Episode 59 Homes Under the Hammer

Hello, and welcome to the programme.

With the property market changing all the time,

this could be a really interesting time to invest in property.

But how do you make sure that you don't get priced out of the market?

One way you can buy at a really good price

is to head to your local auction.

Buying under the hammer can be a really great way

to get into the property market.

Yes, lots of us are heading to auction houses all around the UK.

So let's see what properties were bagged on today's show.

It's a day of ambitious plans on Homes Under The Hammer.

In Watford, time is of the essence.

Ten weeks? Is that ten weeks and that's it?

In Axminster, there's plenty of space,

but not enough for an ambitious architect.

-And maybe build a two-bed on the side? In the time you have?

-Yes.

And in Ilkeston, a long-term goal has a magic number -

and it's not three.

-My plan is to get 23 properties.

-23?

All these properties were bought at auction.

We'll find out who bought them and how much they paid

when these homes went under the hammer.

Sold.

Welcome to Watford,

with plenty of shops and amenities,

and soon, you'll have to mind the gap.

Not the Watford Gap,

but the gap at two new London Tube stations

opening in 2016.

You don't have to wait for the new Tube station to open

to have great transport links with this property.

Just a ten-minute walk that way

and you've got Tube, train and bus stops.

This is a two-bedroom mid-terraced house

and it had a guide price of £180,000-plus.

Oh, bit of a blast from the past walking in here.

Straightaway, you can see how you can upgrade this,

and it looks like it hasn't been decorated in many, many years.

First things first, I can smell slight damp,

or is it a mustiness?

I'm not sure how long this house has been locked up, but look,

you can see down here the meters... These will need to be moved.

It looks really unsightly there.

Good news here, we do have radiators,

so gas central heating is here. Not quite sure about the fake brickwork.

Look, you could do something to modernise that there.

Carpets need changing, but a really good space.

You can imagine that this will look like once you have decorated it.

Lovely window as well, with loads of light coming in.

Second reception room. Again, a lot you could do to improve this.

Great area, nice big window, but again, I can smell the damp in here,

so I would certainly have an inspection

as to see where that smell is coming from.

And then through here, as I expected, the kitchen.

I think it looks a bit tired,

but the thing that makes me think positive here

is that the bathroom is not at the back

where you would expect it to be in a property like this.

That means it must be upstairs, so that's positive point number one.

Positive point number two,

that means there's room here for a utility.

Better still, to extend the kitchen, and this door could be replaced

by a nice set of French windows

that lead out to the very neat garden space.

Positive point number three.

So, upstairs - the bedrooms.

Now, excitingly, this is a little bit bigger than I'm used to,

and that's because the downstairs alley...

you've got this slight overhang, so it's a bit of cheeky space

that you've managed to get in a property like this,

which is great news.

And through here...a nice big bathroom. That is a luxury.

You may even at some stage want to turn that into a bedroom.

But how are we going to get independent access to both the rooms

to use the bathroom? Well, that's easy.

I have seen this done so many times before, and it works a treat.

All you have to do - flip the stairs around so you come up here,

you can then have the bedroom here

and walk along here into a little corridor into the bathroom,

and this bedroom here also leads straight into the bathroom

via a corridor.

And I think it is definitely worth doing with a property like this.

Let's get the opinion of a local estate agent.

Being local, he will know these properties well

and be aware of their strengths and weaknesses.

Parking is quite difficult round here.

The property was built in the early 1900s,

which they haven't got any parking facilities,

so it is difficult to park sometimes.

I would look to change this staircase round,

so when you go upstairs you can make a corridor leading to the bathroom,

or you could change that bathroom to a bedroom

and look to put a bathroom to the front

because, the size of the bedroom,

you could cut that into two and make a bathroom as well.

So you could get three bedrooms and a bathroom off the landing.

See? Great minds, etc.

Well, assuming it's refurbished as just a two-bedroomed house,

how much would it be worth?

My guess is much more than the £180,000 guide price.

Once the property has been refurbished,

I would expect a sale value of around £300,000,

or, if you're looking to rent it, about £1,200 per calendar month.

And is it worth the cost of making it three bedrooms?

If the property was turned into a three-bedroomed house,

I would expect a sale value of £330,000.

There's a lot going for this property -

size, location, outside space...

But there are also problems -

parking, you've got old electrics, and first on my list,

well, the configuration of that bathroom.

So who wanted to flip this property around?

Let's see what happened when it went under the hammer.

Freehold two-floor terraced house, this one.

As you see it in your catalogues.

Start this at 200, shall I? I will, thank you. 200 I'm bid. 202?

202. 204?

204. 206?

206 is here. 208?

208. 210?

Bids come from several areas of the floor

of this packed auction room

until we rejoin the bidding at 232,000.

232, he was first before you. 233, yes?

233. 234, either of you?

It's now hit 234. 235?

236?

237?

238?

239?

No? £238,000 on my left. You're all out on my right.

Yours, in the white shirt, at 238,000 at the moment for the first...

At... Where were we? Thank you, 239, I can see you. 240?

241?

