Episode 3 Homes Under the Hammer

Martin and I are both mad about property.

It doesn't matter how much you know,

there is always something new to learn.

Yes, every property is different.

And of course, let's not forget the people who buy them.

They're all different, too.

Lucy, me, you...

The town of Burton-upon-Trent in Staffordshire

is probably best-known for its brewing heritage.

In its heyday, there were around 12 breweries here

producing, between them, over a quarter

of the total amount of beer brewed in Britain.

# And I want to thank you

# For giving me the best day of my life... #

Well, a couple of miles from the centre of Burton,

in the popular suburb of Winshill, is the property I'm here to see.

£56,000 plus was the guide price for a classic two-bedroomed mid-terrace.

On a fairly busy road. That's not ideal.

And how about that for a front step?

Wow!

So, I guess the obvious question is,

will the house be a step up the property ladder?

Well, maybe.

In through the door, up the step and into your living room. Nice size.

It doesn't smell damp,

it doesn't seem to be in too bad condition.

Door there, down to the cellar.

That's a nice, additional bonus.

And then through into your rear living room area.

Slight disappointment, the kitchen.

Originally it would have been here -

somebody's built some kind of extension at some point,

it's in the back there.

So, as starting points go? Not bad.

# Step it up, step it up, it's all right... #

Apart from that enormous front step, there's nothing too problematic here.

For me, a good modernisation is all it would take to sort this out.

Well, upstairs, and a fairly classic layout.

A little landing at the top of the stairs.

And then one bedroom one way and one bedroom the other.

Both half-decent sized, which is good.

But there's one thing we haven't found yet.

And that's the bathroom.

And I'm afraid, the bad news is that it's accessed through this bedroom.

If you're looking for the property to appeal

to as many people as possible,

I'm afraid a bathroom that only has access through a bedroom is a no-no,

especially if you're looking to rent the property.

In this case, though, creating a corridor

between the landing and the bathroom is an easy fix.

Just remember to account for the cost in your budget.

Well, at the back of the property, this little yard area.

Quite a nice... You've got an outdoor loo. And then the garden.

However, all is not what it seems.

Because you think, wow, what an amazing garden!

However, it's shared with the next-door neighbour.

Basically, it's split down the middle here, on this path.

So, I guess you're going to have to get on well with your neighbours

and hope, like it is in this instance,

that whoever is your neighbour, looks after their side -

in this case, it's absolutely beautiful. But it's a nice space.

And an added bonus,

it looks like we've even got a friendly pet tortoise.

# Any time you choose Kick off your shoes

# Rest your weary eyes and catch up with the news

# A favourite book will be the perfect company, so relax... #

Will everyone appreciate it as much as this local resident?

It's a little rude to give someone's age away,

but this chap is 52 years old.

So that makes me an old-age mentioner!

Sorry. Anyway, a local auctioneer hared along to tell us more.

I would say, once renovated,

this property would achieve somewhere in the region of £85,000.

And if I were looking to offer this property to the rental market,

then I would imagine a fair rent would be

somewhere in the region of £475 per calendar month.

Well, a really nice house in a popular area.

Yes, a bit of noise from the road out the front,

but apart from that, a great one to go for.

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

A two-bedroomed terraced house, good potential to it.

How much shall I say for it today, ladies and gentlemen? 54? Thank you.

£54,000, I have, on the right-hand side.

55. 55.

56. 57.

58.

59.

60,000.

61.

62?

61,000, in front of me.

I'll take 500, if it'll help you.

It's in the market. It's going to get sold.

61,500 somewhere else?

At £61,000, then. It's going to go for the first time, at 61.

For the second time, at 61. Third opportunity.

Anybody? Any higher bid?

Sold at 61,000.

The successful bid of £61,000

came from local pair Sue and her partner Andy.

Sue already has a property portfolio.

So, no doubt, she found this terrace

after scouring through auction catalogue after auction catalogue.

