Episode 41 Homes Under the Hammer

Hello. Now, over the years Lucy and I have met

literally thousands of people who've decided that

investing in property is what they want to do with their money.

That's right, and good investing in property starts with buying wisely.

And one way you might be able to do that

and get property at a good price is by visiting your local auction.

Now, people buy properties for all sorts of reasons.

To provide a rental income, possibly as part of a pension,

or as somewhere to live.

So what were the stories behind the properties

that went to auction today?

In Newcastle, this two-bed flat

has a problem that could floor the unwary.

I think the issue here is something called sulphate attack.

In Kent, I feel the earth move under my feet. But not in a good way.

Look at this! The floor is really, really bouncy.

While in Cumbria, it's the roof that needs the revamp.

I thought it would be a bit of a nightmare.

All of 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.

All done, sir, it's yours.

Roughly five miles north-east of Newcastle

is the suburb of Forest Hall.

In recent years, it's grown, hosting a wide range of local amenities,

as well as bus and metro services,

making it a most desirable location

for those wishing to commute into the city.

Well, the property I'm here to see is in this block of flats,

and it is in fact a ground floor flat

which is often a popular choice.

£65,000 plus, two bedrooms, let's take a look.

There's 137 years remaining on the lease, which is good.

And doesn't it all look neat and tidy?

Nicely presented communal area, really does bode well.

So what about the flat itself?

Well, straight in through the front door,

and you don't get a sense of being cramped in, which is great.

Bedroom over that way, living room facing you there. Kitchen there.

Interesting circles on the floor.

Or some kind of hole which has been filled in. More of that later.

But into the lounge.

And, wow, wow, wow! What a lounge it is.

Absolutely huge.

Loads of light coming in from these two big windows.

And just loads and loads of space.

It really gives this flat a fantastic feeling.

I mean, so much so, I'm wondering whether or not you could even

use part of it to create a third bedroom.

If you needed the space, it's an option, but actually,

if you can afford to leave it like it is, do so

because it gives such a lovely feel to the flat.

# Baby, I can make you feel good... #

The flat does make me feel good.

Inside and outside it looks smart, well-maintained and very sunny.

Outside, there is the bonus of a garage and inside,

the proportions, with a spacious living room

and a decent-sized first bedroom, all add to the positive vibe.

It's not as big,

but the kitchen seems to be in pretty decent condition.

And again, for the size of flat, you know, perfectly good size.

Down this little corridor, you've got bathroom, which, again,

surprise surprise, nicely proportioned.

And then through into the second bedroom. And therein lies a story.

Sadly...

..it's a potential horror story.

It's back to these little circles on the floor.

They're actually concrete, or rather,

concrete which has been put in to fill a hole.

And that hole is actually a borehole

which has been taken to see what's under the floor.

And it's probably been sparked by...

I don't know if you can see this, but I can certainly feel it,

the fact that the floor is actually rising at that point.

Now, I think the issue here is something called sulphate attack.

Which actually is as bad as it sounds.

Years ago, they used to use basically hard core materials,

the stuff which goes underneath the floor, to sort of solid it,

make it what it is, which contained in some cases sulphate.

Very prevalent in areas where there was lots of mining,

and they used to use some of the mining waste to do the hard core.

The problem is, if that gets wet, then it starts to interact.

The water reacts with the sulphates

and you get it literally bubbling up.

Which is what's happening here.

It can take 10, 20 years before it happens,

and often it's an indication

that there is some kind of water penetration somewhere.

What's so bad about that?

The first thing is, it's dreadful, it's causing the floor to do that.

If that happens around the edges, it can even destroy the walls,

the foundations of the building. It's really, really serious.

It gets worse, I'm afraid.

Because number one, it's not covered by insurance under most cases

because it's classed as a chemical attack, that's bad.

Number two, by the time you've dug through there,

you've basically destroyed the damp proofing,

or damp proof membrane that might be under the floor.

So you're going to get damp coming through anyway,

so it's going to compound the problem.

And thirdly, when it comes to getting a mortgage,

as soon as a mortgage assessor or a surveyor sees that,

they're going to say, "No.

"Can't have a penny. Sorry." Not good.

# You're a nightmare

# And you've made it all wrong... #

I had been feeling good about this flat. But now? Oh, dear.

Of course, if this is a sulphate attack, then it can be fixed.

But the floors would need to be dug up, that is going to cost.

Time to ask a local expert about this property, guided at

£65,000, who knows a bit about what is going on with that floor.

It has been uncovered that there are some problems with the floor.

Therefore, some sulphate tests have been done,

we are still waiting to find out what the outcome of that is.

If it doesn't come back positive,

then there may be some serious cost issues with rectifying the problem.

So, there is still hope that the test may return all clear.

If this indeed turns out to be the case,

how much does he think the flat would be worth on the open market?

If this property was updated and refurbished throughout,

then we would expect it to achieve on the market between £85-£90,000.

-That would be the top price.

-And on the rental market?

The rental market in Forest Hall is very strong, so on that basis

we would expect this flat to achieve £500 per calendar month.

Well, on the face of it, a really lovely little flat,

and you certainly can't complain about the size.

But once you scratch the surface,

there's definitely more investigation to be done.

Especially under that floor.

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

Can I ask for 65? How about 61?

Thank you, at 61,000.

Do I have 62 anywhere else? 62 standing.

