cupboard has remained,

but the flat did look in pretty good nick.

Yeah, the actual condition of the flat was all right,

everything was OK. It was just a bit dated.

The kitchen was extremely dated. I think that was from the 1980s.

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

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

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

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

In the end, Stuart left the bathroom suite

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

Stuart is a keen DIYer and he and Lindsay have done up

several properties they've lived in and then sold.

But this flat was the couple's first separate investment property

and they thought they had the timetable all sorted out.

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

and get it all done and everything would be great.

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

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

I needed him at home.

Eventually, once we got in a bit of routine at home, we started coming up

once a week and prepping it all, to come and wallpaper and paint.

The toddler got dumped on grandparents

and the newborn obviously came with us

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

while the other looked after her and go from there.

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

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

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

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

It worked out quite nicely.

Well, I am impressed.

With the 74,000 they paid at auction,

that takes their total investment to £78,100.

The couple are still thinking of extending the 74-year lease

if they keep the property and rent it out.

So, have they decided against selling?

Well, we have different opinions.

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

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

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

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

and Lindsay hear the valuations from two local estate agents.

Coming back today, I think it's a good transformation. Really smart.

They've done a perfect job.

I particularly like the fact that they've styled it very simply -

it's plain walls, plain carpet and nothing to offend anybody.

I think it's an excellent property to have as a portfolio

if you're letting, because it's a relatively modern property,

so the maintenance issues are fairly negligible.

I think the property would rent really well.

It's a property for a couple or a single person

and it's town centre, which is perfect.

And how much income could the flat generate?

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

They might even squeeze £600 per calendar month.

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

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

Will that convince Stuart to rent it out?

No, I want to sell it.

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

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

-Yeah.

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

What could it resell for?

More than the £78,100 they invested?

If I was to put this property on the market

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

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

A potential profit of between

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

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

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

you have to admire them for taking on their first property

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

And doing such a good job, too!

I think the timing has been...

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

a couple of months later.

But the right property came along at the right location,

and so the timing we just had to accept.

In the Staffordshire town of Chesterton,

family life was also on the mind of Phil, who paid £47,000 for this

two-bed mid-terrace as an investment for his children.

What are you going to do to sort it out?

Literally, new kitchen, new bathroom,

new doors, skirting, architraves

and re-plaster and decorate throughout.

Phil lives a couple of miles away in Newcastle-under-Lyme,

and he wanted to put his savings to better use and to provide some

financial security for his six-year-old daughter

and four-year-old son.

What's your job?

-I own a construction company.

-Oh, all right!

-HE LAUGHS

That shouldn't be too difficult, then!

No, I bought it to sort of fill my evenings

and weekends with a bit of a hobby, really.

# My hobby

# I want to you for my hobby

# After work I need something to do. #

I've done my own house, worked on my sister's house,

worked on girlfriends' houses.

Yeah, it's been a long line and this is the first one I've done myself

as an investment.

Phil had set a budget for the work of around £10,000,

and thought it would take about six months.

And that's when we returned.

Well, Phil has smartened up front all right.

And there's something special on the inside, too.

The exterior windows and doors remain, like the fire.

But with new floors, skirting and interior doors,

I reckon the house now has a more cottagey feel.

And opening up the bathroom and former loo works a treat.

In the bathroom, basically, new ceilings, took out the partition

wall that was here, splitting up the bathroom and the separate toilet.

Replastered it, rewired it, some tiling

and fitted a new bathroom suite.

Really quite happy how the bathroom's come out, and I think it was

worth the effort with spending a little bit more on the suite.

Phil has plenty of experience in refurbishing properties

and he's followed the tried and trusted technique in this house -

invest in the two most important rooms, the bathroom and kitchen.

In the kitchen I've done a new ceiling, new plastering,

I've re-waterproofed the walls, waterproofed the floor.

New kitchen units and appliances.

Glass splashbacks were done by a friend of mine,

and, basically, I'm really glad

how it's come out for quite a small kitchen.

Phil fitted the bathroom and kitchen himself, and he did

some of the carpentry work with help from his dad, who's a joiner.

I done quite a lot myself

and I've had some help from some really good friends.

I had to get a plastering contractor in and electrical contractor

to do the rewire.

The work's taken six months, as Phil anticipated.

So, did it end up just being his weekend building hobby,

or was he able to get down here more often?

I've been on site quite a lot.

Even if I haven't got here on the day,

I've been calling in in the evening and just checking things,

making sure the heating is on and everything is drying out properly.

Phil did discover some unexpected damp which required treating,

but the general condition wasn't too bad.

Outside, we've basically just given it a lick of paint

and replaced the guttering, that sort of thing.

I've had to drop some of the patio level out the back

because of damp issues that were on it.

But other than that, just a lick of paint and a tidy up.

The fresh white paintwork does make a big difference, but did Phil

keep his budget sheet black and white or did that go into the red?

My original budget was 10,000 and, give or take 200 either way,

I'm pretty much on target.

Well, let's just say you kept to £10,000, Phil.

And, with the £47,000 you paid at auction,

it means you have a total of £57,000 invested here.

Originally, it was an investment for the children to help with any

future university fees or anything on the property ladder

when they were but older.

But now it's looking like I might sell it,

reinvest the money in another one, and try and go again.

A good time to see what two local estate agents think

the potential resale value could be.

There is very little I would do differently.

I feel the property has maximised its potential and it's just ready

and waiting for someone to move in.

I think the quality of the kitchen and bathroom fittings is quite high

and this will help the property sell.

Having inset lighting in the ceilings is also a bonus.

I really like the kitchen and especially the bathroom as well.

They are really modern, really stylish.

And if Phil does decide to rent,

how much income could the property generate?

Given the high spec of this property, I think you could quite easily

achieve on the rental market £425 per calendar month.

I'd put this property up for rent at £450 per calendar month.

A potential yield of around 9%.

Would that tempt Phil to look for tenants?

My initial intention was to rent,

but I'm going to sell it on, I think, and then go for another one.

Let's see if the six months' hard work could result in any profit.

Will the agents value the property any more than the £57,000

that Phil has invested here?

Given the finish on the property,

I'd happily have this property on the market at £70,000.

I'd put this property on the market for £74,950.

So, a potential profit of £13,000-£18,000

before taxes and fees.

A worthwhile return, Phil?

For the area it's in,

I sort of expected it to be around that sort of figure.

And if it doesn't hang around and he finds a buyer, then what?

If it sells relatively quickly,

I'd like to see what I can find

and just not jump into anything too quickly.

Follow the market a little bit and see if I can find something else again.

Has all this whetted your appetite for property developing?

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

-We'll see then.

-Goodbye.

-Goodbye.