Well, not exactly.

-Andy, Sue, great to meet you both.

-Nice to meet you.

-Nice to meet you.

-Congratulations.

-Thank you very much.

-Yeah.

Tell me why you wanted to buy this place.

-I live just up the road and I do this, actually, for a living.

-Right.

It started as a hobby.

But I came to take my granddaughter to school

and I saw the sign outside, so I thought, "Oh, got to have a look."

And is it normally buy them and sell them on?

No, I buy everything and rent it.

But this is a new portfolio-type thing.

I'm buying this to renovate to a good standard and sell on.

# That's what I go to school for... #

Well, if Sue makes a healthy profit,

she won't complain about the school run again.

It goes to show that experienced developers

are always looking for the next potential opportunity.

Sue has been doing this for 25 years,

along with a significant amount of charity work.

But she was originally a fashion model.

-Tell me what you're going to do to it, then.

-From top to bottom,

it's going to have to have the roof checked.

We want lagging in the roof.

We always start at the top and work our way down.

Brand-new bathroom.

Bedrooms all sorted out.

-But we're putting a passageway in the second bedroom.

-Ah...

-Yes.

So, we're just going to put a stud wall, partition it off,

and the bedroom will still be sized for a double bed.

Out the back, you've got this quite interesting garden

that's split down the middle with the neighbour.

It's lovely. These are the gardens round here,

-this is what they're like.

-It's charming,

and obviously the gentleman who owns next door

obviously does a fantastic job of sorting his side.

Yes. Yes. And he loves doing it.

So, when I bought at the auction,

I came and said that I was coming to renovate it

and thanked him for doing the garden.

And he's done it since, so...

Has he? Oh, excellent. That's fantastic.

And he's got a 52-year-old tortoise.

-Thomas.

-Tommy.

-Thomas the tortoise.

-So he'll be keeping an eye on things.

-Yes.

-Er, no doubt.

The house IS an investment.

But Sue and Andy sound quite fond of it

and its helpful and charming neighbours.

If the lovely garden, a smashing neighbour

and reconfigured bathroom don't add value,

I think a guard tortoise just might.

So what's the budget for all the work?

-I think about £10,000.

-Right.

It usually works out about that with these type of terraced houses.

I've got a good team that have worked with me a long time -

decorators, plumbers, electricians.

I don't touch things that are either going to blow me up or hurt!

Fair enough.

I'm glad to hear that Sue is clearly a switched-on developer.

You can't do better than have a reliable team you know and trust,

which means this should be pretty straightforward in her two-month timescale.

So what do you think the most important lesson you've learned

in your 25 years of doing this is?

-Always read your legal pack.

-Yes.

I've learned that from Homes Under The Hammer.

Oh, good girl! Yes. Absolutely.

Well, listen, congratulations. Good luck with it.

-Thank you very much.

-We look forward to seeing how you get on.

Well, this project should be water off a duck's back

for property old-timers Sue and Andy.

But there's only one person I'm interested to find out

what THEY think of the renovation, and that's Tommy the tortoise.

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

This is Deal, in Kent.

Once a busy shipping port, it's now a quiet seaside town

with a glorious stretch of beach and some lovely views.

A mile from the beach is the lot I'm here to see.

And it's this - a former St John's Ambulance headquarters,

eight garages and a store.

Now, I'm aware the main building hasn't been used for several years

and, well, the whole site's seen better days.

So what are we looking at?

A building plot, of course,

which had a guide price of 100,000 to 105,000.

Let's see what we've got.

Basically, we have an L-shaped site with two road frontages.

One on the main street and one at the side.

Fabulous.

There are eight lock-up garages,

which haven't done much locking up lately.

And a large storeroom, with no door.

And this tired, old hall, which used to be home to St John's Ambulance.

# Doctor, doctor

# Give me the news I got a bad case of loving you... #

So, what have we got?