63? 63 bid.

64? 64 bid.

65? 65? No?

I'm here in the centre, at 64,000. I'll take 500.

64.5 bid.

Take 500. 65. 65 bid.

65.5? I'm selling it once at 65.

I'm selling it for the second time at £65,000.

Sold to the gentleman in the centre at £65,000.

Getting the property at the guide price of 65,000 was Joe,

a property manager for a financial services firm.

Joe's wife Emma is an analyst

in a commercial team for a paint manufacturer.

They already have two properties in their rental portfolio

and she will be looking after this project while on maternity leave.

They came along with baby Olivia to tell us more.

-Joe, Emma, good to meet you both.

-Hello.

-Good to meet you.

Congratulations.

-Thank you.

-Thanks very much, yeah.

So, tell me why you wanted to buy the flat.

We've been looking for an investment property.

And we were recommended to have a look at it.

We know the area, we like the area. And it came up at a good price.

It's a big flat, isn't it?

You walk through the door and it is, wow, look at this!

Yeah, there's a lot of flat here.

I think that's one of the things that really, when we saw it for the price,

in this area, we just thought, this is a good lot of flat for the money.

-Definitely.

-And so we thought it was worth a punt.

So you'd been to see it, you liked the feel of the place?

What was it that impressed, Emma?

We'd seen it a couple of times.

Just as soon as you walk in,

the big hallway with the rooms coming off the side,

I could imagine myself living here.

So I could see the attraction for potential tenants.

Also, there was quite a bit of work already done,

and then we could also put our own stamp on the kitchen and bathroom.

-Yeah.

-To make it appealing and attractive to buyers.

So we thought it was a good challenge for us,

our next property to the portfolio.

All of this is, of course, how I felt about this flat initially.

But there is that elephant in the room, the floor.

But it seems that Joe and Emma are already tackling that head-on.

-We had that done after the auction.

-Right.

-So we now need to consider some options.

-What did you mean?

Well, because the tests have come back that it is a sulphate attack.

-It is? Definitely?

-Yes.

-When did you get the results of that?

-About an hour ago.

-An hour ago?

-Yes.

So you heard an hour ago that something potentially quite bad is going on?

All the floors will need to be pulled up

and sort of the film replaced and it could be quite a costly job.

At this point, you don't know how much it will cost to dig up

the floors, but it sounds a bit labour-intensive, doesn't it?

-We've got indicative costs.

-Already?

The surveyor put in his report that it would cost

-around £20,000-£25,000.

-£20,000-£25,000?

-Remind me how much you paid for the flat?

-65.

So that's getting on for, well, it is

-over a third of what you paid for it again.

-Yeah, ouch.

Ouch indeed! However, all is not lost.

In normal circumstances,

a buyer could choose to have a prospective purchase survey

before bidding, but this property was sold as what is

known at auction as option two, which means that although you

still pay a non-refundable deposit, you do have the legal right

to pull out if you'd discover anything

you don't want to deal with.

Are you within your period that you can pull out of the purchase?

Yes, because we haven't completed yet.

Before we complete, we'll be investigating this further

with our solicitor and with the lender as well.

-How do you feel at the moment?

-Er...reasonably OK, considering!

It's disappointing,

but we've got to find out a bit more about this, because it may be

that we're not liable to pay for the work

since we don't own the freehold.

So it could be that they could sort this out.

It makes an interesting point, because that's something

which affects the fabric of the building, doesn't it?

You would think that this wouldn't be the only flat that might be

-affected.

-You would think that, yes.

And possibly that this comes under the remit of the roof, exterior,

windows, flooring, that should be actually paid for by everyone.

I would expect that's what you pay the maintenance charge

and service charges for.

We definitely need to get legal advice on this.

It's a shame this great flat has this complication, however,

having had the sulphate test done,

they at least can make a decision about going ahead or not.

We plan to rent it, so we need to modernise the property.

We'll be putting a new kitchen in and a new bathroom,

because the pink suite is not to everybody's taste!

We'll also be changing the doors,

putting some flooring down and general redecoration.

Setting aside the 20,000-25,000 it would cost to do the floor...

ALL LAUGH

Forget about that for a bit!

What kind of budget to do everything other than the floor?

As I'm in charge of the project day-to-day, because I'm

on maternity leave, I've got a spreadsheet with all the costs.

We are hoping, for the work that I've mentioned,

-to do it under £9,000.

-Great. That's much more manageable.

-Yes.

-I wish you all the best and I hope it turns out all right.

-We'll come back and find out.

-Thank you.

-Good luck.

Well, a bit of a shock for Joe and Emma and considering they only found

out the news an hour ago, I think they are taking it remarkably well.

Lots of questions to be asked and decisions to be made.

You can find out what happens later in the show.

Well, let's hope there aren't any unpleasant surprises

at the property I'm going to see next

here in Swanscombe in Kent.

Situated between Dartford and Gravesend,

with good transport links, it's family and commuter friendly.

The train station is only a 12-minute walk from here.

There's a park just down the end and as this is a no-through road,

it's a quiet spot without too much passing traffic.

Now, the property I am here to see is this.

It's three bedrooms, it's an end of terrace

and it had a guide price of 90,000 to 95,000.

But the front door is round here. Let's have a look.

Well, for starters, I do not like walking

straight from the outside into your sitting room area.

But I think that's the least of my problems. Look at this!

