Episode 55 Homes Under the Hammer


Episode 55

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Transcript


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Hello. It seems the property market is looking up in certain

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parts of the country,

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so is now a good time to invest?

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It very well could be, but just be aware,

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you might not get as much for your money these days.

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One way to potentially maximise what you do get is by going

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to your local auction.

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Why not go along to your local auction room

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-and see what's on offer?

-That's exactly what today's buyers did.

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Let's see what they bought.

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First up, this London house might be feeling its age,

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and after meeting the buyer, so am I.

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I've been watching Under The Hammer all my life,

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so I know what to do.

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Up in Alloa, Scotland,

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this bedroom's a bit of a pain in the neck.

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Uh, uh, uh! It's a little bit... I mean, I can't even stand up.

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Whilst in Chilton, County Durham, the problem is staring me

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in the face.

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Hm. Yes, the electrics definitely need sorting.

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All these properties have been sold at auction,

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

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-when they went under the hammer.

-Selling, are we, then?

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Well done.

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This is the busy town of Ilford, North East London.

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Believe it or not, the skeleton of a mammoth was found right here

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and is now preserved in London's Natural History Museum.

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Safe to say, quite a lot has changed since those beasts wandered here,

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although there is still plenty of green spaces as well as a busy

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town centre.

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And, as our property shows, progress can produce mixed results.

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On the plus side, this road overlooks a really pretty park,

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right there.

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From a negative side, well, I think it's quite a busy road,

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with lots of traffic driving past.

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So not the quietest place to be.

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So, pros and cons already, but what about the property I am here to see?

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Well, it is a three-bed mid-terrace.

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It had a guide price of £275,000.

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It does have a bit of an overgrown garden here and here.

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But I can already see it has got double glazed windows -

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another plus that will also help reduce this road noise.

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I'm going in.

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# Stop the noise, stop the noise

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# I wish that I could stop the noise. #

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Hurrah!

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You can't hear so much of the traffic.

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It is pretty noisy out there. So, what have we got?

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A really nice hallway here.

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You could certainly do with decorating this place.

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But look at that lovely stained glass behind me, that's really nice.

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Along here, we've got the banisters,

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the spindles are properly hiding underneath there.

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So another character feature for this '30s house.

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A really nice-sized lounge.

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We've got a second reception room at the back,

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with lovely doors that lead out to the garden.

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Oh, no, it's a bit of a shame.

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Very small kitchen.

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But this is what you would expect for a '30s house.

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You can tell it hasn't been tampered with, it hasn't been extended.

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I suppose if you didn't want to go into all that, you could think about

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knocking through here and stealing a little bit of space from next door.

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The next-door room could certainly take it.

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But it is all looking rather good. So, yeah, thumbs up.

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I'm having a look upstairs.

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-# So far

-So far

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# So good

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# Gonna make it Knock on wood

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# Yeah! #

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Yes, generally the house is promising,

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but it isn't totally without its problems.

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There are a few signs of damp and the plumbing has, well,

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seen better days.

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Upstairs, the third bedroom is disappointingly small.

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As is the rather sorry family bathroom.

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The other two bedrooms aren't bad. Lots more lovely stained glass.

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And the master bedroom has a fantastic bay window, although

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there are some signs of cracking that will need to be looked at.

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All in all, though, it is definitely more thumbs up than thumbs down.

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# So far, so good. #

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Overall, this isn't a bad size family property,

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but the kitchen and the third bedroom are disappointingly small.

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So, should you and could you extend and make it bigger?

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Well, as you can see, it has just got this lovely,

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pretty garden out here, which could definitely accommodate an extension

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and still leave you with loads of space for the kids

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to play in the garden. So, what are your options?

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Well, you could improve the size of the kitchen

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with a single-storey extension or maybe build up to the second storey

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and fit in another bedroom as well.

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You could even go up into the loft

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and create another bedroom and perhaps an en-suite.

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My advice - speak to some local agents

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and find out what is most in demand in this area.

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There might be the space,

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but you don't want to risk overdeveloping this house.

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Overdeveloping means

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when you put in more than you can ever get back in terms of value.

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Every property has a ceiling price, that's the top price you can get.

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And no matter how much you do to a property, you are unlikely to

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exceed it, because it is not just dictated by the house itself.

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Other factors - like its position, the value of surrounding houses

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and the type of area the house is in - all have a bearing.

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So the real trick about a development opportunity is to know

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when to stop.

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# Oh, oh, oh You better stop

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-# Stop

-Before you tear me all part

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-# You better stop

-Stop! #

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So, what development work does a local estate agent think

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is best suited for this property?

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You are finding that mostly in demand... It's a standard

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three-bedroom, middle terrace,

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1930s house with an extension across the rear.

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That normally ticks all the right boxes

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with purchasers in this area.

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Once you go into the loft areas,

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you need to make sure that the ground-floor accommodation

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will suit the amount of bedrooms that are in the property and will

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accommodate for that.

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OK, so a single ground-floor extension to improve

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the kitchen certainly seems to have some merit

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and would suit the local market, but what about a loft extension?

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Most people will look at putting one bedroom into the loft area

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with an en-suite or shower room.

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Some people will try to put two bedrooms

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and a shower room in there, but sometimes that can make

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the rooms quite small and a little bit harder to sell.

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But obviously, any extension costs time and money.

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So, as an investment,

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would they be worth doing to this house that was guided at 275,000?

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Should the property have a ground-floor extension

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and be completely renovated, we would expect to achieve

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a figure in the region of £345,000 to £355,000.

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Should the loft extension be done, we would expect to achieve

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a figure in the region of £375,000 to £385,000.

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Those resale figures suggest an additional uplifting value

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of £110,000 if both loft and rear extensions were carried out.

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But with building costs for them both,

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I can't see a massive increase in profit.

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With rental figures thought to be around £1,350 per

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calendar month as a three-bed house and £1,500 per calendar month

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as a four-bed house, again, suggesting

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if this was a developer's project, you'd need to think long

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and hard about any extensions you do or don't carry out here.

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Now, this might not be the most peaceful spot with lots of cars

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whizzing past your front door,

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but it is a solid property with plenty of potential and,

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if you make the right decisions, well, I think

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the pluses do outweigh the minuses here.

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

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Lot 89.

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A three-bedroom mid-terrace house.

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Off-street parking. Needs updating.

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Start at 280, move upwards.

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280 I've got. 281 anywhere?

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281. 282. 283?

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283. 284?

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Have a think. 284 coming in. 284.

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285.

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286. 287.

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288. 289?

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289. 290.

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291. 292.

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293. 294.

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295.

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One more? Lose it for 1,000?

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Anybody else? If not, 294 for the first.

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294 for the second.

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294 for the third and final time. Are we all done?

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Sold, 294, well done.

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And so, for £294,000, the new owner of the three-bed

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mid-terraced house in Ilford, Greater London, is local man Sheikh.

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I met him back at the house to find out what he had planned.

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# Shake, shake, shake, shake Shake it

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# Shake, shake, shake, shake Shake it! #

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Congratulations, Sheikh, lovely to meet you today.

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-Lovely to meet you, too.

-Why did you want to buy this at auction?

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When I first saw this property, I fell in love with it.

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And when I came into this house, I thought, you know,

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it needed a little bit of TLC, you know.

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And I think there is a huge potential with this property, so...

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Have you bought this house for you to live in?

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Not exactly to live in, but it all depends on my missus

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and how she likes it. Most likely, I'm going to end up selling it.

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So you are under a bit of pressure.

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If your wife likes it, she might want to move in.

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-So what do you intend doing?

-Well, I don't know.

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I mean, I do have a plan in place.