Well, the planning permission

is for a row of three three-bedroom terraces

and one detached two-bedroom house.

Now, the reason you have this slightly odd arrangement

is the shape of the plot, which is a dogleg.

So the terraces go along that side

and the detached sneaks in along the back here.

Now, the designs themselves are actually very nice.

I love the layout downstairs.

You've got a nice, big lounge,

then a kitchen at the back with a dining area

and I really like that.

You've got a cupboard here, a cupboard there.

Nice and practical, actually.

Then upstairs, three good-sized bedrooms, a family bathroom

and an en suite

AND a walk-in wardrobe storage area.

Love it!

Whoever designed these, really thought about how families live.

I'm impressed.

# Congratulations

# I'm impressed

# All you had to do was beat the best... #

The busy road to one side of the site could put potential buyers off,

as could the small gardens in the plans.

However, with the planning permission in place,

I can't see anyone wanting to return the hall to its former glory.

Whatever happens, it's likely to become residential.

However, as with any development, it's all about the maths.

Is there good potential profit if these plans were to be carried out?

We've asked a local estate agent along,

to give us his opinions on the plans.

I think the plans that are approved are good for this site.

They're good, interesting houses and will be appropriate for the location.

The only other use for this site

is some other form of residential, maybe flats,

that would be best in this market.

If you want to let, I think I'd put flats.

If you want to sell, I think I would build houses.

Now, that's intriguing.

However, attempting to change the planning permission would cost time and money.

So, how do the options compare financially?

For the houses that are proposed here currently,

they are going to have a value of about £185,000 to £190,000.

Based on those top valuations,

four houses here could have a total value of £760,000.

Wow!

If they were flats, they would be less -

a one-bedroom flat would be about 100 to 110.

And a two-bedroom flat would be about £110,000 to £120,000.

And what would a flat here rent for?

If flats were built here,

they would let for £450 per calendar month for a one-bed

and £500 to £550 per calendar month for a two-bed.

This is a nice plot in a decent enough residential area

with money to be made, if bought for the right price.

Let's see what that was at the auction.

It's the former St John's premises and garages,

and it's got the planning for the redevelopment

for the terrace of three and the detached house.

So can I see £100,000 for it?

£100,000. Where's my builders?

£100,000 can I say?

Give me 90, then. Start me at £90,000.

90, I'm bid. 95 bid, I have.

£100,000, I'm bid.

105, now, if you like. At £100,000.

105, right at the back, I've got.

108.

110, standing at the back.

110, can I see?

110.

And 12.

And 14. And 14.

114.

And 16.

With some cagey bidding going on, we leave it there

and return at £142,000.

142. And four. And six.

146. And eight. And 50.

50. And two. And four.

And six. And eight.

158?

At £156,000, I've got.

158, anywhere else?

If not, at £156,000, for the first time.

156, for the second time.

Third and final time, at £156,000.

Well done, madam, you've stuck with it and you got it.

Sticking with the bidding was Tracey and her builder Paul.

That successful bid of £156,000

smashed the guide price by over 50 grand.

Tracey has been on the show before with her business partner Martin.

Their property business currently has 21 properties,

which they rent out.

Tracey, we meet again. I think it was 2008 the last time we met.

-That's right, in Dover.

-So have you been property developing ever since?

Back in that time, we'd done a bit of renovation work.

But, since then, we've been doing new-build properties.

Building flats around Dover.

The thing that took my eye about this plot

is the planning that comes with it.

You've got a really nice house at the back.

A nice, big detached house.

And three nice houses that sit in the front.

Is that something, or was that something,

that particularly appealed to you with this?

We like the idea that it's got planning on it.

But it wouldn't appeal to us to have that particular planning on it

because we tend to specialise in building flats,

because we don't sell our properties on,

we deal with the rental market.

And we find the rental return on flats

is much better than it is on houses.

So, you're not going to go with the plans that come with this site?

No. We've already spoken to an architect

and he's drafted plans with the potential of nine flats on the site.

