Episode 30 Homes Under the Hammer

Hello and welcome to the show.

We're always being told you need to save for the future.

That's even more true these days.

Because people are looking to supplement their pensions.

Yes, and property can be a very attractive option.

So there is a bit of a stampede to the auction rooms.

If you're like us and you're hoping property will be a safe investment,

you've got to make sure you buy wisely.

And that means doing your research to seek out the bargains.

So is that what happened to the buyers on today's show?

Let's find out.

First up, in Derby, I discover some devilish DIY short cuts.

You can't reach it with a spanner, so what do you do?

You take the bricks out of the wall.

But in London, I find some heavenly inspiration.

You know what, this flat is a miracle waiting to happen.

And in Wales, a brave man lives for the moment and takes a chance.

When the hammer went down, I though, oh, yeah. What do I do now?

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.

Well done, sir. It's yours.

I'm in Cotmanhay in Ilkeston, Derbyshire.

And this is the Erewash Canal. Absolutely beautiful.

And great news, the property I'm here to see is just over there.

This picturesque canal was completed in 1779,

transporting goods in and out of this industrial area,

known for its coal mining, steel works and textiles industry.

Today, having avoided closure, it's been preserved

and developed into this scenic waterway.

While its industrial use is in the past,

it's now a great amenity, providing a wonderful place to

cruise along in your boat and enjoy lovely walks along its banks.

Sharing its peace and quiet with your new feathered neighbours.

So, great location. What about the property itself?

Well, 40,000-plus was the guide price.

And it's this little sort of terraced cottage.

Not sure I like the outside.

OK. Well, nice little front room area here.

Open fire. That would be absolutely beautiful.

Especially on a freezing cold day like today.

I like those original beams.

I think they are original. I'd like to see them stripped back.

But they certainly give a kind of cottage-y feel to the place.

What's that?

That is outstanding.

Perfect!

Bit of Heath Robinson design to stop the draughts coming in through

the front door. And when you've done that, you can just...

Oh, I suppose I have to do that first. OK, put that back.

I think it's... Here we go.

Absolutely superb.

Right, um...

HE LAUGHS

I'd like to somebody who would keep that but I don't think they will.

A few signs of damp here and there.

And I guess the floors are solid. I doubt there's a damp proof course.

So you are going to have to factor that into your renovation costs.

I've already started looking at this place with rose-tinted spectacles.

I don't care about the damp. I'm charmed by the little thing by the front door.

I like the fact it's got an open fire. The back area here,

it's the kitchen. It's got stairs up to the bedrooms.

It's small but a rustic little kitchen in here,

replacing the units that are here at the moment,

and you've got the makings of a real charming little place.

# I-I-I-I'm hooked on a feeling. #

There are some feelings that just can't be explained.

Undeniably, there is a lot of work to be done here,

but the place has got my attention.

So, upstairs. And even these are quite cute.

HE LAUGHS

That is a classic of needs must.

This little drain plug at the bottom of the hot water cylinder.

You can't reach it with a spanner so what do you do?

You take the bricks out of the wall.

Course you do! Practical solutions to real problems.

# All in all you're just another brick in the wall... #

Oh, dear. Not the cleverest way to get the plumbing sorted.

But my semi-crush on this property forbids me to be too critical.

Will the upstairs plant some seeds of doubt?

The good news is, the bathroom is at least upstairs.

The bad news is, it's not really ideal, is it?

You've got this little shower area there.

And then this raised wooden platform on which the toilet sits.

And there's a little hand basin there.

I think that's going to limit what you could do here.

You'd like to have a bath somewhere.

But I think you're really limited by space.

But, you know, it's a small cottage.

Small, yes. Full of character, absolutely.

What treasures await us outside.

Well, the back of the property, it's in a bit of a state.

But nice surprise. A brick-built outbuilding.

It's not actually attached to the house.

So that kind of limits its use. But a great little shed.

Or possibly you could put some kind of roof in between the house

and that, and then turn it into a utility room.

Either way, for a small cottage like this,

a nice additional bit of space. And likewise with the garden.

You don't expect that. It's lovely. It goes right back there,

although you can't quite see where the end is cos of all the foliage.

But it's big. Love it.

Leaving aside my obvious soft spot for this house,

at a £40,000 guide price it's a property with huge potential.

Every inch of this cottage has something to

offer for first-time buyers, landlords and investors alike.

Or is that my heart speaking?

A man sure to use his head is the auctioneer who sold it.

He came along to run his experienced eye over this little beauty.

The property that we're in is a typical terraced house.

It's not large.

Thankfully the upstairs goes over the entry at the sides

so you've got a bit more space up there.

But this has been rented out for many years.

It's not been particularly well maintained.

So obviously there are traits of neglect in it.

It's very tired and it needs a thorough make-over.

My estimate in what you'd have to spend on this to bring it up

to a good, modern standard would be

probably in the order of £15,000 or £16,000.

Hmm. £15,000 is no small change.

Assuming you got it for anything like that guide price

of £40,000, would an investment of 55,000 be justified?

I would say, on today's market, it would have a

value of around 60,000 to £65,00.

You need to be a little bit careful about your spend on it.

Because there is a ceiling value for a property in this area.

Hmm. So it's tight. Potentially a £10,000 return is available.

But a little over the guide price, a little over on the refurbishment,

and there's isn't much of a profit left.

Could you get a better return by renting it out?