The floor is really, really bouncy, which is a bit of a worry.

And you can't really imagine yourself sitting next to

a lovely roaring fire in here.

It's quite obvious you really need to start from scratch with this property.

I think there's honestly been some woodworm, some damp,

something drastic, because down here there's a huge hole in the floor

and again it's bouncy, so best tread carefully.

I'm going to go and investigate.

MUSIC: Bounce by Calvin Harris

With a careful step over, I enter a second reception room,

equally in need of a complete clear out and upgrade.

Beyond this, lies a small and narrow kitchen that has seen better days

and beyond that, I'm sorry to say, is a ground-floor bathroom.

All very disappointing. And on that very theme...

And Energy Performance Certificate or EPC is

required for properties when they are built, sold or let.

Now, it gives a rating from A, the most efficient, to G,

the least efficient. Guess which category this property falls into.

Yes, unfortunately, it's G.

That's bad news and it means at the very least you'll have higher

fuel bills.

Luckily, the EPC also provides recommendations of how you can

improve the efficiency and I would certainly advise reading this

thoroughly and taking heed of the advice given.

# Well, I'm cold in my heart... #

Summoning the energy to get upstairs,

I'm presented with a good-sized bedroom to the left of the stairs

and to the right, a decent-sized middle room.

However, I am sorry to discover the third bedroom does not

have its own access.

So if you're familiar with Homes Under The Hammer, you'll have

seen me harp on about the famous room that leads off a room.

So here we have this space. Now what can you do with it?

Could you put a bathroom up here?

Well, yes, you could, but you would need to create independent

access from this bedroom here.

Or I suppose you could think about using this as a dressing room.

There are lots of things you could do to use this room,

to not use this room, the choice is yours, really.

Yes, you need to weigh it all up.

What you could gain versus what you'd need to spend.

It's all a bit tired, as is the large back garden.

But it's the outside space which offers an end to the disappointment of this house.

Not only is there room to extend and resolve that layout,

there's something else.

The parking round here is limited

and it won't always be easy to find a space on that narrow road

outside, so that makes any off-road parking very, very desirable indeed.

Well, guess what? I've got some good news for you. Da-da!

Here is some and there is right of access running along the back

of the property here, which leads to this off-road parking at the back.

Definitely a tick in the box for anyone living here.

# Pull up to my bumper, baby... #

Suddenly, the real potential of this property is making itself known.

Add some imagination to the mix

and improvements could be made all over this house.

And round the front - or is it at the side?

I see another problem that could be resolved.

As I mentioned earlier, walking straight into your lounge

from the pavement outside, well, I don't think it's ideal, really.

Just imagine taking off your muddy old shoes on a wet and rainy day

and ruining that lovely new carpet. I don't think so.

Take a look at this house next door.

You can see how they have solved the problem.

They've replaced these windows here with a front door

and created a porch area.

I think this would improve the layout

and it's something definitely worth considering.

After a bit of a rocky start,

I'm feeling optimistic now about the possibilities here.

We asked a local agent to come along to give us

his thoughts about this property.

How I would extend the property is to widen the kitchen downstairs

and to make a corridor through to the garden which would give you

better access to the bathroom and a larger kitchen.

And what about that ground-floor bathroom?

If you didn't want to lose the third bedroom,

you could use the cupboard space over the stairs to create an en-suite,

precedent has been set in the road to do that,

and you therefore don't have to lose that third bedroom.

Yes, that is a good idea and the agent reckons that ensuite

could add £10,000-£15,000 to the value of the property.

What else would the agent recommend?

I think I would try and create a separate access to the third bedroom.

It may mean the removal of the chimney breasts in the property

to give you that extra space in the second bedroom.

Well, the agent thinks that if you lost that bedroom, that would take

as much as £20,000 off the valuation, so that doesn't seem worthwhile,

but there is also something to heed when it comes to costs.

As there are a lot of options to optimise the property,

the ceiling value I would say would be £200,000

and a ceiling rental value of £950 per calendar month.

Yes, this property does need a lot of work

but there is plenty of potential here

and you have the added bonus of that parking out the back.

I think this is a good one to go for.

Let's see who agreed when we went to auction.

Can I see £90,000 as a start? £90,000 bid. Can I say 90?

I'm under way. And two. 92, 95, 97.

There's lots of interest

and we rejoin as the auctioneer is looking for a bid of £143,000.

Right at the back, 143, madam? 143? At £142,000 at the back of the room.

For the first time. 142, if anyone is coming in, for the second time.

Third and final time at £142,000. 143. Wow, that is close!

That was close. 143, first time. 143, second time.

Your bid, sir, at 143,000, G780. Thank you.

After a rather dramatic auction,

the property was bought by Paul for £143,000.

After many years working in the building trade,

this is his first purchase at auction.

Paul, congratulations.

-Thank you very much.

-Really good news that you got this on auction day.

Why did you want to buy it?

Well, it was in a good location from a working aspect.

We found that, in the area,

there seemed to be a lot of amenities that would pick up in the future.

When you viewed this property for the first time, what did you think?

I see that it had a lot of potential.

I did a little bit of research, saw what it could make.

After years quietly observing,

Paul is very much looking forward to being the man calling the shots.

What do you think you could do downstairs to add value

and make this a better house to live in?

We are looking at the back,

possibly putting an extension on the back to open the property right out.

-Maybe changing the entrance to another position.