So, have you spoken to the planners?

Have they, like, given you any indication

whether or not they'll pass something like this?

The architects had an initial chat with the person from the council

and it's looking very hopeful that they will agree the new plans.

And how much would it cost to build

what you're looking to do on this site?

Generally speaking, we estimate about 70,000 per unit.

-OK.

-So, we've got two separate units, phase one and phase two.

Phase one, of the five units, you'd be looking at about 350,000.

And the second of the four units, that's about 280,000.

Wow!

Tracey certainly has a business head on her,

but this project isn't without

its little sentimental sting in the tail.

I grew up in the north end of Deal.

So I was fairly familiar with this end of Deal

and it was only after I'd bought this place at the auction

and I was telling my family about it

that I found out that my parents had their wedding reception here

back in 1968.

That is amazing to think that, once upon a time

they sat in here having a wedding reception

and now you're going to knock it down! How do they feel about that?

I did ask if they wanted to come

and have one final look down, for memory, old time's sake,

but they said it was pretty grotty back in 1968

and it wouldn't have improved since then.

And now here you are, you're about to improve it completely.

I think the best thing we can do with this is knock it down.

How long do think it's going to be before this development is finished?

I would think it would be about 20 weeks until we got the plans through

and we're in a position to proceed.

And then, phase one I would think is about six months, 26 weeks,

and similar or less for phase two.

-Well, good luck.

-Thank you.

-It's going to be really exciting

coming back and seeing this not being here

and a lovely block of flats in its place.

Good luck with the project,

-and hopefully, it won't be so long the next time I see you.

-No.

Thanks very much. Thank you.

So, another block of flats for Tracey.

Seems to be a winning formula.

It's such a shame these nice houses won't see the light of day,

but I do hope they get the planning permission they want.

Certainly money in it.

You can find out what happens later in the show.

Still to come... In Maryport, Cumbria, I think I've spotted the problem.

Urgh!

That's not good.

And over in Deal, Kent, best-laid plans have stalled in the erm...

planning office.

Back now to the town of Burton-upon-Trent in Staffordshire,

where I earlier looked around this two-bedroom mid-terrace property

that had a guide price of £56,000.

A solid, traditional property in need of updating.

And it had one inconvenient element.

And that's the bathroom.

And I'm afraid, the bad news is that it's accessed through this bedroom.

So not ideal at all.

It certainly was a problem that needed fixing,

and the person who was feeling flush enough to do it on auction day

was Sue and her partner Andy.

Five months later, we returned to see just how things had come along.

The downstairs has been transformed, from dull and dated

to modern and aspirational.

The feature fireplaces in the two reception rooms

give a great focal point.

And the brand-new kitchen is unrecognisable from before.

Wow, this is a fantastic job and a really professional finish.

I can't wait to see what's been done upstairs.

A lovely new bathroom suite

sits at the end of a newly-constructed landing,

made with space taken from the second bedroom,

as Sue explains...

This is the stud wall I built. I actually did build the wall.

Some of the lads gave me a hand with the plasterboard,

because that's very heavy.

But I did all the framework.

I think it's made it ideal.

You couldn't walk through a bedroom to get into a bathroom.

The bedroom's still a really good size

and it's just made the whole upstairs flow through. I love it.

This is a much more practical layout that suits modern living,

as does the bright and tasteful decor.

I like the greys - still fairly neutral,

but getting away from magnolia makes a change.

But, how has it been for Sue and Andy?

Oh, and of course, pet dog Alfie.

Well, we started at the top of the house.

Bathroom totally stripped, a new suite put in.

The whole house was rewired.

All plaster off the walls.

Went into the kitchen, removed the kitchen.

Redid the plastering there.

And very nice job.

Good kitchen fitters, so...

I'm pleased with the whole thing.

It all came together.

It certainly has.