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Hopefully, you know, I'm going to start from the top.

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We are thinking of converting the loft, having the two bedrooms

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and also having a separate bathroom as well.

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-Two bedrooms up there?!

-Yeah.

-To make this into a five-bedroom house?

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Yes.

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Hm. Five bedrooms. I'm not sure.

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I think that might be squeezing too much out of this house.

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And he's not stopping there.

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Where the current kitchen is, we are going to have another shower,

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basin and toilet there.

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And we are going to move the kitchen into where we are planning on

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doing the extension, really, and keep the second reception as well.

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Well, it is certainly an ambitious project.

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And Sheikh has set a budget of 90 grand.

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But he is savvy enough to realise that he might go over this.

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But this is his first-time project and he aims to be on-site

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full-time, so what role does he think he'll play?

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I would say, in the stepping stone of becoming a project manager.

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So, can you turn your hand to a lot of things?

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Because, I mean, you know, this is not for a novice,

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a project like this.

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I mean, I've been watching Under The Hammer all my life,

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so I know what to do. I mean, I've got...

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I think you need a little bit more than a couple of a series

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of Homes Under The Hammer to know how to build a house.

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Now you're really worrying me, Sheikh.

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No, I think, you know,

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I've done my research, so hopefully,

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if everything works out the way it is, then, you know,

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hopefully, I should make something out of this.

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Well, I hope for Sheikh's sake that it does work out.

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He's hoping to make a career out of property developing,

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but with the £90,000 spend on top of that £294,000 purchase price,

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potentially taking his costs to 384,000,

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he is not far away from that £385,000

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top-end price the local estate agent thought might be possible.

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And he is hoping to get all the work done in just three months.

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He is certainly going to be busy.

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This is your first foray into property developing, really,

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-isn't it?

-Yeah, I mean, I actually love it.

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It has been a dream of mine to do such a huge project like this.

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But hold on a minute, whoa, whoa, whoa.

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Now, you say you love it. This is your first project.

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You only love it because you've been watching lots

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of Homes Under The Hammer. You've never actually done it, have you?

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Oh, I don't have to do it, but I've got to start somewhere, don't I?

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So you think you're going to love it.

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But the thing is, I do have the drive and ambition,

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so that, you know...

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And I've got a lot of energy, you know,

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to put into this property. And, hopefully,

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I'm thinking I can do really well with this.

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Sheikh, I am really excited for you

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and I hope your first property journey goes smoothly.

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-Thank you very much.

-Lovely to meet you.

-Lovely to meet you, too.

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I think it is great that Homes Under The Hammer has inspired Sheikh

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to try his hand at property developing for the first time.

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But do we make it look too easy?

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He certainly has the enthusiasm, but is he making the right

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decisions with this, his first property?

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I am a bit worried he might be taking it too far with those

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ambitious loft plans.

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Join me later on in the show and you can find out how Sheikh,

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our budding developer, gets on.

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We are heading to Scotland for our next lot.

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It is situated in Clackmannanshire, in the town of Alloa, to be exact.

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Alloa's famous landmark is its 15th-century tower, but has

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a more modern imprint with its beer and glass industries.

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And it is also a favourite with commuters,

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with the Kincardine and Clackmannanshire Bridges

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offering good road links

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while the reopening of the rail link has eased

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access to Scotland's major cities.

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Here is the property I am about to see.

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It is a traditional, one-bedroom mezzanine flat, and it is in a prime

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town centre location with fantastic buy-to-let opportunities.

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Now, the guide price, wait for it,

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£20,000 to £30,000 for a one-bedroom mezzanine flat.

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It is in here. It is above this bank.

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And I'm excited.

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A nice handsome building from the outside.

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The thing that really hits you in the face is that smell of rubbish.

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Look, one, two, three, four, five... Six dirty bin liners there.

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So, I would try and sort out a better place for the rubbish bins.

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Um, this is nice, though. Lovely, generous proportions in here.

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Really nice banister. Although a bit of paint wouldn't go amiss.

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And walking straight into the flat,

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I've got to be honest, a little bit oppressive.

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Low ceilings. Look, I'm very small

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and I can touch the ceiling.

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I know it is a mezzanine...

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So there is, one, two, three layers to his flat.

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It is like a little sponge sandwich, isn't it?

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But, you know, it is small, but it is what it is, I suppose.

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The kitchen is over here. You could do with addressing that.

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I think an upgrade wouldn't go amiss. You've got a little loo,

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a shower through there.

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A window letting in lots of natural light. So that really does help.

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Let's have a look upstairs.

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I'm not usually a huge fan of these spiral staircases,

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but they do offer a fantastic use of space.

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And I'm not going too giddy just yet.

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What could make your head spin, though,

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are the numbers of regulations around spiral staircases.

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Details like the maximum rise, the gaps between stairs,

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the handrail heights, the load they can take,

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all have to meet building regulations.

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So check them out if you fancy this one.

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# I'm spinning around Move out of my way

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# I know you're feeling me Cos you like it like this. #

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It is really, really interesting the way they've done this.

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I'm not sure whether I like it or not.

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It's like another layer,

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another level has just been sliced through the property.

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I mean, this really is it, this small space.

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Cleverly done, maybe.

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Not that many features.

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A fireplace here, which is pretty useless, not doing much.

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A really nice window over here. Now, that's beautiful.

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I know this building is listed,

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so if you did want to change anything, like that

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window for example, you would need to get listed building consent.

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And it might be worth doing because that is a single-glazed window.

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And this is the fun bit.

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Look at that, that is the mezzanine level.

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I'm going to go up.

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Shall I go up? It looks pretty precarious.

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I'm not sure.

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I think the kid in me just wants to go up there

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and have a little jump around. So off I go.

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I'm not sure whether a fireman's pole might be a bit easier,

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actually.

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Here we are. Now, there is not that much room at the top.

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Uh, uh! It is a little bit... I mean, I can't even stand up.

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Can you imagine in the middle of the night having to

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get down the stairs and use the loo? But, you know, it is quite spacious.

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It does what it says on the tin, this property.

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And come on, people! £20,000 to £30,000 guide price?

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It's a bargain.

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But it does need work.

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A new kitchen and a new bathroom wouldn't go amiss here.

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And, unless you like living life on the edge, literally, well,

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you would want to take another look at those stairs.

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# Yeah, living on the edge

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# Living on the edge. #

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I think it is pretty safe to say that those steps won't be following

0:17:430:17:46

any building regulations.

0:17:460:17:48

We asked a local estate agent

0:17:480:17:50

to come for a spin around this flat and tell us what she thought.

0:17:500:17:53

I feel that it's quite good value

0:17:550:17:57

because it is quite expensive to live in the city.

0:17:570:17:59

And you could be within Glasgow

0:17:590:18:01

and Edinburgh within sort of 40, 45 minutes by rail link.

0:18:010:18:04

Just park your car. And there is no cost for parking here.

0:18:040:18:09

And you can get the properties far cheaper than in the cities, like,

0:18:090:18:12

you know, a good £30,000, £40,000 cheaper than Glasgow or Edinburgh.

0:18:120:18:16

Which would make this little mezzanine a very attractive

0:18:160:18:19

prospect for commuters and investors alike.

0:18:190:18:22

Once the refurbishment is complete here, what might it be worth?

0:18:230:18:27

I think because the market has

0:18:290:18:30

been improving quite considerably in the last six months,

0:18:300:18:33

it could achieve £50,000 to £55,000 on the open market.

0:18:330:18:37

And the rental value?

0:18:370:18:39

Once renovated, I believe this apartment could achieve between

0:18:390:18:43

£350 and £370 per calendar month.