Once renovated, this would have a rental value of between 425

and £450 a calendar month.

Well, £40,000 doesn't buy you much in the property world in 2013.

Apart from here, where it could buy you the most charming little place.

Let's see who fell in love with it when it went under the hammer.

Start me on this one where you like. I'd say 38 again for it.

Lot 54. Start me where you like.

Thank you. £35,000.

At 35,000. 36 someone else? 35 is the opening bid. 36 I've got here.

36. 37 is bid at the back.

37. 38.

At 38. 500.

38.5. 39.

39.5. 40,000.

40,000. At 40. And a half again.

It's going to go at £40,000. You're out in front of me.

At 40,000 once.

£40,000 twice. Third opportunity.

Sold at 40,000. Thank you.

The successful bidder getting the cottage at bang on the guide

price was Wallace.

He came along to meet me with one of his three children, Karen.

She'll be helping him renovate the property,

which he's bought to add to his pension.

Wallace, Karen, great to meet you both.

-Congratulations.

-Thank you.

This is a great house for £40,000, isn't it?

Mm-hmm. Yeah. Hopefully got a bargain but...you know...we'll have to see.

Well, it's charming. I loved it the moment I walked in.

It needs a bit of work but it just has that something, doesn't it?

We felt the same, didn't we, when we first saw it.

We just liked the area. And all the neighbours came out

when we were waiting for the estate agent.

They were so friendly. We had a little walk to the canal

and just thought it was a beautiful little spot.

It's got a nice feel about it.

Yeah, without a doubt. So why did you want to buy it?

It's an investment, really. Just something for me to do up.

A bit of a hobby, if you like.

-How about you, Karen?

-The same.

I've got two houses and we've done them up, haven't we?

One similar to this.

So, between us, we've probably managed at least

-houses in as bad a state as this, haven't we?

-Well, yeah.

So a bit of experience on both Wallace and Karen's parts.

Which should certainly help them get the most from this property.

Tell me what you're going to do to this place to sort it out.

First of all, we've got to put a new fire in. That sort of thing.

Get rid of the beams. Cover them up.

These beams, don't you think they're original?

-No, I don't think so. No.

-They add a bit of character, don't they?

I think so, but you disagree, don't you?

-Yeah.

-I quite like them.

-I do, but...

-Yeah.

-You don't, do you?

You hate them.

-Yeah.

-Why do you hate them? What is there to hate about them?

I think beams are more suited to cottages. Not to...

Don't you think this is a cottage? I think this is a cottage.

-Not to a mid-terraced house.

-I think this is a little cottage.

-Do you?

-Yeah. Sort of. It's like a lock keeper's cottage, isn't it?

-Yeah.

-I think they're nice, but we'll wait and see.

-Yeah.

-At the moment, they're definitely going.

I think that's the first thing you're going to get rid of.

HE LAUGHS

OK.

Karen and Wallace will battle it out about the beams.

But in the meantime, they plan to replace the bathroom,

the central heating system and boiler.

And of course, a total redecoration.

They seem pretty confident about tackling this house.

But don't forget, margins in this property could be quite tight.

So I hope they've taken that into account.

What's the budget for all the work?

-We've got a budget of ten grand.

-OK.

-Hopefully that will do.

There's a little bit damp that has to be seen to.

But not a great lot. That shouldn't cost too much. But there is a bit.

The bulk of the spending will be the kitchen,

the bathroom and the new boiler.

-What about how long it's going to take?

-About six weeks.

Not a lot of time, with such a long list of jobs to complete.

But with a solid budget of £10,000, it will surely give them

a very good chance.

So the idea is to rent it out then, is it?

At this moment in time, yeah. Unless we make a fantastic profit.

But, you know.

What kind of profit would tempt you to sell, do you think?

Anything, say, 15 to 20.

# What about Daddy Cool? #

Wallace is being quite cool about his wait and see approach.

In the meantime, he has something else in his diary.

-You've got a trip to New Zealand?

-Yes. Yeah.

-My son lives in Christchurch so...

-Right.

I'll go and see him for a month or so, you know.

-Wow.

-Yeah.

-Nice. You want to get it done before that?

-Yeah.

Yeah. That's the idea. Yeah.

Then when I'm away they'll be getting someone in here.

-Good. Listen, congratulations. Good luck with it.

-Thank you.

-Nice to meet you.

-Thank you very much.

-I look forward to seeing how you get on.

-Thank you.

# Daddy, Daddy Cool... #

So, a good purchase for father and daughter team, Wallace and Karen.

Will those beams be here when we come back?

Jury's out. You can find out later in the show.

You couldn't get more of a contrast to that charming waterside terrace

than here in Hammersmith, West London.

It's right at the heart of city life, with plenty of tube lines

and road links. And house prices here, well, I think you know

what I'm going to say, are on the rise.

And actually, about a mile from the centre of Hammersmith, you can

find the odd charming terrace.

Isn't that lovely?

Now, look to your right. Yes, that's where we're going.

The 1960s block. Sorry.

The property I'm here to see is a studio flat.

I have a guide price of £160,000.

I know that sounds like a lot of money for a studio flat, but not when

you're in pricy Hammersmith where the average flat costs around 474,000.

Let's head inside and see what you get for your money.

It's on the fifth floor so I hope there's a lift.

# You raise me up

# So I can stand on mountains... #

Ah-ha, yes, there's a lift.