-Like where?

Maybe on the back area there,

so you are not walking straight into the sitting room.

And you wouldn't think about copying the neighbour

and putting a porch out the front?

I like the look of the front of the building so if you put that there,

it tends to change it from the character

that is in the front of the building.

It has some quite nice brickwork.

It does have nice brickwork. I do agree with you.

But I do like the way that you can walk into the porch

-area before you get to the lounge.

-Yes, so that is a possibility.

We will get the team together

and hopefully we can come up with a perfect solution that benefits.

Although we're not completely in synch as to the location

of the new entrance, I am glad to see it's a priority for Paul,

so what about that more common conundrum?

I have noticed you have got this downstairs bathroom.

Not ideal, not everybody's cup of tea.

What are you going to do about that? Will you change it?

There is a possibility with the small bedroom at the back.

Maybe turn that into a bathroom. There's a few possibilities there.

I hope Paul takes some advice.

The agent thought sacrificing that bedroom could cost 20 grand.

And there's that ceiling valuation to consider.

But he is approaching this project with imagination which is great.

And I think being a builder, well, that is going to come in very handy.

One of the things that slightly worries me

is the floor that goes, urgh, like that!

Standing here, I can even feel the floor beneath me is really bouncy.

What do you think is going on?

What's probably happened is the wall plates on the subfloor have

collapsed and the joists have tilted.

So what we will be doing is completely ripping the floor

out, re-establishing the brickwork and putting new joists

in down on the new floor.

So nothing terribly worrying,

-just slightly ambitious on the building front?

-Yes.

Other people that may have come in here probably think there is a lot

more involved but we have done it time and time again.

Paul plans to transform this place within three months.

Will his budget reflect that?

How much are you going to spend?

We are looking to spend around 20,000.

It may creep a little bit higher but, you know, for what

we want to do, we've got to try and hit the high-end of the market.

So is this quite an easy job?

-Is this one of the easier jobs you will have done?

-Yes.

Am I going to be really impressed with this?

-I am hoping you will be, yes.

-Good luck with it.

-It's lovely to meet you today.

-Thank you very much.

-Thank you.

So after 25 years in the building industry,

Paul has now decided to invest in his first property.

He has got useful skills and contacts

but will he make the right decision about that bathroom location?

And will he stick to that 20 grand budget? Questions, questions!

You can find out the answers later on in the show.

Still to come, the thrill of starting work in Cumbria.

-Are you excited about this?

-Yes, definitely. Yes. Of course.

To the reality of getting it done in Kent.

The only thing that remained was the staircase.

We return to the north of England now,

where Joe and Emma took a chance on a spacious two-bedroom

property in the popular area of Newcastle upon Tyne.

It's a big flat, isn't it?

You walk in the door and it is, "Wow, look at this."

Yes. It's a lot of flat here.

I think that is one of the things that really,

when we saw it, for the price in this area, we just thought,

-this is a good lot of flat for the money.

-Definitely.

And so we thought it was worth a punt.

Indeed. In many ways it was a no-brainer for the couple.

But the floor had boreholes which suggested significant issues.

-We had that done after the auction.

-Right.

-So we now need to consider some options.

-What do you mean?

Well, because the tests have come back that it's a sulphate attack.

That sulphate attack was bad news, as digging up the floors

and making it all good was going to cost £20-25,000.

Considering the purchase price of 65,000,

that would be a very unwelcome outcome.

-Ooh!

-Yes, ouch.

-How do you feel at the moment?

It's disappointing but we have got to find out a bit

more about this because it may be that we are not liable to

pay for the work since we don't own the freehold.

They have a lot of researching and heart searching to do,

as they bought it as an option two property and could still pull out.

So would they change their minds?

Let's go back to find out what happened next.

# If you change your mind I'm the first in line

# Honey, I'm still free

# Take a chance on me

# If you need me, let me know Gonna be around... #

We had a new boiler put in and we also had a partial rewire.

We then installed a new kitchen, new bathroom

and decorated throughout with new painting, new flooring, etc.

# Have a little patience... #

Although it has been 18 months since the auction, it is

only the last 12 weeks that they have had the chance to

work on the flat because of course that floor issue had to be resolved.

In the end, everything rested on whether the vendor would

pay for the work.

Thankfully, after a little bit of time, they did get the work done

and earlier this year we were able to complete on the purchase and move on.

With all those issues resolved, the couple could finally get on.

So who did all the work?

I was the project manager, making sure we had the materials

and sort of had a timescale with everything.

And I was the dogsbody, basically the hod carrier!

Ripping stuff out and pulling stuff down and painting

and decorating, I did a lot of that.

We did get tradesmen in for the boiler for the heating

system and the electrician. And we did get a kitchen fitter, didn't we?

Yes, just to speed things up a little bit.

I did a lot of the cleaning and things as well!

Besides the main issues, Joe and Emma took a lot of pleasure

in addressing the more dated aspects of the property.

OK, so we're in the bathroom. Originally in here was a pink suite.

It took me great pleasure in ripping everything out.

We've refurbished it top to bottom, new tiles on the floor

and walls, new white suite with chrome finish

and we're really pleased with how it has turned out.

But for Joe, even that change can be topped.

I am most pleased with the way that the kitchen has turned out.

I think Emma did a lot of the design on the kitchen

and the redecoration and the shelving.