Not only have they done the interior but they also tidied up the back

including their neighbour Des's side,

who has very kindly continued to look after the garden,

along with the now hibernating Thomas the tortoise.

It hasn't all gone to plan, though - as Sue and Andy explain...

All the electrics were the original electrics in the property when it was built, we think.

So, the whole place had to be stripped.

So then it meant all the plaster...

and we didn't cut corners, it's been done to a high standard,

plus we've got the internet cables all through.

Every room has got a TV plug, TV aerial

and erm...all the DVD, anything you want

regarding electrics is all behind the fireplace.

Wow! That's impressive. OK, I like a gadget or two -

but Sue has certainly brought this property right up to date.

And she's only gone over her £10,000 budget by £600 -

thanks mainly to Andy sourcing the best deals on the internet.

What's more, their timeframe of two months has been stuck to,

albeit somewhat delayed by holidays

and problems with other properties they own.

So, with Sue and Andy keen to sell,

it will be interesting to see what two local experts

think of the property.

With a total outlay here of just under £72,000,

what kind of figures are we talking?

If this property were placed on the market for sale,

I would expect it to achieve £85,000.

I think, if the clients decided to market this property for sale,

I would expect them to achieve at least £89,000.

Well, erm...

I think they're fair.

But, to this standard, it wants to be at the top end, the 89.

I valued it at 89,950,

and I've actually sold the property for 89,000.

Crikey! You kept that quiet, Sue.

Selling it for £89,000 has left Sue

with a pre-tax profit of just over 17,000,

making this project a big success.

And she isn't resting on her laurels one little bit.

I keep saying I'm not going to buy any more, but it's like a drug,

you do. You can't help yourself.

Today, I'm in Maryport,

the southernmost coastal town on the Solway Firth in Cumbria.

Now, for many years, this place was called Ellenfoot,

until a developer in Georgian times by the name of Humphrey Senhouse

decided to redevelop it and name it in honour of his wife,

Gladys.

I'm kidding.

Mary.

# And the wind, it cries Mary... #

Well, a few minutes' walk from the town centre and the harbour

is the property I'm here to see.

Three-bedroomed terrace,

guide price £35,000-plus...

So, not a lot of money -

but does it have an interior that reflects that price?

Well, nice, high ceilings as you walk through the door.

Bit of an odd layout. Just one, big room down here

which obviously makes this your living room and sort of kitchen area.

Work to be done but I do quite like the layout here

and er... Yeah, onwards and upwards.

Urgh!

That's not good.

Neither's this.

Sort of on this little landing halfway up the stairs,

you've got this door

which leads out into this... well, covered passageway,

which leads to another front door.

This house is a listed building, so you have to think about that

when it comes to deciding what you want to do with it.

It's described in the catalogue as a three-storey house.

But with this half-landing

and this extra door that leads to it, it certainly is quirky.

Let's hope it's not quite as complicated up here.

Erm, what have we got? Bathroom there.

Stairs up to the second floor where the second bedroom is

and then through into your first bedroom here.

And, you know, what's the opposite of open plan?

Because downstairs is open plan

and up here is absolutely the opposite,

it's very cramped, it's all corridors and stairs and it doesn't work.

And glancing around, there's not an easy solution.

So, some work to be done inside here.

Going from the first floor with its bathroom and front bedroom,

ever upwards to the second floor, you find two further bedrooms,

each of reasonable size.

We asked a local property expert

for their opinion on this perplexing property.

What could this house rent for if done up to a good standard?

We could achieve somewhere in the region of £350 per calendar month.

Given a guide price of 35,000,

after refurbishment,

what sort of sale price would you advise on the open market?

If the property was renovated,

depending on the standard of the finish,

it could achieve anywhere between £75,000 and £80,000.

Well, a nice enough property, but a lot of work to be done on this one

so not a weekend refurbishment.

Let's see who decided to take on the challenge

when it went under the hammer.

Three-storey four-bedroom terraced house

situated in a popular area of the town.