0:18:430:18:47

This is a really unusual property. It's got three floors

0:18:470:18:50

linked by a spiral staircase.

0:18:500:18:53

It's certainly not everyone's cup of tea,

0:18:530:18:56

but I think it is in a great location

0:18:560:18:57

and it has a gobsmackingly low guide price.

0:18:570:19:01

Let's see who fancied it when it went to auction.

0:19:010:19:04

Mid-terrace flat with first-floor mezzanine bedroom.

0:19:090:19:12

25 to start me.

0:19:120:19:14

20 then. Start me off at £20,000.

0:19:140:19:16

20 here. At 20 I'm bid now.

0:19:160:19:18

21 here. 22.

0:19:180:19:20

23. 24.

0:19:200:19:23

25. 26?

0:19:230:19:26

Not quite sure. With you at £25,000.

0:19:260:19:29

At £25,000.

0:19:290:19:31

Take a half. 25,500. 26?

0:19:330:19:36

26 I've got.

0:19:360:19:38

You are out. With you at 26.

0:19:380:19:41

At £26,000. Are we done?

0:19:410:19:44

At £26,000, then, are we selling this?

0:19:440:19:47

At £26,000, first time.

0:19:470:19:50

At 26,000, second time.

0:19:500:19:52

All done. Are you sure? All out?

0:19:520:19:55

The successful bidders with a bargain at £26,000 were

0:19:570:20:02

Nick and wife Irene.

0:20:020:20:04

Both originally from Bulgaria, they have been living

0:20:040:20:07

and working in the UK for five years.

0:20:070:20:09

This is their second renovation project.

0:20:090:20:12

And with that low price,

0:20:120:20:13

they'll be laughing all the way to the flat above the bank.

0:20:130:20:17

I met Nick, he works in marketing,

0:20:190:20:21

to find out about their climb onto the UK property ladder.

0:20:210:20:24

Nick, congratulations, lovely meeting you today.

0:20:270:20:29

-Thank you very much.

-Well done, you!

0:20:290:20:30

What an interesting property you've got here.

0:20:300:20:32

Yeah, well, it's a very nice, small property, actually.

0:20:320:20:36

It is quite interesting, cos this is the sort of property

0:20:360:20:38

you'd find in the centre of London -

0:20:380:20:39

a small place where somebody really has tried to make the most of it.

0:20:390:20:43

But for £26,000, you did really well on auction day.

0:20:430:20:48

Yeah, well, to be totally honest, yeah.

0:20:480:20:49

-I'm pretty pleased.

-So what are we going to do here?

0:20:490:20:52

Because it's not for everybody.

0:20:520:20:53

The staircase leading up to the sleeping area is what concerns

0:20:530:20:56

-me here.

-Me too, to be totally honest.

0:20:560:20:58

We haven't decided what to do with it yet.

0:20:580:21:01

-We will be upgrading quite a lot of things inside.

-Yes.

0:21:010:21:05

But eventually, we will decide what we are going to do with this.

0:21:050:21:08

So, have you got any budget?

0:21:080:21:09

The initial budget is between £2,000 and £3,000.

0:21:090:21:12

And how many days,

0:21:120:21:13

weeks or months are you going to spend on this place?

0:21:130:21:15

We are thinking between three and four weeks.

0:21:150:21:19

Wow, that is a quick turnaround and a tight budget, especially

0:21:190:21:23

when you consider that Nick and wife Irene both work full-time

0:21:230:21:27

and will only be able to come here on evenings and weekends.

0:21:270:21:30

So, what do they plan to get done in that time?

0:21:320:21:34

We're going to just paint it. We're going to refurbish the kitchen.

0:21:380:21:42

We're going to upgrade the bathroom.

0:21:420:21:43

And new carpets, that is pretty much it.

0:21:430:21:46

So, how are you going to upgrade the kitchen? To what extent?

0:21:460:21:49

Because, I mean, it is OK, but it's a bit shabby.

0:21:490:21:51

Yeah, well, we will look at it

0:21:510:21:54

and we will decide eventually what needs to be done.

0:21:540:21:56

Probably most of the budget is going towards the kitchen,

0:21:560:22:00

so we will see how it goes.

0:22:000:22:02

You have got a magnificent window here, in this room.

0:22:020:22:06

That might benefit from an upgrade,

0:22:060:22:09

but you would have to apply for listed building consent.

0:22:090:22:11

Yeah, that is absolutely right.

0:22:110:22:13

We'll definitely go for something. We'll see how it goes, actually.

0:22:130:22:17

But probably we are going to upgrade a little bit the windows.

0:22:170:22:20

Did you research this property prior to bidding on auction day?

0:22:200:22:23

Did you get a survey done?

0:22:230:22:25

Did you read the legal pack? Come on.

0:22:250:22:28

To be totally honest, well, the legal packs, yes.

0:22:280:22:30

We prepared it with the legal packs. We haven't done a survey, no.

0:22:300:22:33

Do you think you needed to get a survey with a property like this?

0:22:330:22:36

Do think there could be structural damage to a property like this?

0:22:360:22:38

Probably we should.

0:22:380:22:40

Um... We should.

0:22:400:22:42

But we didn't.

0:22:420:22:43

So it looks like a survey is now a priority.

0:22:440:22:47

If all goes to plan,

0:22:470:22:49

though, the couple want to sell the property in a couple of years' time.

0:22:490:22:52

But for now, they intend on renting it out.

0:22:520:22:55

And a quick tot up of the figures makes you think, well,

0:22:550:22:58

they can't really go wrong.

0:22:580:22:59

So come on, Nick, tantalise my taste buds.

0:23:010:23:03

How much rental return could you get for a property like this,

0:23:030:23:06

bearing in mind you paid 26 grand on auction day?

0:23:060:23:09

The average rent in this area is 375, so probably... If we get 375,

0:23:090:23:15

-I will be quite happy.

-That is over 10% yield.

-Yeah.

0:23:150:23:18

I mean, that really is stunn... That's brilliant!

0:23:180:23:21

"Quite happy." I can't see how he wouldn't be.

0:23:220:23:25

A quick toss of the maths here,

0:23:250:23:27

pay attention at the back of the class, please.

0:23:270:23:29

Bought for £26,000,

0:23:290:23:31

spent £3,000 on renovation, brings us to £29,000.

0:23:310:23:36

So, even if we go with the estate agent's top estimate of 375,

0:23:360:23:41

the yield would still be,

0:23:410:23:44

wait for it, around 15%.

0:23:440:23:47

I think you've done really well, Nick, and I think this is

0:23:470:23:49

a great property in a great location for a fantastic price. Well done.

0:23:490:23:52

I'm really looking forward to seeing how you upgrade it.

0:23:520:23:55

-Nice to meet you today.

-Thank you very much.

0:23:550:23:58

Nick has certainly got himself a bargain here.

0:23:580:24:01

But I've got a feeling this property won't look too different on

0:24:010:24:04

our return with his £3,000 budget and his three-week timescale.

0:24:040:24:09

Will this spiral staircase and the bunk-bed ladders

0:24:090:24:13

put potential tenants off? That is my worry.

0:24:130:24:16

You can find out what happens later on in the programme.

0:24:160:24:19

Still to come, the numbers are adding up in Chilton, County Durham.

0:24:210:24:26

I paid more for a caravan a few years ago that I have for the house.

0:24:260:24:30

But in Scotland, it is the weeks that have racked up for Nick.

0:24:310:24:35

The original timescale was four weeks.

0:24:350:24:37

It turns out to be six months.

0:24:370:24:40

Ilford, in Greater London,

0:24:460:24:48

is where we first came across a three-bed mid-terrace house.