And a newly modernised one by the looks of it.

More about that later.

'Doors closing.'

This might not be the prettiest of buildings,

but purpose-built blocks like this do provide a more affordable

alternative for people who want to live in the city.

Being so high up, love it or hate it,

it's exactly as I would expect on the inside.

Needs a bit of work.

You've got your bathroom here, and off to right, the kitchen.

Now this has taken me by surprise.

I would not have expected a kitchen this large in a studio flat.

But I'm just wondering how big the lounge-sleeping area is.

Lovely! A kitchen to shout about.

But it's clear already that a bit of modernisation is going to be needed.

New kitchen units for a start.

There is double glazing and central heating.

# I'm living in a box

# I'm living in a cardboard box... #

Well, this is how you can make your money.

You've got to think outside the box with this studio flat.

I actually think you could turn this into a one-bedroom flat.

Look at all this space out here.

It's not a lot of space, but it's certainly enough to house a kitchen.

I would block up this area here.

Put another little doorway in through here.

And you could have all your kitchen units...

Knock this out. All the kitchen units housed along this back wall.

You could then use the kitchen as a bedroom,

because you can go right the way as far back as this wall.

The bed can all be house in this little alcove here.

I really believe this room can take it. It's huge.

It's got a fantastic view of London on the other side.

You know what, this flat is a miracle waiting to happen.

# I believe in miracles... #

OK, so maybe miracle is going a bit far.

But the space in this property has been a great surprise to me.

As well as its very reasonable £80 per month service charge.

One should also remember that its lease-hold status means any

structural changes will need permission of the free-holder.

And of course, you'll have to do the maths on where the fairly big

structural changes, like moving the kitchen,

would actually make you any money.

I know there's a strong rental demand here.

And I think this flat would fly off the shelves.

But it's all about the money. Do the figures add up?

Let's say you buy for around the guide price of £160,000.

You spend ten grand on renovations. And you rent for £860 per month.

That would give you a return of 6%. Not bad at all.

And that's as a studio flat.

If you did create a separate bedroom here then that yield could

increase to 7%.

Well worth doing for that extra five grand that it would cost to do

the renovation.

It's great that the rental income works here.

As unfortunately, capital growth will always be

limited by the stigma of purpose-built blocks.

# Oh Sussudio... #

Well, if you've got a fear of heights,

this might not be the flat for you.

But if, like me, you love a good London view, that is epic.

How I love a good old view. And that's really a cracking one.

And I've got more positive news to report about this property.

I know this might not be the most attractive of buildings, but the

good news is that there are plans to improve the exterior and

the communal parts over the next few years.

Modernisation of the lifts has already taken place.

And there are further plans in 2017 and 2018 to overhaul the windows,

improve the lighting and repair and redecorate the block.

So, if you look at this property in the long term,

it could be a good place to put your money.

Lots going for it then, as long as purchaser doesn't mind heights.

Time to find out what a local property expert thinks.

# Send me to work in tall buildings... #

Having had a look around this property,

at the moment it is laid out as a studio flat.

There is the potential to turn this into a one-bedroom flat.

Which is, without a doubt, far more saleable, far more lettable,

and you're going to get a much better price

when you come to resell or rent it.

There you go, we are in total agreement on that one.

But let's look at the numbers.

What would a refurbished studio flat resell for?

If I was to post this on the open market as a studio flat,

once it's been completely renovated to a fairly high standard,

I would expect to market it around about £230,000.

And what if you decided to splash the cash

and make it a more desirable one-bed flat?

If I was to sell this as a one-bedroom flat tomorrow,

once it's been renovated, I would put it on the market for £260,000,

looking to achieve just under the £250,000 stamp duty threshold.

# I'm going to work in tall buildings... #

Small and perfectly formed?

Mm, I wouldn't quite describe the flat like that just yet.

But it could be, after some hard work.

But perhaps a little re-jig with that layout...

Let's head to the auction

and find out who had their sights set on the studio.

I'd like to kick off on this, I don't know, 140.

140 down here. 145.

140. First time. Second time.

Third and last time.

145. 150. Behind you, 150. 150.

155.

160. 160.

165.

170.

170. 175. 180.

Have a think. 175.

I'll take a thousand. 176 now.

If not, 175 down here.

First time. Second time.

Third and last time. Are you all done?

Sold. 175.

Getting the property in their first auction was Jonathan and Dorothy,

who secured the flat for 175,000.

They both have a background in education. Dorothy is retired now.

But Jonathan is a school vice principal.

Let's find out if they've done their homework on this property.

# Let this be a lesson to you... #

-Jonathan and Dorothy, congratulations. BOTH:

-Thank you.

What I want to know is, how much did you want to buy this flat at auction?

Was this the only property you wanted?

No, there were two properties we were interested in at the auction.

The first one was one of the earlier lots and it went way,

way over the guide price. So we're actually quite surprised

that we managed to get this one at all.

But we were quite keen on it.

We've been to see it twice before the auction.

We were very happy in the end that we got it.

Dorothy is going to be the one getting her hands dirty

on this project. But having taught and raised four children,

it's most definitely a step in a new direction.

I've been teaching since I left college. I finished in summer.

I taught home economics, and food and nutrition.

I'm sort of...

Having lost my children, they've flown the nest,

I've decided to do something different.

How do you feel about your kids having flown the nest?

It's taken a little bit of getting used to.

-Really?