The property is a listed building.

35? 30?

I need a bid.

I can't sell it without one.

At 30,000.

30, I'm in.

At 30,000.

Despite a packed auction house,

it looked like the guide price was unobtainable.

But then the bids started to move a little.

At £30,000, then.

31. 32.

33. 34.

35. No?

With you at 34.

Half. 35.

35. Yeah, I've got half here. At 35, with you.

Half? No.

Back with you, at 35.

At £35,000 on my left seated.

First time. Second time.

Third time at £35,000, then.

-GAVEL BANGS

-Well done, sir.

The successful bid of £35,000 was made by Dave.

I met up with him and his business partner Kevin,

leading the way here,

back at the property.

-Dave, Kevin, good to meet you both. Congratulations.

-Thank you.

Tell me why you wanted to buy this property.

-God knows!

-That's a good start. Yeah.

Well, we're new into the renovation part of our careers now,

we've done the house builds, we've done all that to do with that.

We now want to go forward and buy properties to do up and to rent.

Right, OK. And what's the relationship between you two?

Kev is the builder of the business.

So does, in effect, Kevin work for you?

-Kevin actually works for my drainage business, yes.

-Ah.

So why this particular house, then?

We arrived at our first auction a month ago, just gone,

and the house we wanted was number five on the list.

And the money that it went for was absolutely above our budget.

Right.

We have a certain budget and the next one along was this one,

which was within our budget.

-Right, so had you seen it beforehand?

-No.

-No.

Oh...!

-Had you read the legal pack?

-No.

Oh...!

So you hadn't seen it, hadn't read the legal pack.

-That's, kind of, a little bit on the...

-Back to front?

-Well, kind of. Bit dangerous.

-Absolutely. But confidence, you see?

Foolhardy, a bit, sort of?

-Nothing to worry about, is there?

-Well, possibly.

-You don't know until you've read the legal pack.

-Yeah.

-No, it's all been dealt with.

-Oh, now - after you've bought it.

Oh, yes. Well, I'm finalising now, so there's nothing scary amongst it.

Could have been, though.

Well... Confidence.

Next time, we WILL read the legal pack.

But this was our first and we're not upset about the purchase at all.

So, what are the plans for it, then?

-What are you going to do to it?

-Top to bottom,

-take all the chimney breasts out, top to bottom.

-Oh, are you?

-Yeah.

Take everything apart.

And the walls, we'll re-skim where necessary.

New floorboards. New heating system.

Rewire.

It's a kind of interesting layout, as well, isn't it?

Sort of higgledy-piggledy, all over the place.

What are you going to do to sort of change that?

Well, the worst part for us, we think, is the kitchen area here

because, you know,

with the stairs coming up from behind that wall there

it's going to take a little bit of erm...

imagination.

And there's no back yard to this property here.

But the passage is there, which is a back yard.

So we can do things with that to make light work of the kitchen.

-Right.

-Put white goods in there, that sort of thing.

-Right.

-So is the idea, then, to do it up and sell it on or to rent it out?

-Rent out.

-Rent out.

So, what's the budget?

We have a budget of up to 12 grand.

With the purchase price on top of that

we think we can turn this round into a nice return,

-market appraisal-wise.

-Right.

What sort of rents do you think you might get?

In the area, they're going for roughly £450 to £500.

-Yeah, in this area.

-Right.

It does worry me that Dave and Kevin

have gone into this without having a chance to weigh it all up.

Their estimate of the rental

is much higher than the agents who came to see it.

Well, it remains to be seen who was right.

They've set themselves a 12-week timescale,

and Dave's wife Linda will be looking after the finances,

so hopefully she'll make those figures add up.

-And were you happy with what you paid for this one?

-Yeah. Very much so, yeah.

-Within the budget and all?

-Although I bought it blind.

-Yeah, I know.

Tut-tut.

-Well, listen, congratulations.

-Thank you.