0:24:480:24:51

It needed not just a full refurbishment,

0:24:510:24:54

but a bit of rethinking on the layout.

0:24:540:24:56

Small pokey kitchens and shabby bathrooms just don't cut

0:24:560:25:00

it in today's competitive property market.

0:25:000:25:03

And a tiny boxroom off a third bedroom is hardly going to

0:25:050:25:09

excite either.

0:25:090:25:10

So, the layout definitely needed looking at.

0:25:100:25:14

And the man to take this challenging property on was Sheikh,

0:25:140:25:17

who bought it for £294,000 at auction.

0:25:170:25:21

-So, what do you intend doing?

-Well, I don't know.

0:25:240:25:28

I mean, I do have a plan in place.

0:25:280:25:31

Hopefully, you know, I'm going to start from the top.

0:25:310:25:33

We are thinking of converting the loft, having two bedrooms

0:25:330:25:38

and also having a separate bathroom as well.

0:25:380:25:42

-Two bedrooms up there?!

-Yes.

-To make this into a five-bedroom house?

-Yes.

0:25:420:25:47

And it wasn't just a loft conversion Sheikh was hoping to carry out.

0:25:480:25:51

Oh, no, he hoped for a rear single-storey extension to enhance

0:25:510:25:56

the kitchen space. Ambitious plans, indeed,

0:25:560:25:59

particularly when you considered this was to be Sheikh's first

0:25:590:26:02

development project and his only experience of property work was,

0:26:020:26:06

well, watching episodes of Homes Under The Hammer.

0:26:060:26:09

But he had given himself £90,000.

0:26:090:26:12

Provided he got planning permission,

0:26:120:26:14

he hoped to get the work done in three to four months.

0:26:140:26:17

So, has Sheikh managed to do this top-to-bottom redevelopment?

0:26:170:26:21

Well, three and half months later, we are back to find out.

0:26:240:26:28

Well, there may be scaffolding still in place...

0:26:330:26:35

..but it definitely looks like the top of the house has got what

0:26:390:26:42

he hoped for - a loft conversion. But how many rooms does it have?

0:26:420:26:47

Initially, we actually planned to have one big

0:26:470:26:51

room with an en-suite.

0:26:510:26:53

Then we decided to have two rooms there, which is

0:26:530:26:55

a reasonable size, I believe.

0:26:550:26:58

And we also managed to fit in a wet room as well.

0:26:580:27:01

Well, this really is impressive.

0:27:010:27:03

Sheikh has gone for his most ambitious plan of adding two

0:27:030:27:07

extra bedrooms and found space for a wet room.

0:27:070:27:10

Down to the first floor, the bedrooms have been re-plastered,

0:27:120:27:15

new electrics, re-plumbed and the chimney breast has been removed.

0:27:150:27:20

And there are new windows. And I have to say, it is

0:27:200:27:22

a shame those lovely stained-glass panels have now gone.

0:27:220:27:26

And the bathroom, well, it still needs a bit of work.

0:27:260:27:29

With those loft rooms,

0:27:290:27:31

Sheikh has now got the five bedrooms he was after.

0:27:310:27:34

But what about downstairs?

0:27:340:27:36

It is still a work in progress.

0:27:410:27:43

There is no ground-floor extension yet, but it is in hand.

0:27:430:27:47

His initial application for a downstairs

0:27:470:27:49

extension at the back with a six-metre depth has been refused.

0:27:490:27:53

And he has currently submitted plans for a slightly smaller one

0:27:530:27:56

of five metres.

0:27:560:27:58

So, here's hoping that will succeed.

0:27:580:28:00

If he gets the go-ahead, what will it be like?

0:28:000:28:03

Where the existing kitchen was, there is going to be another wet room.

0:28:030:28:09

And we're going to have the toilet and the sink

0:28:090:28:12

and a fitted shower.

0:28:120:28:13

From there, we're going to have the kitchen extension going out.

0:28:130:28:17

I have to say, despite my reservations that Sheikh was being

0:28:170:28:21

overambitious here, I think he has done a pretty impressive job so far.

0:28:210:28:25

But how hands-on has he been?

0:28:250:28:27

I would say I have taken the role of management.

0:28:270:28:31

Um, I had a little baby boy a month ago and that has

0:28:310:28:36

kind of taken up most of my time, you know, just spending time with him.

0:28:360:28:40

And I spend the rest of the time here.

0:28:400:28:42

Wow, new baby boy, an extensive renovation project,

0:28:420:28:46

Sheikh has clearly had a lot to deal with.

0:28:460:28:49

And perhaps not surprisingly, it has all taken longer than planned.

0:28:490:28:53

But he is hoping,

0:28:530:28:54

provided he gets planning permission for the rear extension,

0:28:540:28:57

he'll be able to complete the house in two more months.

0:28:570:29:00

So he is overrun on his timescale, but what about his proposed budget?

0:29:000:29:04

Originally, the budget was set for £90,000.

0:29:040:29:08

I think we just might exceed that by another £8,000 more.

0:29:080:29:15

OK, so a spend of £98,000 on top of his £294,000

0:29:160:29:22

purchase price would bring Sheikh's

0:29:220:29:24

total expenditure to 392,000.

0:29:240:29:27

So has he got his numbers right on this one?

0:29:270:29:30

Will the house be right for the local market?

0:29:300:29:33

What did two local estate agents think?

0:29:330:29:36

The market is strong for five-beds in this area.

0:29:360:29:39

They don't come up that often and get sold quite quickly.

0:29:390:29:41

Having an extension at the back is a good idea.

0:29:410:29:43

It will extend the kitchen or you can have a conservatory

0:29:430:29:47

if it is for a family home.

0:29:470:29:50

So, having an extension is always a good idea.

0:29:500:29:53

All very encouraging.

0:29:540:29:55

Now, I was worried about this house being overdeveloped, so with the

0:29:550:29:59

projected £392,000 spend, will he have hit that ceiling price?

0:29:590:30:04

Let's find out what the house might fetch in its current configuration,

0:30:040:30:08

before he goes ahead and builds that ground-floor extension.

0:30:080:30:12

Fully renovated, I think this property could achieve

0:30:120:30:14

between £460,000 to £490,000.

0:30:140:30:17

I would suggest to advertise the property

0:30:170:30:21

on a price ranging between £475,000 to £500,000.

0:30:210:30:28

Well, those figures suggest a pre-tax profit

0:30:290:30:32

anywhere between £68,000 and £108,000.

0:30:320:30:36

And the agents felt you could add another £20,000 to £30,000

0:30:360:30:40

if Sheikh gets permission to build the proposed rear extension.

0:30:400:30:43

And I think that would really help balance out the house.

0:30:430:30:46

In any case, I was worried for nothing.

0:30:460:30:48

He hasn't over developed it and he has come up trumps

0:30:480:30:52

on his first project. So well done, Sheikh.

0:30:520:30:54

This is fantastic news.

0:30:540:30:57

So, first time around, yeah, not too bad, actually.

0:30:570:31:01

And with rental values in the local area for a five-bedroomed house

0:31:010:31:04

being £2,000 per calendar month,

0:31:040:31:07

that would generate a fairly healthy yield of 6%.

0:31:070:31:10

So, all looking good. But Sheikh's plan was always to sell it on.

0:31:100:31:15

And his wife is pretty keen for them to actually move into the property.

0:31:150:31:20

But is Sheikh still unmoved?

0:31:200:31:23

I still intend on selling this, no matter what.

0:31:240:31:27

No matter what my missus says.

0:31:270:31:29

And realistically, he might have to risk his wife's wrath

0:31:310:31:34

if he wants to have the funds for another project.