It is a smallish space so getting that space well used was

important for us and I'm really pleased how that has turned out.

So a fantastic transformation. How did their budget hold up?

The original budget was 9,000. We ended up spending just under 11,000.

A bit because we were moving in and we wanted to have a nice finish

and I think it has been worth it.

We're happy with the results.

Originally, Joe and Emma had no plans to live here,

so how did that come about?

When we bought it at auction, the plan was for us

to buy this as an investment to rent out,

to add to our portfolio of buy-to-let properties.

As it turned out, because it took so long to complete, we were in

the process of selling our house and wanting to move to a bigger house.

We hadn't found that property yet so in the interim we decided to move

here, finish off the decoration and then look out for our dream house.

Great plan. And has that dream house shown itself?

We have found the dream house, yes.

Patience, coolness, determination.

Qualities needed for every project but especially this one.

It is great that it has paid off as their dream house awaits.

But when this young family leaves, will they hold on to

their property and rent it or sell it at the earliest opportunity?

We asked two local agents to come along and help them decide.

First, though, what are their thoughts on the work done here?

This is my second visit to the property

and I am very impressed with all the changes that have been made.

The property is in really good condition,

it has been refurbished to a high standard.

This is my first time inside this property.

I feel that the work that has been carried out appears to

be of a very high standard.

It is bright, it is airy and a very nice property.

So, options galore. What about that sale price?

If this property was to be put on the market as it is now,

I would expect to achieve in the region of £100,000, perhaps slightly

higher if we get a couple of people who are interested at the same time.

I would say that it would achieve around the £100,000+ mark.

I think that is broadly what we expected.

It is on the market for slightly higher

but we would probably accept something around there.

A £100,000 sell price would mean a potential pre-tax profit of £24,000.

Originally, Emma and Joe wanted this property for their rental

portfolio so what kind of rentals might this flat achieve?

For this property, I would expect it to achieve in the region

of £500 per calendar month for rent.

I would put a figure on of between £525 per calendar month

and £550 per calendar month.

If you take that top price of £550,

that would mean an annual return of 8.5 percent on their investment.

Pretty much what we would have expected, around 500.

If we could get up to 550 that would be something to consider.

Absolutely.

Joe and Emma have handled every problem faced here with guts

and determination and it is a credit to them

that, at the end, they have two good options to think about.

How was the overall experience?

The experience has been really good.

Really challenging at times,

sometimes stressful as we said around the time that we moved in.

But we have learnt a lot and it has been a really good experience.

-I think we would definitely do it again.

-Absolutely.

It has also allowed us to get into the position where we can

find our dream house so it has worked really well for us.

Hadrian's Wall helped secure the Roman Empire's frontier

and it stretches from South Shields to Ravenglass in Cumbria,

and that is the county I am visiting.

The area is rich in Roman history and the market town of Brampton

has a particular archaeological treasure, Birdoswald Fort.

It is a lovely area and nine miles from Carlisle.

The town has a train station which can get you to the

city in under half an hour.

Well, on the edge of town, about a mile from the market square,

is the property I am here to see.

£95,000+ was the guide price for a two-bedroom semidetached bungalow.

It sounds pretty promising.

The house is set in this quiet, pretty cul-de-sac

so let's hope the inside is just as pleasing to the eye.

So what have we got?

Decent sized living room there

and I really like the fact that the centre of the bungalow has

what some people might consider to be a bit of a waste of space,

this very large corridor.

But actually, I think that gives a nice sort of open feel.

So, useful, erm, no,

perfect in terms of generating a good feeling, definitely.

Likewise, a good-sized bedroom there and it is nice to have

those built-in cupboards.

Bathroom looks to be in slightly dated condition.

But you could certainly do some good things there.

Through to the second bedroom.

Again, not a bad size for a small bungalow like this which leaves

only one room yet to discover.

The kitchen.

Small but shaping up to be perfectly formed

and in really quite nice cared for condition.

It's been a long time since I've seen a blue suite!

The fire in the living room might need some updating,

as might those single-glazed windows.

And there is a really generous garden. Meanwhile, back indoors...

Oh, half-decent sized space.

Admittedly at the moment in a bit of a mess.

You need to put new units in but you have got a lot of space to

play with. Lovely views out the windows. What more could you want?

So a bit of a surprise.

Not that massive looking on the outside, but once you get in,

it's great.

This small bungalow has given me big ideas,

or at least ideas of making it bigger.

And I always like to look out for an opportunity to make

the most of an unused space.

Here in the bathroom I have spotted one,

currently this cupboard houses the hot water tank.

If you were to replace that system with, say, a combi boiler which is

situated in the kitchen, this cupboard then becomes free.

With a bit of playing around and maybe taking down a chimney

stack or whatever,

you could end up with either an improved bathroom, maybe a shower,

or, I don't know, maybe knocking through to the kitchen perhaps.

Food for thought.

Look out for those cupboards, you never know what

they may contain and what opportunities they might present.

You would only need to do serious work here if you really wanted to.

You could also think about extending the property or converting

the loft, both of which could seriously increase the return

on your investment here, if you get planning permission of course.

Now, that is

not bad potential for a quiet little bungalow in a quiet little street.

We asked along the auctioneer who sold the bungalow to let us

know his thoughts on this property, guided at £95,000.

The options with this particular bungalow is to leave the front

footprint alone, refurb it, windows, kitchen, bathroom,

new wall covers, new floor coverings.