-Yeah.

-So you need this to fill your time?

-I do. I do.

-And it certainly will. THEY LAUGH

Of course, the time it takes will depend on just how much

Dorothy decides to do.

Have these first time developers seen the potential of this property?

I know exactly what I would like to do.

But what are you two going to do here?

We're going to try and make it into a one-bedroom flat.

Fabulous. Tick! Yeah, well done.

-We had a couple of plans, didn't we?

-Yeah.

Plan A - we were wondering

whether the kitchen could actually be a bedroom.

But then when we came back and measured it up,

we thought maybe, maybe not. But in here, it's fairly sizeable.

So I think there's probably scope here to actually get a bedroom.

There is more than one way of looking at a property.

But I still think they should get those tape measures out again.

But they are on the right lines.

The other thing to think about with this flat is you get

past its rather unappealing exterior.

It is not the most attractive of buildings.

How are you going to draw in the tenants or the potential purchasers?

When we see the estate agent, we will ask them

to take as many photographs as possible of the inside of the flat.

Because we are doing it up to a high standard, we'll hope that will

wow the prospective buyers and so they'll hopefully not be too worried

about the outside and concentrate on the inside of the flat.

# I am beautiful no matter what they say... #

Another tick from me there.

And more marks for a sensible budget of 10,000.

And a timescale of three months.

They are both keen DIYers and have sorted out who is doing what already.

-You're going to be doing all the painting and decorating.

-Yes.

-Jonathan, you're going to be doing the building.

-Yep. Yeah.

And a bit of plumbing as well. Any plastering, I can do that.

Any electrical work, we'll have to get someone in.

But otherwise, you know,

we'll probably do most of the work ourselves.

It's going to be five minutes away from your school,

which is going to be so handy if you ever want to nip back here.

Yeah, don't tell the boss that though.

THEY LAUGH

What was the point of your guys buying this flat?

Is this purely an investment opportunity to flip, to sell on?

Or would you like to rent it out?

We'd like to sell it on.

And then we can buy another one at another auction,

and repeat this procedure later on in the year.

I'm really excited to see how it all turns out.

-Congratulations and well done.

-Thank you very much.

-Thank you.

-Thank you.

Jonathan and Dorothy are good at teaching,

but will they be as adept at learning with their first investment property?

Let's hope they make the right decisions and a profit will be

made at the end of all this hard work.

Join me later on in the show and we'll reveal all.

Still to come...

In Wales, the perfect property...if you want to shed a few pounds.

Oof! It would certainly keep you fit living in this house.

And down in Hammersmith, West London, did Jonathan

and Dorothy make a few pounds?

It's not bad, is it?

We return to Ilkeston in Derbyshire now where, earlier,

I met father and daughter team Wallace and Karen.

Wallace bought this two-bedroom terrace for £40,000.

And Karen, she was going to lend some moral support.

And boy was Wallace going to need it.

Because, although the house was in a lovely setting,

it really did need the works.

However, I thought this house had bags of charm.

It had some fairly quirky features, some of which I hated,

but then, there were things I loved.

These beams, don't you think they're original?

-No, I don't think so. No.

-They add a bit of character, don't they?

-I think so, but you disagree, don't you?

-Yeah.

-I quite like them.

-I do, but...

-Yeah.

-You don't, do you? You hate them.

In the end, family commitments meant Karen had to reluctantly take

a back-seat. Wallace certainly knew what he wanted.

Although, when it came to the issue of whether to rent or resell,

he seemed less sure.

-So the idea is to rent it out then, is it?

-At this moment in time, yeah.

Unless we make a fantastic profit. But, you know.

What kind of profit would tempt you to sell, do you think?

Anything say from 15 to 20.

Wallace had a holiday to New Zealand planned, to fit around this project.

For which he had a budget of £10,000

and a timescale of six weeks for the work.

Well, nearly six months later, we're back.

Wallace wanted to keep himself busy.

And given the long list of jobs completed, he has.

The kitchen is obviously a totally new kitchen.

All the walls have been plastered.

Ceilings have been done.

New fire. Carpets throughout. New windows and doors.

It wasn't on the original budget but, you know.

Outside work, obviously the bit of wall at the front.

The chimney was repaired. The garden done.

I can't really think of...

I'm sure there's a load more that we've done

but I can't think of them just at the minute.

I'm not surprised, Wallace. A thorough job done throughout.

And to, clearly, a high standard.

There are many things to admire about what's been achieved here.

Nowhere more so than in the bathroom.

This is the room where most of the work had to be done.

The sink was in the corner there, we had to take the sink out of there.

Put the boiler in there.

The shower, that whole cubicle had to be taken out and a new one put in.

Heating, new floor. Had to take the old platform out that was in here.

The raised floor, took that out. Replaced it with a lower floor.

Obviously a new suite in here.

Radiators, pipes, tiles, everything else,

all the old chipboard off the walls that was on it.

It was really old-fashioned, you know.

I've never seen a bathroom like it in my life

and I hope I never see one like it again.

You may never have to one again like it, Wallace,

but on Hammer, I've got a funny feeling I will.

He might be relieved about having got that bathroom challenge

sorted, but it wasn't the only one.

The main challenge with the house, obviously it's an old house.

Nothing is square, nothing is level.

It's very difficult to get things to fit properly.

Wallace also underestimated the level of damp in the house.

Which didn't do his schedule or budget any favours.