0:31:340:31:37

Or has this first one scared him off?

0:31:370:31:40

This is something I have dreamt of doing for a long time

0:31:400:31:43

and I hope to pursue this career once I'm finished with this.

0:31:430:31:46

To the north-east now and the former mining

0:31:500:31:53

village of Chilton, which achieved town status in the year 2000.

0:31:530:31:57

Close to Durham and Bishop Auckland, it boasts over 200 allotment plots.

0:31:570:32:02

It was also the hometown of Alan White,

0:32:020:32:04

drummer of the band Yes and The Plastic Ono Band.

0:32:040:32:08

Well, seven miles from Durham city centre, a mile from the A1,

0:32:140:32:18

is the property I am here to see.

0:32:180:32:20

So, a very popular spot for commuters, for sure.

0:32:200:32:22

And up for auction was a classic two-bedroom mid-terrace.

0:32:220:32:27

There is no guide price for this property.

0:32:270:32:29

This auction house operates on offers invited.

0:32:290:32:32

In this case, offers around £14,950.

0:32:320:32:36

It is a different terminology,

0:32:360:32:38

but basically very similar to the guide price,

0:32:380:32:40

where the starting price is usually about 10% lower than the reserve.

0:32:400:32:45

So, what have we got? Um, well, nice, bright space.

0:32:460:32:50

It looks like it has been partially decorated, although...

0:32:500:32:54

Some signs of damp over there around some very strange pipework going on.

0:32:540:32:59

I think that is where the gas is coming in.

0:32:590:33:00

But I don't exactly like the way that has been done.

0:33:000:33:03

But it is not a bad size.

0:33:030:33:06

Open fire, which is good to see.

0:33:060:33:08

And then knocked through at some point into a kitchen area.

0:33:080:33:13

And it creates a really nice downstairs.

0:33:130:33:17

Very open-plan.

0:33:170:33:18

Obviously, it hasn't got a finished kitchen.

0:33:180:33:22

What it has got though...

0:33:220:33:24

..is rather a lot of damp on this wall here.

0:33:260:33:30

I'll go outside in a minute and see

0:33:300:33:31

if I can see where that is coming from.

0:33:310:33:33

But obviously, an issue. And you've got to ask yourself...

0:33:330:33:37

It has been started, in terms of renovation,

0:33:370:33:42

but some very basic things have been missed out.

0:33:420:33:46

Properties that don't have a complete kitchen or a kitchen

0:33:460:33:49

at all can be refused a mortgage, so it is definitely worth doing.

0:33:490:33:53

Ah-ha, perfect place for a door.

0:33:570:34:01

Upstairs, though, seriously,

0:34:010:34:02

what have we got? Missing floorboards here and there.

0:34:020:34:06

Obviously, you'd have to sort those out.

0:34:060:34:08

And I think your options for stripping that

0:34:080:34:10

back are a little bit limited.

0:34:100:34:12

They are slightly all over the place.

0:34:120:34:13

But up here, two bedrooms - one there, not a bad size.

0:34:130:34:17

Bathroom where you'd hope it would be.

0:34:170:34:20

It looks to be in... Well, again, half-completed condition.

0:34:200:34:24

But maybe those units are salvageable.

0:34:240:34:28

But then down a rather intriguing corridor.

0:34:280:34:30

Hm.

0:34:320:34:34

What is this?

0:34:340:34:35

Oh!

0:34:350:34:37

A fairly substantial set of stairs there, leading up to what?

0:34:370:34:41

Cos it is only described as a two-bedroomed house. Hm.

0:34:410:34:46

Definitely worth investigating further.

0:34:460:34:48

Huh. Now, you see, this is a perfectly usable room.

0:34:520:34:56

But it is really important that it is not defined as a bedroom,

0:34:560:35:00

because in order for it to be a bedroom, it would

0:35:000:35:02

have to pass certain building regulations -

0:35:020:35:05

most importantly, ability for someone who is

0:35:050:35:07

sleeping in here to escape in case of a fire,

0:35:070:35:11

in which case that would have to be the suitable kind of roof window.

0:35:110:35:15

Now, you may well think it is worth doing a little bit of extra

0:35:150:35:19

effort to make this a building regulation compliant bedroom.

0:35:190:35:23

On the other hand, it may well be cost prohibitive.

0:35:230:35:27

You only know that by finding out how much three-bedrooms

0:35:270:35:29

sell for and how much two-bedrooms sell for around here.

0:35:290:35:33

In any case, it is

0:35:330:35:35

not as if there's a shortage of work to do elsewhere in the house.

0:35:350:35:38

It's as if jobs have been started in every room,

0:35:380:35:41

but sadly, none have been finished.

0:35:410:35:43

# Come on, baby Finish what you started

0:35:460:35:50

# I'm incomplete! #

0:35:500:35:53

One thing that is really important to check out

0:35:530:35:56

when you're looking around houses is the state of the electrics.

0:35:560:35:58

And a good place to start for that is to look at the fuse board.

0:35:580:36:02

This one, however, is sending out some very mixed messages

0:36:020:36:05

cos you've got a fairly new consumer unit at the top there,

0:36:050:36:09

but this lower one, with these old sort of cartridge-style or

0:36:090:36:13

even wire fuses in there, that is very old.

0:36:130:36:15

That is a bit more modern.

0:36:150:36:17

My guess is that is mirrored in the state of the wiring

0:36:170:36:21

in the house in general.

0:36:210:36:23

Some old, some new. That is not good.

0:36:230:36:26

# Something old, something new

0:36:260:36:30

# Something borrowed Something blue. #

0:36:300:36:34

One clue to the age of the electrics is the colour of the conductors

0:36:360:36:39

and the state of the sockets, light switches and consumer unit.

0:36:390:36:43

Hm, yes.

0:36:460:36:48

The electrics definitely need sorting.

0:36:480:36:51

Yes, electricity and damp don't make for good bedfellows.

0:36:520:36:56

Time I investigated the worst-case wall in the kitchen that

0:36:560:37:00

I noticed earlier.

0:37:000:37:01

So, let's see where that damp might have been coming from.

0:37:020:37:05

Obviously, penetrating. Out the back here, what do we see?

0:37:050:37:09

OK, first of all, some of the pointing on the brickwork,

0:37:090:37:12

that looks like it is not in a very good state.

0:37:120:37:15

You could get water going in there.

0:37:150:37:17

I noticed that there is a new gutter up there,

0:37:170:37:19

so perhaps in the past, there was an old gutter,

0:37:190:37:21

and that was causing sort of water to cascade down there.

0:37:210:37:24

My guess, having done a bit of analysis, is that it is historical

0:37:240:37:30

and whatever was causing the problem has been sorted out.

0:37:300:37:33

Phew!

0:37:330:37:34

We called in a local estate agent to get her views about the attic

0:37:340:37:38

bedroom and get resale and rental valuations,

0:37:380:37:41

bearing in mind the auction house wants bids

0:37:410:37:43

starting in the region of 15,000.

0:37:430:37:46

I would probably say that they should have a look

0:37:480:37:51

at the planning regulations for the loft conversion

0:37:510:37:54

because if it was to be classed as a three-bedroom property,

0:37:540:37:57

it would be more desirable.

0:37:570:37:58

Price difference value wise wouldn't be a massive amount,

0:37:580:38:01

but for the rental threshold, it would change slightly.

0:38:010:38:04

So, no appreciable effect on the resale value.

0:38:040:38:07

How would the rentals compare, then?

0:38:070:38:10

As a three-bedroom property, if you could market it at that,

0:38:100:38:12

you're looking at around £350 per calendar month.