-Good luck.

-Yeah, thank you.

-And look forward to seeing how you get on.

-Nice one. Thank you.

-Nice to meet you both.

So, a new joint venture for David and Kevin.

But they broke all the rules buying this,

their first auction property -

not reading the legal pack, tut-tut-tut,

not visiting the property beforehand... More tuts.

HE BREATHES DEEPLY IN AND OUT

Hopefully...

..the renovation will go a bit more, how shall we say, to plan. Yes.

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

It's time to go back to Deal in Kent,

where part-time property developer Tracey

and her business partner Martin

paid 156,000 for this L-shaped plot of land,

which came with planning permission for four houses.

Since Tracey and Martin only build and rent out flats,

the existing plans became the first casualty

of this former St John's Ambulance headquarters development.

We've already spoken to an architect

and he's drafted plans with the potential of nine flats on the site.

Tracey and Martin first submitted their plans in November 2013.

And one year later, it's not been such a mad dash after all.

MUSIC: THEME FROM STEPTOE AND SON

We met up with them back at the site

to find out how far their plans had progressed.

Well, the original purchase was in the summer of last year,

with completion a month later, July.

After that, we instructed an architect

and he had meetings with the local planning authority.

We moved on from there with him preparing plans

and submitting them in December.

We understood that process was going to be about six weeks.

So we hoped to have planning by the end of January of 2014.

But it wasn't, in fact, till October 2014

that planning was finally granted to us.

Tracey and Martin had originally planned for nine flats on the site.

But this was increased by one at the suggestion of their architect.

Back at the office,

Tracey took us through the new plans in more detail.

# Everybody's gotta have plans

# She said Everybody's gotta have plans... #

So looking at the plans now,

we've got the driveway through the front of the property,

under the archway, to the rear of the property.

On the ground floor, we've got three two-bedroom flats.

When we move up to the first floor,

we've got three two-bedroom flats and a one-bedroomed flat.

And moving to the second floor, which is effectively the loft area,

there's a large three-bedroom flat

with one very large bedroom with an en suite

and two separate double bedrooms with a shared bathroom.

All of the property has got lounge-diners as an open space,

and separately

there's a stand-alone two-floor two-bedroom unit,

which has got separate parking.

It all looks pretty impressive.

But their timescale for completion has, obviously, taken a hit.

Has this delay had an impact on their budget of 630,000?

Fortunately in the last year we've been in a rising market,

so the properties will be worth more when they're actually built.

Tracey and Martin know this business,

and more importantly, this area, like the back of their hands.

Seems like a good point to bring in some impartial opinion

from two local estate agents.

Firstly, what price could these flats achieve

on the current property market?

Sales values here are going to be

between 100,000 and 135,000

in the range of one bedroom through to three bedrooms,

with probably the two-beds coming in at about £120,000.

I would suggest that the one-beds would be marketed around 100,000,

the two-beds around the sort of 120,000, 125,000 price banding

and then the three, around the sort of 135,000, 140,000 level,

depending on spec and how it's finished.

Taking those top-end prices,

the grand total comes to £1.24 million,

minus the purchase price of 156,000,

with an estimated spend of £700,000 including the extra flat.

That would leave Tracey and Martin

with a healthy profit of 384,000 before taxes and fees.

Fantastic. Better than I thought.

-Slightly higher figures than we we're working to.

-Mm.

But as fantastic as those figures are,

these two Kent developers aren't changing their game plan.

We find that the financial advantage is in keeping the flats

over a period of time.

We are looking to build and keep flats over 10, 20 years.

Time to return to the town of Ellenfoot in Cumbria.

# That's not my name

# That's not my name

# That's not my name

# That's not my name... #

OK, OK -

the name it's been known by since Georgian times, Maryport in Cumbria.

We were here to see a three-bed three-floored terraced house

with a guide price of £35,000-plus,

and...well, a few problems to go with it.

Urgh!

That's not good.