With the budget being stretched,

it meant not everything in the plan could be achieved.

With the brick building, eventually we'll turn it into a utility room.

To do it now would have put us way over the budget,

so we've just left it for now.

Wallace might have discovered more work than he expected,

but there was also a very pleasant surprise.

The garden was overgrown. I didn't realise there was a patio there

until we started to clearing it.

Then, all of a sudden, we found a patio. Cleared it all out.

Put a new fence up. Returfed it. Jet-washed the patio.

And that's how it is at this minute in time.

But there's still work to be done there, as well.

It's 100% better than it was.

I reckon it's closer to 110% better, Wallace.

But that looks like an awful lot of work.

And he hasn't stinted on the finish.

So could it really have come in on Wallace's budget of £10,000?

We initially set out 7,000 to 10,000. But it was about 10,500.

We have gone over but not drastically.

I think Wallace has done really well for that money.

However, his timescale of six weeks has taken a bit of a slide

to six months.

And it turns out the list of things he had to do outside the project

was pretty long too.

Just before Christmas I had to have a hernia operation,

and I was out for six weeks. So that was a bit frustrating,

cos you're thinking what you could be doing here and what have you.

Went to New Zealand for a month.

Came back from New Zealand, went to a funeral and that was another week.

So the last couple of weeks have been a bit frantic.

And after all that hard work, is Wallace hoping to sell or rent?

I'm leaning more to renting than selling.

But if someone wants to give me a shed-load of money, well,

I'll gladly take it off them.

That is the name of the game, Wallace.

With his purchase price of £40,000 added to his £10,500 refurbishment,

Wallace has invested just over £50,000 in this property.

This was a place where margins were quite tight.

With a resell value reckoned to be around the £60,000-£65,000 mark.

I can't imagine Wallace could have done any more to this house.

What did two local estate agents think?

This is the first time I've been to the property

since it was refurbished.

I think it's been done to a really good standard throughout.

I think the property is finished to a high standard.

There is a high demand for properties like this.

You are looking towards the investor market that can immediately

rent it out. But also, the first-time buyer market

is incredibly strong at the minute.

So I don't think it would take long to sell.

So, clearly impressed with Wallace's achievements.

But how does that translate in terms of value?

If this property was to be placed on the market in its current condition,

I would recommend an asking price between £80,000 and £85,000.

If the owner of the property was to sell, we would put

the property on the market at £85,000 to achieve £80,000.

Hmm. That's a little more than I was expecting.

But, yeah, that's good. I like that.

You might like it, Wallace, but I love it.

A profit of almost £30,000 is no mean feat.

Will rental estimates bring more good news?

If the property was to be placed on the rental market,

I think the owner could expect to achieve anywhere within

the region of 425 and 450 per calendar month.

I would look to put the property on the market at £425 per

calendar month up to £450 per calendar month.

They're a bit under there.

The going rate around here is 475. Um...

to 500.

So, Wallace has done his research

and thinks more can be achieved in the rental market.

But whether he sells or rents, this has been a great success.

So what advice, if any, could he hand over to would-be developers?

I think you've got to really look into it well, you know.

Make sure you know what you're doing.

Never, never buy it without looking at it.

Couldn't have said it better myself, Wallace.

# I know a valley... #

Well, there's no doubt that the valleys of South Wales

are spectacular. The big question is,

are there spectacular property bargains to be found?

# I know valleys of gold

# Sweet and fair... #

Well, I'm heading down into that village of Penrhiwceiber

to see what I can find.

Claimed to be one of the steepest villages in Wales, if not the UK,

it certainly nestles into the lush surroundings beautifully.

In many places, £24,000 would be the sort of deposit you might

pay on a three-bedroomed house.

But here in this part of Wales,

£24,000-plus was the guide price for a three-bedroomed mid-terrace.

From the outside, well, if you can see it, up there...

Looks pretty good.

# Down from the hillside, down to the valley

# Where the people all stay

# Down to the valley where the people all stay... #

Set up against the hillside,

the scenic backdrop gives the terrace a majestic look.

Hmm. Relatively new double glazed door.

It's a good start. A little porch, I always like that.

Keep the cold out. Although it could do with an internal door.

Then straight into a really nice sized open plan living area.

Nice sized windows.

Obviously got relatively new central heating, which is good.

Feels lovely.

I mean, not only does it feel quite deep, it feels nice and wide.

Which I certainly wasn't expecting. Understairs storage cupboard there.

Then through into the kitchen.

It's not bad. Perfectly serviceable.

The layout, I think, works for that sort of U-shape.

Replace the units, keep the layout pretty much the same.

As a starting point...

Well, we like.

Outside, you have this concreted area,

surround the property with a terrace above.

# To the left, to the right

# Step it up, step it up... #

Oof! It would certainly keep you fit living in this house.

So many stairs.

Up to it, through it and then out the back,

up to your little patch of garden.

And when you get here, something you don't see every day.

Looks like the lawn's actually been made of carpet.

DOG BARKS

Quite bouncy.

Quite hardwearing too.

Could almost say it's going to be quite tough. Turf.

DOGS BARK

# Who let the dogs out? #

Hmm. Interesting roof. Solar panels, need to look into that.

Anyway, back to the inside of the property.

So, equally spacious upstairs, he says hopefully.

Looking good, actually. Rear bedroom there. Not a bad size.

The loo, not only where it should be - as in, upstairs -

but in not bad nick.