The only other thing you might do is perhaps swap

the lounge around with the back bedroom.

If you put the lounge into the back with the views to the gardens.

You don't have to but that is an option.

The other option, of course, is to extend it

-and maybe put a third bedroom in.

-Good suggestions.

I like the idea of swapping the living room to the back.

You could have French windows on to the garden.

That would make this house much more appealing.

And if the new owner decided to keep the layout the same but just

refurbish and redecorate, how much does he think it would resell for?

I think the property would achieve in the region of £170-180,000.

And what if the extension work was done? How much could it achieve?

If the property was to be refurbished and extended,

and a third bedroom could be added with maybe a utility

room as well, I think you would be up towards the £200,000 region.

If the bungalow was to remain on the same footprint,

what kind of rental could it achieve?

I think if this property was exposed to the rental market,

and it is a very healthy rental market in this area, I think you

would achieve in excess of £600 per calendar month.

Bungalows are always popular at the auctions

and I am sure this one was no exception.

Let's find out who bought it.

OK, lot number 37. Start me off at £90,000.

I need a bid, can't sell it without a bid. 90 here. At 90, I'm away.

And away they went. Small determined steps. We rejoin at £118,000.

118? Having a discussion. First time then, at 117. 118 I've got now.

And a half. Thinking about it. With you at 118,000. On the back row then.

Here to sell. First time at 118. Are you sure? Second time at 118.

Selling it. Third and final time. All done? All out.

Against you, against you. With you. Selling away.

Well done, sir.

I love the auction but it is a shame that someone has to lose out

when people really want a property.

The successful bid of 118,000, that is

£23,000 over the guide price, was made by Craig

and his wife Andrea, who live about 17 miles away from the bungalow.

This is their first property investment.

Andrea is a night support worker for the elderly,

while Craig runs a small organic beef farm.

-Craig, good to meet you!

-Hi.

-Congratulations.

-Thanks.

-Tell me why you wanted to buy this place.

-This is just a new thing.

We thought we'd put it into buildings instead of in the bank.

-And that was a fairly easy decision to make?

-Hmmm... Yes. Yes, yes.

Put it in the bank, you only get 1% or 2%, if that.

If it's in a house, you can rent it out,

or your son can go and live in it.

Right, sounds good. Why this particular property, then?

Came and had a look up here and fell in love with it.

-Lovely little house, so we've decided to go for this one.

-Great.

The principle being that, even though it's not for you,

if you've fallen in love with it, then somebody else will.

Yes, definitely.

It's always got potential to rent out, or family can move in,

-or we could retire here in years to come.

-Yeah.

-Maybe.

Craig has got himself a nice little house in a lovely location,

so he can definitely relax.

Well, after his sizeable list of jobs is complete, that is.

Put windows and doors in, double glazing. Upgrade that.

We're going to renew our heating system, put a combi boiler in.

We're taking the old boiler and tank out,

and the chimney out of the bathroom, to make the bathroom bigger,

-and a new kitchen, and just, basically, decorate it.

-Right.

And bring it up to spec.

Any thoughts about enhancing it size-wise?

We can't go to the side,

cos that would limit the access to get round to the back of the garden.

Also, that would cut off the garage.

Maybe to the front would be the easiest,

but I don't know whether we would get permission for that.

And at the back of the house, it's got a three-foot drop, which would...

You want all the same with floor levels.

You can't have it stepping down, which wouldn't be good.

Ah, Craig has done some valuable research on this house,

and his findings throw up important things to bear in mind

when thinking about extensions.

It appears Craig knows exactly what he's going to be doing

and also who's doing it.

We've got a family builder,

my father-in-law is a joiner, and he's got a friend

who's a painter, so we're quite well sorted out.

We're getting an electrician in and a plumber

to make sure that's all up to standard.

How much work are you going to actually do?

As much as we can.

We'll knock walls down and take chimneys out

-and basically clean the spot up a bit.

-Are you excited about this?

Yes, definitely. Of course. It's a good thing to do.

So you'll manage to find time in between your farming

-to do the work, will you?

-Yes.

-We're hoping to have this done and dusted in three months' time.

-OK.

-And the budget of around...

-Around about 12,000.

If this goes well, is it something you might consider doing more of?

Yes, but I would have to get some more money scraped together.

Listen, congratulations, well done and very nice to meet you.

-Thank you.

-And good luck with it.

-Thank you very much.

So, a good choice for farmer Craig's first investment property.

-It's certainly cold today.

-HE BREATHES COLD AIR

Will it be 'Friesian' when we get back? Hopefully not. Ooh.

Join us later in the show to find out.

So, we've seen how one of our auction properties turned out -

-what about the other two?

-Hmm.

Have there been many changes, or have they remained exactly the same?

Let's find out.

We make our way again to Swanscombe in Kent

where, after years of working for property developers,

Paul decided it was time to strike out and become one himself,

investing 143,000 on this property.

Why did you want to buy it?

Well, it was in a good location for our working aspect.

We found that, in the area, there seemed to be

a lot of amenities that would pick up in the future.

So, what do you think you could do downstairs to add value

and make this a better house to live in?

We're looking at the back,

possibly putting the extension on the back to open the property right out.

Maybe changing the entrance to another position...

This property was long neglected and it showed,

and with a layout that would have many feng shui masters

weeping in the corner, Paul had some serious decisions to make.