0:38:120:38:16

If for some reason you couldn't get the planning permission or

0:38:160:38:18

there's problems with the regulations on the loft room,

0:38:180:38:21

you're looking in the region of £300 per calendar month.

0:38:210:38:24

So it might be worth upgrading the bedroom

0:38:240:38:27

if it is going to be a rental property.

0:38:270:38:29

And how about the best resale value?

0:38:290:38:32

I think once the basic renovation works have been done

0:38:320:38:35

and they are finished with the kitchen,

0:38:350:38:36

possibly damp-proof course and some decoration, I think that the

0:38:360:38:40

property would probably be worth about £25,000.

0:38:400:38:43

Well, there is always a bit of a risk when you take on a house

0:38:450:38:48

that has had some work done to it

0:38:480:38:50

that you don't know to what standard that work has been done.

0:38:500:38:54

However, on the face of it,

0:38:540:38:56

you are getting quite a lot of house for the money.

0:38:560:38:58

So around that guide price... Definitely one to go for.

0:38:580:39:01

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

0:39:010:39:04

Start bidding around 15. Only 15,000.

0:39:040:39:07

Who is in for this one? Come on. 10 I'll take to start.

0:39:070:39:11

At £10,000.

0:39:110:39:12

At 10. At 10. Go 11.

0:39:120:39:13

-Come on, let's get on.

-11.

0:39:130:39:15

11 to a voice. 11. 12. 13.

0:39:150:39:18

13?

0:39:180:39:20

I've got 12 in the far corner. No? At 12, 12, 12.

0:39:200:39:23

13 there. 14 on the table? At 13 there. 14, new bidder. 15, sir?

0:39:230:39:28

14,500.

0:39:280:39:30

15. And a half?

0:39:300:39:32

16.

0:39:320:39:34

And a half? 17.

0:39:340:39:37

17. New bidder altogether. At 17.

0:39:370:39:40

17,500?

0:39:400:39:42

Yes or no?

0:39:420:39:43

No, he says. 17, new bidder altogether.

0:39:430:39:45

£17,000, it is going to go.

0:39:450:39:48

First time at 17.

0:39:480:39:50

Second time at 17.

0:39:500:39:51

Third and final at £17,000. Your bid, sir.

0:39:510:39:54

And your number is? 336. Well done.

0:39:540:39:58

And the successful £17,000 bid came from John, who first

0:39:580:40:03

started property developing after an accident in the work place.

0:40:030:40:07

I met up with him back at the Chilton property.

0:40:070:40:10

-Good to meet you, John.

-Nice to meet you, man.

-Congratulations.

0:40:110:40:15

-Thank you very much.

-Tell me why you wanted to buy this place.

0:40:150:40:17

It was mainly the price, to be honest. I came and had a look.

0:40:170:40:21

I watch your programme all the time.

0:40:210:40:23

So I knocked on next door to find out a bit about the house,

0:40:230:40:26

and it is quite a nice area cos the lady from up the street

0:40:260:40:29

came down and asked me what I was doing with it.

0:40:290:40:32

I told her I was hoping to buy it at auction and she told me

0:40:320:40:35

-it had been empty for 12 years.

-Oh, wow.

0:40:350:40:38

But people had been backwards and forwards to... As you can see,

0:40:380:40:41

it is a half modern house, half not.

0:40:410:40:43

So, I went to the auction, I had a price in mind.

0:40:430:40:46

-Like you said, I'd done my homework and I got it for 17,000.

-Yeah.

0:40:460:40:50

So it wasn't so bad, but then, obviously,

0:40:500:40:54

you have the auction fees.

0:40:540:40:56

Ah, auction fees,

0:40:560:40:58

always something for any developer to scrutinise carefully.

0:40:580:41:02

In this case, John knew that on top of his bid of £17,000,

0:41:020:41:06

he'd have to fork out the vendor's selling costs as well.

0:41:060:41:09

That and all the bits and pieces came to £6,200,

0:41:090:41:14

not an inconsiderable sum.

0:41:140:41:16

I was quite shocked at why it was 6.2.

0:41:160:41:19

And it is still not a bad price.

0:41:190:41:21

I paid more for a caravan a few years ago than I have for the house. So...

0:41:220:41:27

And like what you always say, you make money on bricks and mortar.

0:41:270:41:30

So I can't really lose, I don't think.

0:41:300:41:32

Well, it is always possible to lose,

0:41:320:41:35

given that valuation of 25,000 the agent gave earlier.

0:41:350:41:38

We could be talking about you losing money even before you'd started

0:41:380:41:42

to work on the house. However, John is not local.

0:41:420:41:46

He comes from Redcar, about 45 minutes away,

0:41:460:41:48

so he took advice and researched on the internet.

0:41:480:41:51

That research has told him the resale value for this

0:41:510:41:55

type of house in the area is nearer 50,000 to 55,000.

0:41:550:42:00

It is always advisable to use as many research sources as you can.

0:42:000:42:04

The internet is one,

0:42:040:42:06

but I'd recommend taking advice from local agents, too.

0:42:060:42:10

So, what was it about this particular little place that

0:42:120:42:14

you liked, other than just the price?

0:42:140:42:16

To be honest, when I came, it seemed a nice family sort of area.

0:42:160:42:20

Like the lady up the street said to me,

0:42:200:42:22

"I hope you get it, as long as you are not going to rent it."

0:42:220:42:25

I said, "No, I'm not, I'm just going to do it up and sell it.

0:42:250:42:28

-"And hopefully it will be someone's little family home."

-Right.

0:42:280:42:32

-And just make a bit of profit on it.

-What are your plans for it?

0:42:320:42:35

To be honest, I don't know how good the work has been done,

0:42:350:42:40

what has been done, so you have got to still look at it.

0:42:400:42:44

Obviously, it wants a full damp-proof, the floor,

0:42:440:42:47

obviously it wants a new fitted kitchen, the bathroom wants doing.

0:42:470:42:51

Just the basics, really.

0:42:510:42:53

And then a complete paint, carpets,

0:42:530:42:56

and put it on the market.

0:42:560:42:58

-So what is your budget?

-Round about 8,000. But...

0:42:580:43:02

-another two contingency in case things go over.

-Sure.

0:43:020:43:06

That seems fair. What is the timescale?

0:43:060:43:09

Roundabout, I'm hoping, three and a half, four month,

0:43:090:43:12

so that is what I'm looking at.

0:43:120:43:14

-Well, listen, John, really great to meet you. Congratulations.

-Thanks.

0:43:140:43:17

Very nice to meet you.

0:43:170:43:19

So, John has taken on his first property and hopes to have it

0:43:190:43:21

done in three to four months.

0:43:210:43:23

Work to be done. But still, hopefully, a profit to be made.

0:43:230:43:28

You can see how he gets on later on in the show.

0:43:280:43:31

Well, we have seen how one of today's properties fared.

0:43:340:43:37

What about the others?

0:43:370:43:38

Will there be big changes or a few minor improvements?

0:43:380:43:41

Let's go back and find out.

0:43:410:43:43

Back to Clackmannanshire and the pretty town of Alloa,

0:43:490:43:51

where earlier, I looked around this one-bedroom mezzanine flat,

0:43:510:43:55

slap bang in the middle of the town centre and above the local bank.

0:43:550:44:00

It would be fair to say that this flat wasn't the most

0:44:000:44:03

conventional when it came to the interior, with the kitchen on the

0:44:030:44:06

ground floor and a spiral staircase leading up to the living space.

0:44:060:44:11

And then, there was this.

0:44:110:44:12

Was it worth the climb? Well, hm, not exactly.

0:44:140:44:19

Here we are. Now... There is not that much room at the top. Oh, oh!