But of refurbishment required here and there.

Nice little landing. Second bedroom there. That's not a bad size either.

And then, third bedroom here. Oh.

HE GROANS

That's a bit of a shame.

Looks like we've had a bit of water coming in there

and that's what it's created on the floor.

Hmm. Cos you don't know what kind of damage that's done underneath.

That needs checking out.

Apart from that, this is a good sized room.

And yes, the upstairs just caps it off. Literally.

This is everything you could want really from a three-bed

terraced house.

Well, nearly everything.

There's a bit of floor missing in a really important place.

So mind your step on your night-time visits to the loo.

Talking of waterworks,

I found something quite interesting that I was looking for.

Now, on the landing here, you've got an airing cupboard which

contains lots of good industrial stuff.

I love this kind of thing.

This does answer one slight question I had

about the solar panels on the roof.

Cos at first glance I thought, oh, are they electricity-creating

solar panels or are they hot-water-creating solar panels?

Because there are some issue with houses electricity-creating ones

by them entering into long-term contracts in some instances.

That's definitely something to check out.

However, what we've got here is something which

I understand was done by the local authority.

And it's basically hot water.

So what it's doing is supplementing the boiler here.

On a sunny day, it'll warm the water up,

which will keep your electricity bills down. Good news.

I love it. Who says it's not easy being green?

However, you do need to check out who owns the panels

if you buy a property with them installed.

Best case scenario is you own them outright when you buy the property.

Then all you have to do is wait on the sun coming out.

# Sun shine on a rainy day... #

OK, so it's not quite a rainy day, but definitely a bit grey.

So while I wait for the sun to come out, we ask a local property

expert to come and have a look at the property.

What did he think the place had going for it?

The property would appear to have benefitted from a local

council grant.

Specifically, there are solar panels to the roof.

It would appear that it's got a brand-new

central heating system here.

And some very modern glazing. Double glazing as well.

Overall, it's going to benefit greatly from that.

Boilers and windows are two of the common things that can

quickly affect your budget. So it's always good

when those things have already been done recently.

The property generally, other than the work carried out via

the council grant, is in fairly poor condition.

Once renovated to a fair standard, I would estimate the rental

potential value to be in the region of £375 per calendar month.

And the potential sale value to be in the region of £50,000.

Well, I like the location. I like the house.

And I like the guide price.

Let's see who was equally enthusiastic

when it went under the hammer.

Start me somewhere sensible. Guide at 24.

Start me at £20,000, will you?

20 I've got. Thank you. 20 I've got. And one now.

21. Thank you. 21. Two.

22. 23. 24.

25. 25. Right, it's 25,000 for the first time.

25.5. 26.

And a half.

27. And a half.

28. And a half.

29. And a half.

30.

32. And a half.

33. No? At 32.5 then for the first time.

Second time. Third and last time. 33,000.

33. And a half.

33.5? No. At 33,000. With you, sir. For the first time.

Second time. Third and last time. £33,0000.

Yours, sir. Thank you.

Game, set and match. With a neat serve by Darren.

Darren, who's from the other side of the Valleys,

runs a security business.

And this is his first time in the property game.

-Darren, great to meet you.

-Hello. Nice to meet you.

Congratulations. Tell me why you wanted to buy this house.

Investment purpose.

I've got some money sitting in the bank.

I always thought about looking to do some property development.

-So decided to go to an auction to see how it works.

-Right.

-This is number one, is it?

-This was number one.

-Right.

Yeah, this was number one.

-It was interesting.

-It's a good house for the first one, isn't it?

-Good, yeah. Not too bad.

-Yeah. What was it that appealed to you?

-I don't know, never saw it before.

-You didn't see it?

-Nope.

-How did that work out then?

Turned up at the auction, just wanted to see how the auction works.

And ended up buying it.

So, you didn't read the legal pack either, presumably?

Nope. Didn't know how the auction process works.

And eventually when the hammer went down I though, oh, yeah,

what do I do now?

Did you find anything nasty that you weren't expecting?

Yeah, there's a couple of damp patches.

And a hole just in front of the toilet.

Yes. So this is the first time you've seen it today?

-Yes.

-So what do you think?

-Um, yeah, bit of work to do.

HE LAUGHS

It'll be interesting. Looking forward to it.

Interesting? Believe me,

buy a property sight unseen and things could get interesting fast.

And not in a good way.

Darren was lucky to get away with what looks like just a few

damp patches. You might not be.

But it probably takes a lot to faze Darren.

He's run a security business for the last 21 years.

What kind of security do you do?

We work in the film industry and event industry,

from crowd management to the sporting industry.

What did you do before you were in the security industry?

I was in the army for 11 years.

Yes, that may explain a lot of his cool, calm demeanour.

So has he got his battle plan worked out?

Put a new kitchen in. New bathroom suite.

Tidy the back up.

Basically strip everything back to the bare wood and do a re-plaster.

Darren has a budget of £6,000 to £8,000.

And a timescale of six to eight weeks.

-Then once it's done, rent it out?

-Yeah.

Any idea what the rentals around here are?

I've been looking this morning. Anything between 320 to 390

-is the sort of budget that's happening.

-Right.

So anything between that, I'll be quite happy with it.

So how is Darren feeling about his first auction experience?

Is this the first of many or...?

I'm going to see how this one goes.

If it's successful then yes, I'll look at investing some more.