Now, I've noticed you've got this downstairs bathroom.

Not ideal, not everybody's cup of tea...

What are you going to do about that? Will you change it?

It's a possibility.

With the small bedroom at the back,

maybe turn that into a bathroom.

There's a few possibilities there.

Yes, possibilities there definitely were,

but there was also the possibility of reducing

the value of the house if a bedroom was lost to the upstairs bathroom.

Experienced builder Paul had 20,000 to spend on the property.

So, is this quite an easy job for you?

-Is this one of the easier jobs you'll have done?

-Yes, yes.

-Am I going to be really impressed with this?

-Well, I'm hoping you will be, yeah.

Paul - cool and collected - was sure that his years of experience

in the trade would see a happy conclusion to his project.

He was out to impress. So, go on, Paul! Impress me!

MUSIC: Amazing by George Michael

Since you were last here, we've changed all the windows,

put a completely new central heating system in.

We've built the extension

and we've put bifold doors to the rear of the property,

and we've put VELUX windows in the lightwell to light the staircase,

and we've also put VELUX windows in the roof of the extension

so you've got light going round the property virtually all day long.

The transformation here is incredible.

It seemed like an impossible task,

but making use of the outside space and building an extension gave Paul

a great opportunity to address all the issues with the original layout.

We've extended the sides of the rear elevation

which has made it open plan downstairs,

which introduces the kitchen/dining/sitting room area

if you're going to use the front area as a bedroom.

Paul seemed to use all his experience to look at the situation.

With the only bathroom downstairs,

and the small room without its own access upstairs...

..something had to be done, and he acted accordingly.

Well, what we've done on the first floor is created

the bathroom behind me here, freeing up the space in the ground floor.

We've also created this corridor area

because the corridor wasn't here prior to that.

We had just a room, two bedrooms up here,

with an open door behind me,

and also we've then taken the bedroom two into the ground floor,

so you have two large bedrooms, and, to my left-hand side, bedroom three.

Paul went above, beyond and - not forgetting - a little back

to achieve his goals here.

How was his timetable?

It's taken four months.

With the planning application, we had to clear the property

to start the works anyway,

so we stripped the old furniture out,

stripped all the walls back to see what we had,

and we applied for planning application,

which takes around six weeks,

so, once we've got that, then we started our works.

More than acceptable - amazing!

The access to the property has also been addressed,

with the main door shifted further back, allowing more privacy

and opening up the front room,

giving any buyer the option of using it as a sitting room or a bedroom.

So, a huge job, and I'm very impressed.

But what about the £20,000 budget?

We've probably done around...

50,000...

on the budget.

We only were intending to spend around 20...

But, in the meantime, what we've done...

We had no central heating,

so we've put complete central heating through there.

Also, we've virtually gutted the property and started again.

The only thing remaining was the staircase.

Going 30,000 over his budget means that Paul's total spend here

is 193,000.

But Paul should still be proud of his achievements.

However, this game is about profit,

so we asked two local estate agents to come along and take a look.

Having looked round the property, I think the extension

and the kitchen area that he's created is a great space

for families and couples alike.

Adding the bathroom upstairs is what most buyers

would be looking for in a property in this area.

I think the property is a really nice property.

It's been refurbished to a really high standard.

Moving the bathroom upstairs does allow the property to be

used for a young, growing family or indeed a young first-time buyer.

With the new layout, how would they market this house?

I think I would market this property as a two/three-bedroom property,

because there's a separate room at the front which could be used

as the dining room or as a third bedroom if necessary.

And what impressed them most about the work here?

The extension, with its vaulted area in the ceiling

and the trifold doors leading onto the garden...

It's a great addition to the property.

I think that's the part of the house which will attract

the buyer in putting an offer forward.

I think the layout of the property is a really good layout.

The kitchen/diner at the back going out onto the garden

is a really good idea for the house.

I think it suits the style of house that we've got here.

Most importantly, what did they feel it would go for on the open market?

This property for circa £215,000 to achieve anywhere above £210,000.

I believe this property could re-sell for £220,000 on today's market.

So, if you take the top estimate of £220,000,

that would give Paul a profit of £27,000, so not bad!

But it's hard to keep up with Paul, because he's already been

putting the property out there and he's had a result!

We have had an offer of 245 for the property, which is going through

at the moment, so hopefully we can move on to the next property.

Wow. The man is on fire!

With a £245,000 offer, that brings Paul's profit -

before taxes and expenses, of course - to £52,000.

Well done, Paul.

We return to Brampton, Cumbria now,

where Craig and his wife Andrea bought this wonderfully secluded

two-bedroom bungalow for £118,000 at auction.

Tell me why you wanted to buy this place.

This is just a new thing.

We thought we would put it into buildings instead of in the bank.

-And that was a fairly easy decision to make, was it?

-Hmm. Yes, yes.

-Good.

-If you put it in the bank, you only get 1% or 2%, if that.

If it's in a house, you can rent it out,

or your son could go and live in it.

Craig thought that this might even end up

as a home to retire to in the future,

but, in the meantime, given how popular bungalows are,

I reckon this was a good investment.

But he had a sizeable to-do list.

Put windows and doors in, double glazing, upgrade that.

We're going to renew the heating system, put a combi boiler.