0:44:190:44:24

Is a little bit... I mean, I can't even stand up.

0:44:240:44:26

Can you imagine in the middle of the night having to

0:44:260:44:29

get down the stairs and use the loo?

0:44:290:44:31

It was bought on auction day for a bargain -

0:44:310:44:34

26,000 - by Nick and his wife Irene,

0:44:340:44:38

who are both from Bulgaria.

0:44:380:44:40

They work in marketing.

0:44:410:44:43

And this was their second property bought at auction.

0:44:430:44:46

And although this flat was weird and not so wonderful

0:44:460:44:49

in many respects, there was one big attraction.

0:44:490:44:52

So come on, Nick, tantalise my taste buds,

0:44:520:44:55

how much rental return could you get for a property like this,

0:44:550:44:58

bearing in mind you paid 26 grand on auction day.

0:44:580:45:01

Quite a lot, actually.

0:45:010:45:03

The average rent in this area is 375, so probably, if we get 375,

0:45:030:45:08

-I will be quite happy.

-That is over 10% yield.

-Yeah.

0:45:080:45:11

I mean, that really is stunn... That's brilliant!

0:45:110:45:14

It was unconventional but it was a good size across the three levels.

0:45:140:45:19

And with some creative thinking, it could realise its potential.

0:45:190:45:24

Nick had plans to rent the property out after a quick

0:45:240:45:26

renovation of three to four weeks and a tight budget of just 3,000.

0:45:260:45:31

Almost six months later,

0:45:330:45:35

we've returned to Alloa to see how Nick has progressed.

0:45:350:45:39

The kitchen has been replaced and it is an improvement, while

0:45:450:45:48

the rooms have been stripped and plastered, and they look fantastic.

0:45:480:45:52

The precarious-looking steps up to the sleeping area remain.

0:46:030:46:07

And although painting those and the banisters have brightened it

0:46:070:46:10

up here, there is, however a fair bit of snagging to sort.

0:46:100:46:14

So why is such a small flat taking

0:46:190:46:21

so much more time than Nick originally thought?

0:46:210:46:25

Um... Yes, the original timescale was four weeks.

0:46:250:46:29

It turns out to be six months

0:46:290:46:31

because eventually I have purchased one more property,

0:46:310:46:34

which was closer to me, so I have actually done it before this one.

0:46:340:46:40

And also it was the holidays, so I enjoyed a little bit of a holiday.

0:46:400:46:45

The main idea of this property is for me to learn how to do things,

0:46:450:46:49

because this is something I really enjoy.

0:46:490:46:52

So it was a definite learning curve for me.

0:46:520:46:55

For me, the biggest challenge was when we removed the old wallpaper,

0:46:550:46:59

the condition of the walls, it wasn't in the best condition.

0:46:590:47:03

So we actually needed to do a lot of work on the walls.

0:47:030:47:08

Hopefully, it turns out good.

0:47:080:47:11

To be totally honest, I actually did all of the work.

0:47:110:47:14

The only thing which I am going to use professional help

0:47:140:47:18

is for the sash windows.

0:47:180:47:19

As it is a listed property,

0:47:190:47:22

we need to use a professional to do the sash windows.

0:47:220:47:27

So this is the only help I'll be using.

0:47:270:47:30

We've done quite a few things.

0:47:300:47:32

We started with the carpets, new carpets.

0:47:320:47:35

We re-decorated the walls.

0:47:350:47:36

We've removed the old wallpaper.

0:47:360:47:38

We have actually brightened up the flat a little bit with more...

0:47:380:47:43

Let's say nice and neutral colours - white and beige.

0:47:430:47:48

So it was a pretty straightforward job.

0:47:480:47:50

We actually do have a couple of things we need to do.

0:47:500:47:53

We do need to redo the bathroom.

0:47:530:47:57

We do have the units here,

0:47:570:48:00

so I presume in just a couple of days, the job will be done.

0:48:000:48:03

Up to this moment, we have spent roughly around £1,500.

0:48:030:48:08

I presume there will be an additional probably 100 to 200 or even

0:48:080:48:12

£500 for the sash windows and for the finishing of the bathroom.

0:48:120:48:17

So, with those extra costs,

0:48:170:48:20

Nick may creep up towards his original budget of 3,000.

0:48:200:48:24

And although it is not yet finished, an overall outlay

0:48:240:48:28

so far of £27,500 still looks like a good investment.

0:48:280:48:33

Nick reckons he would make a handsome return on this flat.

0:48:350:48:39

We invited two local agents along for their opinions.

0:48:390:48:43

It really is quite different.

0:48:430:48:45

It's quite quirky,

0:48:450:48:46

which makes it quite desirable in the market.

0:48:460:48:50

There is not anything I have seen like this for a while.

0:48:500:48:53

So that might be quite popular.

0:48:530:48:55

The modern presentation of the property would be a good

0:48:550:48:58

reason for a person to be interested in this one,

0:48:580:49:01

with the new kitchen and the quirky nature, to be honest.

0:49:010:49:04

The mezzanine flat would appeal to a certain client base.

0:49:040:49:07

Obviously, the property is not fully complete yet.

0:49:070:49:10

But with a new kitchen and when the bathroom is installed,

0:49:100:49:13

it will look a lot better.

0:49:130:49:14

I think this property would appeal to first-time buyers or investors

0:49:140:49:18

looking for something they could let to a tenant with access into Stirling

0:49:180:49:23

with the train station as well,

0:49:230:49:25

and obviously centrally located in Alloa.

0:49:250:49:27

What about those handsome rental valuations that Nick thought

0:49:270:49:32

they could achieve here? What do the agents think?

0:49:320:49:36

In the current rental market,

0:49:360:49:38

I would value this property at around £350 per calendar month.

0:49:380:49:41

I believe the property would let for £350 per calendar month.

0:49:410:49:45

That's pretty much what we expected, to be totally honest -

0:49:450:49:49

350, 375.

0:49:490:49:50

This is what we are looking for.

0:49:500:49:53

Well, it looks like Nick was spot-on with this one.

0:49:530:49:57

That £350 per calendar month could give Nick a possible

0:49:570:50:01

yield of around 15%.

0:50:010:50:03

And coupled with a top sales valuation here of 50,000,

0:50:030:50:08

that means Nick has made a really sound investment,

0:50:080:50:11

even if it isn't finished.

0:50:110:50:12

So, will he be heading back to the auction house?

0:50:140:50:17

Oh, yeah, it was a great experience.

0:50:180:50:20

I'd definitely recommend to anyone to get

0:50:200:50:23

the experience of buying a property through an auction.

0:50:230:50:26

Back now to the former mining

0:50:330:50:35

village of Chilton, in County Durham, where earlier,

0:50:350:50:39

I looked around this two-bed mid-terrace, which from the outside

0:50:390:50:42

looks solid enough, but on closer inspection,

0:50:420:50:45

there were one or two worries.

0:50:450:50:48

Some signs of damp over there around some very strange pipework going on.

0:50:480:50:53

That is where the gas is coming in.

0:50:530:50:54

I don't particularly like the way that has been done.

0:50:540:50:57

Despite the damp and what looked like some half-finished work,

0:50:570:51:01

I was impressed, especially when I found there was an attic room.

0:51:010:51:05

Now, you see this is a perfectly usable room,

0:51:070:51:10

but it's really important that it is not defined as a bedroom,

0:51:100:51:13

because in order for it to be a bedroom, it would

0:51:130:51:15

have to pass certain building regulations.

0:51:150:51:19

Now, you may well think it is worth doing a little

0:51:190:51:21

bit of the extra effort to make this a building regulation

0:51:210:51:25

compliant bedroom.