-But buy from the auction, perhaps.

-Buy from the auction but, yeah,

I think I'll go to view the property and read the legal pack.

LAUGHTER

-And yes, back to auction.

-Good.

-Listen, congratulations.

-Thank you.

-Good luck with it.

-Excellent.

-I look forward to seeing how you get on.

-Excellent.

Well, Darren seems to have been fairly lucky with this house.

Not seeing it beforehand, not reading the legal pack...

-HE LAUGHS

-Oh boy!

Anyway, yes, it's a good house.

He's got the right plans for sorting it out.

And hopefully it will be a successful start

to his property investment portfolio.

How will he get on? You can find out later in the show.

Doing up a property always seems to take longer than you imagine.

-Or hope.

-There are all sorts of reasons why delays happen.

So, do you think our buyers have been held up or have they raced ahead?

Let's find out.

From their home in Ryslip, husband and wife team, Jonathan

and Dorothy, travelled to Hammersmith to survey this studio apartment,

which they purchased at auction for 175,000.

It's an exciting time for the couple as this is their first venture

into the sometimes treacherous world of property development.

Jonathan, the vice principal of a local school

and Dorothy, a retired home economics teacher

had spotted an opportunity

to turn this unloved duckling into a very profitable swan.

First important decision, what to do with the space.

We're going to try and make it into a one-bedroom flat.

Fabulous. Tick.

THEY LAUGH Yeah. Well done.

-Well, we had a couple of plans, didn't we?

-Yes.

Plan A, we were wondering whether

the kitchen could actually be a bedroom

but then when we came back and measured it up we thought,

hmm, maybe not.

But in here, it's fairly sizeable,

so I think there's probably scope here

to actually, you know, get a bedroom.

For me, deciding on this route was a masterstroke.

Turning it into a one-bedroom

would open up so many more opportunities for them

both in the sales and rental market.

Just as important was the design, because, unfortunately,

outside, this flat had little going for it in the looks department.

I think it will probably be very minimal and very up-to-date.

We're just going to try and do everything to a high standard.

To create a good spec one-bed flat the couple had a budget of 10 grand.

That sounded a tad ambitious to me

but I am more than happy to stand corrected.

So...?

The original budget was 10,000 and we've...

In terms of materials

and labour costs

it's been about 11,200

but, of that, then we have spent...

Well, the best part of 1,000 on sort of professional fees

and structural engineer,

building rigs and so on.

So, I suppose just in terms of materials and labour

then we weren't too far out in terms of the estimation.

What a transformation. Huh, wow!

Three gold stars.

Two for Dorothy and one for Jonathan.

It's only fair.

I think it was a little bit harder than we imagined, but obviously,

we had hiccups along the way where we had to actually

deal with the council and that sort of delayed us a little bit.

Every project has its challenges.

It's how you deal with them that matters.

Jonathan and Dorothy, I must say,

you've given us a very good lesson

in how to make the most out of a little space.

The main change was to put up a partition,

splitting the single room into two.

And we were quite pleased with the partition

because we thought rather than putting in just a straight wall,

we'll put something in with an alcove in it

so it gives more interest

and it looks quite good from both sides.

And we're pleased with the eventual bedroom.

It's a nice, usable space and it's ended up quite nice.

Quite nice? It looks fantastic.

Jonathan and Dorothy were keen to do as much of the work as possible.

So, how did this impact on their schedule?

We estimated two to three months,

and so, here we are six months later,

so it's more or less doubled and...

Um,

I think...

I think we just underestimated the time it would take,

given the fact that I was only available

for a certain amount of time.

Well, it's not uncommon

to underestimate the time it's going to take,

and not everyone completes the task to such a high standard.

What, if anything, has the process taught them?

I've learnt that to make more of the month

between buying the flat and completion,

to look for, uh, reputable people to help,

to find and source materials.

So, you know, we've learnt an awful lot from it

which we'll take with us on our next venture.

Good on you, Dorothy.

Another gold star for you and a smiley face.

And already looking forward to the next project. Fantastic.

But, with a total spend of 186,000,

will all their hard work have been enough

to ensure that this new venture will become a reality?

We've asked two local agents along to find out.

Coming back from the second visit,

it's a complete transformation from when I was here before.

The excellent place on offer has been well used by the developer.

He's proportioned rooms out very well

to make it an excellent living space.

The kitchen and bathroom they've put in is very high standard,

especially for a property at this sort of level.

It's nice to see. Very good job.

Very good job indeed.

And with a purchase price of £175,000

plus overall expenditure on transforming the place - £11,000,

what kind of return can our couple hope to achieve?

One and two-bedroom flats are high in demand at the moment

and there's a limited supply.

I would anticipate it selling very quickly

and I would think that it would sell for £275,000 in the current market.

If I was to place this property onto the market for sales,

then I would market it at £275,000.

I would expect to get offers pretty close to that.

We may even get in excess of asking price

because we are experiencing such a fantastic market at the moment

and I have had a number of properties

which have gone to best and final offers,

so, this could well very be another one.

Well, well, amazing.

If it sold for 275,000,

that would leave our first timers with a potential profit

nearing £90,000

minus the usual taxes and expenses, of course.

That's not bad, is it?

Um, no, that sounds pretty good.

I mean, it's a bit more than we expected initially, so, yeah.

-We're pretty happy with that, I think.

-Yeah, definitely.