We're taking the old boiler and tank out,

and the chimney out of the bathroom to make the bathroom bigger,

and a new kitchen, and just, basically, decorate it

and bring it up to spec.

Who could do the work?

Well, we've got a family builder, my father-in-law's a joiner,

and he's got a friend who's a painter,

so we're quite well sorted out.

We're getting an electrician in and a plumber

to make sure that's all up to standard.

As a farmer, Craig is no stranger to hard work,

which is maybe one of the reasons

he seems to be taking this all in his stride.

Seven months later, we've come back, and, in true Craig style,

it all seems rather easy.

MUSIC: Easy by Commodores

We did the garden.

We've taken all the weeds out, cut the hedge down

and things like that. Just, basically, tidied it up.

And there were a few bits on the front of the house that needed pointing,

but apart from that, it was in good condition, really.

We've plastered the ceiling in here, we've sorted all the plastering out

in the house, we've re-wired it,

we've put new central heating in, we did the double glazing,

and we've re-carpeted it, and we've put a nice new gas fire in here.

A thorough job throughout.

I'm impressed he's managed to get everything done.

How did he balance the farm work with the project?

We were here most weekends doing little bits and bobs,

but we had family and friends who came and helped

and did quite a lot, and also,

we got tradesmen to do the specialist things

like putting the windows in, electrics, gas, that sort of thing.

So, a job well managed,

and Craig took advantage of any spare time he had.

But what was the biggest thing he had to contend with?

Well, the biggest thing was taking the chimney out.

I thought it would be a bit of a nightmare,

but, luckily, the chimney wasn't tied into the main wall,

so we didn't have to take a wall down.

We could just knock a chimney down without having to alter the wall,

which was brilliant.

So, once we got it below the roof level,

we just sealed the roof and then it wasn't a problem

with water getting in or anything like that.

Once we got the chimney out,

there was a nice space to put a shower in

and get rid of the airing cupboard with the copper tanking,

cos we didn't need that anymore, cos we had a combi boiler in,

which did away with the big tank.

So, once we got that out and sealed the roof up again,

we just had to re-plaster the ceiling in the bathroom,

put the new bathroom in, and that was sorted.

It seems that even the big jobs came with a certain element of luck.

It's good to see, but Craig also feels lucky

to have had his family and friends make such an effort.

Keith, my father-in-law, he's a joiner and he came

and did all the joinery work which needed done in the house.

He put new doors on, all round.

And then I had a family friend, Alan...

He came and painted and decorated the whole house,

which helped quite a bit,

and I think he's made a marvellous job!

Indeed! One room that needed a complete make-over was the kitchen.

In the kitchen, we've re-plastered the ceiling,

we've put nice new spotlights down,

we've put new kitchen units in all-round, we've re-tiled it,

re-plumbed it, and we've also put new wiring in here,

I've got a brand-new radiator over there,

and we did the floor, which I think looks like quite a good job.

Ha! I'd go a little further and say an excellent job!

How were his timescales?

The timescale was about six months.

It took about seven months,

but it was just organising people to come when you needed them to,

and sometimes people can't make it when you want them to,

but you've just go to work round them and put up with it,

and eventually get it done.

Again, all very relaxed.

But not having unrealistic deadlines goes a long way

in creating a happy environment.

What about the budget?

The original budget was 10,000.

I think we've spent about 9,800, which was about right.

Um... You know, we've done quite a bit of work here,

and I think we've done OK with the budget.

Craig's being a little modest there. Coming in on budget is more than OK.

With a total spend of almost £128,000,

how will the returns look on this property on the open market?

We asked two local agents to come along and give us an idea.

He's done a fantastic job all the way through.

Left it neutral, left some of the original features,

such as the cupboards in the hallway, that kind of thing.

He's done a very nice job.

It's been very well refurbished. It's been a good job.

I think the kitchen's been done well, and things like the windows,

the general finish throughout, the carpeting,

everything looks very good and well finished,

and it would be ideal for any potential buyer.

So, positive responses there.

How much do they think the property could fetch if sold?

If this was to go on the open market,

I would market it at £180,000, or thereabouts,

and I would expect him to achieve somewhere between 170 and 180.

I would look to market this property around about £175,000.

That's very, very good. That's more than I expected.

We thought it would make about 160,

but obviously, the more, the better, which would be really great.

So, taking a top price of £180,000,

Craig and his family could be looking at a potential profit

of £52,000, minus taxes and fees, of course.

How would things look on the rental market?

If this property came to the rental market,

I would expect it to achieve somewhere in the region

of £600 per calendar month.

I think, on the rental market,

we could achieve around £550 per calendar month.

That's what we were expecting.

Maybe a bit more than I was expecting,

but that's very, very good.

I'm really pleased about that.

As you should be!

So, taking the top estimate, Craig could be looking

at an annual return of almost 6%.

An easy decision for Craig, I wonder...

We're going to rent it out and keep it.

We've got somebody in mind that wants to rent it,

but we're not going to sell it, we're just going to keep it.

A wise choice, and a decision that fits nicely with his laid back ways.

Overall, an experience he'd repeat?

Yes, I would definitely do another house,

but it would have to be the right house.

If you pick a good house at the right price, it should be OK.

You can't really go wrong.

What do you think?

Would you have been tempted to buy any of those properties

-at today's auctions?

-Well, there's plenty more where they came from,

so make sure you join us next time for more Homes Under The Hammer.

Goodbye.