0:51:250:51:26

On the other hand,

0:51:260:51:28

it may well be cost prohibitive.

0:51:280:51:30

You only know that by finding out how much three-bedrooms

0:51:300:51:32

sell for and how much two-bedrooms sell for around here.

0:51:320:51:35

This property went to auction with offers invited at £14,950

0:51:350:51:42

and was snapped up on auction day for £17,000

0:51:420:51:46

by former truck driver and novice property developer John.

0:51:460:51:50

So what was it about this particular little place that you liked,

0:51:510:51:55

other than just the price?

0:51:550:51:56

When I came, it seemed a nice family sort of like area.

0:51:560:51:59

Like the lady up the street said to me,

0:51:590:52:01

"I hope you get it as long as you are not going to rent it."

0:52:010:52:04

I said, "No, I'm not, I'm just going to do it up and sell it,

0:52:040:52:07

"and hopefully it will be someone's little family home."

0:52:070:52:11

John had a budget of between £8,000 and £10,000

0:52:120:52:15

and a long list of jobs ahead.

0:52:150:52:17

However, his timescale of four months seemed pretty achievable.

0:52:170:52:21

Well, four months later,

0:52:260:52:27

we have returned to see how he has progressed.

0:52:270:52:30

The walls have been stripped back, re-plastered

0:52:450:52:48

and neutrally decorated to a high standard.

0:52:480:52:52

And the kitchen is modern and appealing,

0:52:540:52:56

with a brand-new boiler in situ.

0:52:560:52:59

Upstairs, and the improvements continue.

0:53:010:53:04

Carpets are still to be laid and the bathroom still needs tiling,

0:53:140:53:18

but the improvements up here are obvious.

0:53:180:53:21

And the attic is also looking much better.

0:53:230:53:26

As you can see, the attic room...

0:53:290:53:31

If people want to use it as a third bedroom, they can,

0:53:310:53:35

but I haven't gone down the building regulations for it.

0:53:350:53:38

It is going to cost a bit of money and it is still a nice sized bedroom

0:53:380:53:42

if they want to use it as that.

0:53:420:53:43

Or a storage room.

0:53:430:53:46

Not upgrading the attic to a bedroom means that John can only

0:53:460:53:49

advertise his property as a two-bed and hope that perspective buyers

0:53:490:53:53

see the potential and possibly decide to change it themselves.

0:53:530:53:57

He has overseen a total rewire here as well as full damp-proof coursing,

0:53:570:54:03

new radiators and central heating.

0:54:030:54:06

And with so many jobs for novice John to oversee,

0:54:060:54:09

it has been a steep learning curve.

0:54:090:54:12

Cos I live so far away, and it is about 45 minutes

0:54:130:54:16

to an hour to get here, backwards and forwards, uh...

0:54:160:54:19

..that was a pain, to be honest with you.

0:54:210:54:23

And it was also a pain trying to get tradesmen here to do the job.

0:54:230:54:27

But in the end, I think we've got it here. And we are quite happy with it.

0:54:270:54:32

The time, I don't know what I said - three and a half, four month?

0:54:320:54:35

But I think we have come just in that.

0:54:350:54:38

But I did want it done quicker.

0:54:380:54:40

I did think we would get it done quicker.

0:54:400:54:42

I thought I was going to give myself a bit more time

0:54:420:54:44

by saying three and a half, four month.

0:54:440:54:46

But, as I've said, we have come in and it just needed stripping.

0:54:460:54:50

It looked half decent, but it needed back to basics and starting again.

0:54:500:54:54

Along with his friend, Neil, John project managed the job.

0:54:540:54:58

Although, it is up to him to get the bathroom tiled and finished.

0:54:580:55:02

The way circumstances were, I couldn't be more hands-on.

0:55:040:55:08

So I should have done... This weekend I brought my...

0:55:080:55:12

I took my daughters and the missus, Joann.

0:55:120:55:15

They have cleaned the windows, cleaned the window frames inside.

0:55:150:55:18

And obviously, I've got to buy them now diamonds or summat.

0:55:180:55:22

The missus wants a holiday in Dominican.

0:55:220:55:25

So God knows what this is all going to cost me for them.

0:55:250:55:28

But obviously, whatever profit I get,

0:55:280:55:31

I'm not going to be able to spend, am I?

0:55:310:55:32

Cos they're spending it before I even get it.

0:55:320:55:35

Well, it just goes to show, there is no such thing as free labour.

0:55:350:55:39

And aside from jewellery and holidays, John has

0:55:390:55:43

so far spent £12,500 and hopes to be finished in two weeks,

0:55:430:55:48

when the property will go on the sales market.

0:55:480:55:51

With a total investment so far of 29,500

0:55:510:55:54

and in an area where house prices have a definite ceiling price,

0:55:540:55:59

it will be very interesting to hear what two local estate agents

0:55:590:56:02

think of John's improvements,

0:56:020:56:04

starting with the agent who originally predicted

0:56:040:56:07

a resale valuation of 25,000.

0:56:070:56:11

This is my second visit of the property.

0:56:110:56:13

I came to it before the renovations were done.

0:56:130:56:15

There's been an awful lot of changes made.

0:56:150:56:17

And it looks really, really good.

0:56:170:56:19

I think the selling point of this particular property is

0:56:190:56:21

definitely the kitchen.

0:56:210:56:23

It does look very, very attractive.

0:56:230:56:25

And, you know, it is, in my opinion,

0:56:250:56:28

one of the nicer kitchens in this area.

0:56:280:56:30

All sounding positive so far. So, time for the big one - valuations.

0:56:300:56:36

If this property was placed on the open market,

0:56:360:56:39

I would expect to achieve around £30,000.

0:56:390:56:42

I would expect the property to achieve in the current market

0:56:420:56:45

conditions around about £30,000.

0:56:450:56:47

Oh, crikey, not good news for John.

0:56:470:56:49

Those valuations would leave him

0:56:490:56:51

with a pre-tax profit of just 500 quid.

0:56:510:56:54

And he's not even finished yet!

0:56:540:56:56

How is he feeling?

0:56:560:56:57

Shocked.

0:56:590:57:00

I honestly thought it was worth a lot more.

0:57:000:57:02

30, no, I totally disagree with them.

0:57:020:57:05

Totally disagree.

0:57:050:57:07

John has had other valuations done

0:57:070:57:09

and has put the house on the market at 54,950,

0:57:090:57:13

which would give him a much better return.

0:57:130:57:16

There is better news on the rental valuations.

0:57:160:57:19

Both agents thought £400 per calendar month,

0:57:190:57:22

which would mean a whopping yield of 16%.

0:57:220:57:25

So, will John change his plan and rent it instead of selling?

0:57:250:57:30

If it is only worth what they are saying,

0:57:300:57:32

I'd definitely have to look at rental, maybe keep it three,

0:57:320:57:35

four years until the house market picks up to...to make a profit.

0:57:350:57:41

The good news is John is currently in negotiations for something

0:57:410:57:45

closer to his preferred figure.

0:57:450:57:47

So what does he feel about his first foray into property?

0:57:470:57:51

I'm happy with the finished house. I know it's not totally finished,

0:57:510:57:55

but it is nearly there. And I am happy with what we have done.

0:57:550:57:58

We have done it to where it is a really good standard, in my opinion.

0:57:580:58:01

And whoever gets the house has got a lovely house,

0:58:010:58:05

they don't have to do anything to it.

0:58:050:58:07

We will have more news from the auction rooms

0:58:090:58:11

from around the country for you next time.

0:58:110:58:13

So make sure you join us then for more Homes Under The Hammer.

0:58:130:58:16

Goodbye.

0:58:160:58:17

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