And so they should be.

I'm thrilled for them both.

The couple have shown great focus and determination throughout the project.

Does this mean that they have now caught the property bug?

It would depend on the market

because, obviously, property prices in London are rising very quickly,

so we may well be priced out of the market soon,

so we may be forced to buy something a bit closer to home,

which might enable us to actually buy something a bit bigger, um,

and work on that...

at a slower pace.

Yes, I can confirm,

they have caught he property bug.

So, it was first time lucky for our couple in Hammersmith.

Will it be the same here in Penrhiwceiber,

in the Welsh valleys,

for another first timer to the auctions, Darren,

who owns his own security company?

This was his first foray into property development.

What was it that appealed to you?

I don't know. I'd never saw it before.

-You didn't see it?

-Nope.

-How does that work out?

Um, turned up at the auction,

just wanted to see how the auction works

and ended up buying it.

-So, this is the first time you've seen it today?

-Yes.

-So, what do you think?

-Um...yeah.

Bit of work to do. HE LAUGHS

So, it'll be interesting. Looking forward to it.

Has Darren's enthusiasm survived through a refurbishment?

Six weeks later, we're back to find out.

The main challenges of it was to get attuned to it first of all.

First time I've ever done anything on this scale.

Bought the house blind, so I didn't see exactly what it required,

so the day I came in then we decided what it needs.

So, biggest challenge was looking for tradesmen, finding them.

And how did the challenge to find tradesmen work out?

Apart from a friend of mine who is a carpenter,

so he came along and helped out with the...fitting the kitchen

and sort of helping with the bathroom side of it.

But, yeah, a lot of the painters, the plasterers,

a lot of the electricians were people who work for me on a full-time basis,

which I didn't realise that I have these tradepeople working for me.

Well, that's a stroke of luck.

So, with his tradesmen lined up,

how did Darren tackle the renovation?

When we come into the house,

we decided to do the house from top to bottom.

Took the kitchen out, ripped the kitchen up,

put a brand-new kitchen in.

The bathroom - exactly the same. Complete bathroom in.

We had a hole in the floor, hence, new floor, new bathroom suite

and new tiles in the bathroom.

There was a lot of water damage throughout the house

in the ceilings,

so we decided to redo all the ceilings,

replaster everything, and then at the same time

we decided to replaster the whole house from top to bottom

and hence then, fully paint it.

Brand-new carpet throughout.

And at the same time it was my father-in-law, Dave,

who decided to get out the back garden as he loved gardening,

so that was his project to take care of.

A lot of mattresses, a lot of carpets and laying all the grass.

A lot of brass objects about, old beds,

so we decided to take the whole garden apart,

take it down to the earth,

put a new lawn in,

and then we decided to put a wooden security fence around

to make a more enclosed area.

So, with his team of tradesmen and his father-in-law,

how did Darren's original timescale and budget hold up?

Initial timescale when we came first of all, was six to eight weeks,

however, I think once we got the tradesman on site

and I was overseeing the product side of it and them, um...

So, yeah, we managed to take it down to four weeks overall

from... That's start to finish.

And how about the original budget of £6,000-£8,000?

Just slightly over the £6,000 mark we've managed to complete the house.

And, yeah, so, quite pleased overall

keeping within the budget range.

Darren has done well on his first project

but how satisfied is he with the end result?

I'm most pleased with the overall concept of the house itself,

you know, from top to bottom.

A lot of work has been put into the house

and I'm pleased with ALL the house, should I say.

Will the appraisal of two local agents also please Darren?

After you've got your breath back, gentlemen.

There are few issues here with regard to access to the property.

We have a lot of steps to the front of the property

and quite a steep garden to the rear.

There's no question,

it will limit those who want to rent or buy this house.

But what are the plus points?

The selling point of this particular property, um,

are the fact that it has been refurbished.

It's got UPVC double-glazed windows,

a new central heating system,

a new kitchen and a new bathroom.

Standard of finish is very good here.

I mean, depending on whether they choose to sell or rent

this property, it's been done to a good standard.

The new doors have made a big difference to the potential -

both sale and rental of this property.

I think it's been a very successful development.

The transformation from our first visit has been quite extensive,

so it's pushing it into a decent sort of first-time buyer market.

And what kind of return could Darren expect

on the resale of this property?

I would suggest marketing it for sale at £50,000,

with offers in the region of £45,000 to be given consideration.

If this property was put to the sales market

I would expect a figure of no more than £50,000.

Those prices would give Darren a potential profit before taxes

and expenses of between £6,000 and £11,000.

My intention is to long term rent.

I can't see any reason why I should do the house up

and sell it for quick money.

So, therefore, my decision will stay the same,

it is long-term rental.

The rental value of this property would probably be in the region

of 390 to maybe £420 per calendar month.

I would expect to achieve up to £400 per calendar month.

Those rental figures would give Darren

a yield of between 12% and 13%.

It sounds very good to me, the £400 mark for rental value.

That's what it'd be about.

Well, Darren seems to have achieved his goal with this property.

But overall, has he learnt anything from the process?

Enjoy the experience, have a bit of fun doing it

but also do your research first before you dive in.

That's a lesson I've learnt

and it will be taken on to my next investment.

Well, that's it for today's show.

We'll have more tales of thrills and spills from the auction rooms

for you next time.

So, make sure you keep watching Homes Under The Hammer.

-Bye for now.

-Bye.