It was bought for the guide price of £35,000 by Dave.

He was going to develop it with business partner Kevin.

Could the boys dream up a profitable property,

or is that the stuff of fantasy?

Four months later, we've returned to find out.

That bathroom's been totally redeveloped, and it's looking great.

And while there's still work to be done on the rest of the house,

the walls and ceilings have all been re-plastered

so that it's just about ready to decorate.

They've even found a use for the mezzanine passageway,

putting in a WC to make a ground-floor toilet.

As Kevin was on another job,

we caught up with Dave and his wife Linda,

to hear all about it.

It's been four months almost to the day since we started the project.

We've got about another four weeks to go.

The top two rooms are both bedrooms.

They just needed squaring up and stripping back and rebuilding, basically.

Floorboards were replaced where necessary.

The middle floor, the bathroom,

that was a total, total disaster, that - all the floors came out of there,

joists were replaced where necessary.

The whole place has been rewired, replumbed.

And then we're on the sitting room, which is the last room to do.

So, that'll be happening in the next few weeks,

we'll be into that and squaring that away.

So, with a combined sitting room and kitchen the last on their list,

they're getting there.

Hang on, though - if the kitchen isn't finished yet,

where are we interviewing them?

Let's let Dave explain.

Within a few days we decided to take away

the chimney in the sitting room,

to give a bit more width to the room.

And we dropped the chimney onto the floor upstairs,

cleared all the rubble away,

and then we found a hole in the floor where the hearth was.

And my grandson was here that day and we put a ladder down

and dropped him into the hole,

and he shone his torch around off his phone.

And it became quite clear that we have to use this room.

So, where's the kitchen?

Yep - it's in the cellar they didn't even know existed.

And moving it down there really seems to have solved a problem.

The original room, which had got a lounge and a kitchen,

we were struggling to get it to look anything.

So to find a cellar, it was brilliant.

I came down when they'd made access into it.

It was very dark, I had a torch.

It was an earth floor, and I thought,

hmm, it's got to be very light in here.

So, the vision was to have a light floor, light walls

and I wanted a white kitchen, but it was too white.

So, we put the floor down

and then carried on with the rest of the kitchen equipment.

Erm...

And, really, I'm so pleased with it.

It does look great. And, OK, it does mean another set of stairs,

but on the other hand it means more room for the living area.

But, discovering and renovating a secret new room

would have had an effect on the budget.

So, how HAVE they got on?

The original budget we estimated between 12,000 and 15,000.

That's now gone to 20,000.

If we come in with 20,000 spent, then we're doing OK.

Dave bought the house for its guide price of 35,000,

and although his budget has gone up to 20,000,

the property now has an additional room.

His total spend is now 55,000.

We've asked along two local property experts to get their opinion.

How much could he expect were he to sell the property?

We would estimate we could market the property for around £82,000.

Done up to a good standard, I feel in the current market

this property would achieve a sale value

in the region of about £85,000.

That would be a profit of up to £30,000,

minus the usual taxes and expenses.

Not bad for five months' work.

And were the property to be rented...?

We would expect that we could achieve around £400 per calendar month.

In the region of £400-£425 per calendar month.

-Oh, that's good.

-That's all right.

-Yeah. Yeah.

I thought about 360, 380. So that's not bad.

Yeah - well, that's... That's fine.

This would give Dave a yield of just over 9%.

Not bad, considering they're keeping the property as an investment

and renting it out.

So, what's next?

Look for another one.

No, not quite yet. I have to have two months off now.

And then I'm allowed to start looking for another one.

But, the next one, he will definitely look at before he buys it.

I don't want the shock again that I had when I came in here.

Yeah, but what a result.

Well, that's all we've got time for

but join us next time for more of the ups and downs...

-Hopefully not too many downs.

-Well, yes!

..of property developing here on Homes Under The Hammer.

-We'll see you then.

-Goodbye.

-Goodbye.