242?

243?

Are you sure?

£242,000 is here on my left. It goes for the first...

For the second at 242...

Third and final time. Yours, sir, at £242,000. Your bidder number is..?

102.

The successful bidder is Lee,

who's a property investor and chartered surveyor.

So I suppose if he and his investors

can't maximise the potential of this property, no-one can.

We met at the £242,000 purchase.

-Lee, congratulations.

-Thank you very much.

So what I want to know is why did you want to buy this property

and how much research did you do?

I've known about the Watford area for quite a while,

as I've lived within the wider area for a number of years

and it's got a lot of growth potential.

I thought the property was quite cheap

and also I think the property has got a lot of value-enhancement potential.

Is that what attracted you?

I think the poor condition of the property attracted me -

knowing that if it's in a poor condition,

you should be able to improve it and the value should follow,

if you're coming off quite a low base.

How are you going to get the most and maximise this property?

We're going to turn the staircase around.

The bathroom upstairs will become a bedroom,

and we will split the front bedroom at first-floor level

into a bedroom with also a bathroom accessed from the hallway.

The bathroom is unnecessarily big, it doesn't add anything to the value,

particularly for a house of this type.

So, if we can create three bedrooms with a family bathroom upstairs,

and then the other critical thing

is to ensure you have a cloakroom downstairs

at ground-floor level for guests,

which we can also do as a result of turning around the staircase.

You've got lots of space downstairs as well, which is a huge bonus.

I don't think it's worked particularly well in the kitchen.

You've got that big area by the back door,

which I would like to incorporate into the kitchen,

or put some lovely big double doors there

so you can see out to the garden.

So the kitchen, we're going to enlarge and utilise all of that area

and put the kitchen in that whole area.

And the current back door we're going to move into the dining-room area,

and that will allow us to get a return on the kitchen.

One thing I don't want to do, and I particularly dislike,

is in kitchens where you have a galley kitchen.

So here we're going to have an L-shaped kitchen,

and where the current door is we'll put a window,

-which is where the sink will be.

-But the only thing is -

and I agree with you about galley kitchens -

to have instant access from your kitchen

directly into your garden is a really good thing.

It is a good thing and it's important,

however this is going to be a rental property

and you've got to look at the practicalities

and getting everything in whilst also creating a sense of space,

and you will be able to enter the garden from the dining area,

the principal reception room,

so I don't really foresee it as a problem.

I think, weighing it all up, that's probably the best solution.

If Lee sounds like he knows what he's talking about,

that's because he does.

He's been investing in property ever since he was at university,

when he bought his first one with a friend.

I suspect he has everything covered, even that lack of parking.

What about the negative sides of having bought this?

The parking, as an example.

The parking is an issue, but across the whole of London now

there's parking issues, particularly for new developments.

There's resident's permits outside,

so the occupier of this can obtain a permit.

In terms of if they've got friends over,

well, that's living in Greater London.

If you have a new-build property in London,

you're lucky to even get a parking permit... Parking space.

So this area is actually Hertfordshire.

Interestingly, you're calling it Greater London. Why is that?

Erm... I'm certainly not calling it a London address, definitely not.

However, it is located within the M25,

so it could be regarded as being within Greater London.

It is on the London Underground, for example.

-Excitingly, all the Tube links are coming out to here.

-Exactly.

So it's easy access into London.

Exactly, and many people who live around here

will work in central London, but it is a Hertfordshire address.

Tell me what you're going to be doing with the garden.

The garden, we'll just put some paving slabs down

and tidy it up, just so it's ready.

-Any chance you might do an extension?

-None.

-Definitely not?

-Definitely not.

-Do you feel you don't need to here?

Don't get me wrong, I'd love to,

but I don't feel spending an extra £10,000-£20,000

you'll get back on the end value.

So what's your spend? How much budget have you got?

The budget will be between £40,000 and £50,000.

OK, do you have any contingency in case you go over?

There's a couple of thousand in there as a contingency.

How long is it going to take you before the property is shipshape?

-Ten weeks.

-Ten weeks?!

Is that ten weeks and that's it - no quivering, wavering...?

-Ten weeks, easy.

-Really?

-Yes.

-So you're certainly not going to be going over that?

-No.

-And your budget is set at that level?

-Absolutely.

-Do you feel confident with this?

-Very much so.

Why do you feel so confident?

Because I've done it before, I know what things cost,

I've got a good team who I work with

and I'm very comfortable with the budget.

One thing I would say is if the budget does increase,

or if we do decide to spend extra money,

it will be because we feel that the property is improving as a result.

It won't be necessarily because of unforeseen issues.

It's been lovely meeting you today and I'm really excited to see

whether you keep to that ten-week timescale. Good luck.

Absolutely. Many thanks.

Lee certainly knows what he's doing.

He's so efficient, he's organised,

and he's got very definite ideas on his budget and timescale.

But I'm intrigued to see how he works that space upstairs.

Can he really spin it around in just ten weeks?

Join me later in the show and you can find out.

Well, I'm off to the southwest part of the UK

that is synonymous with the manufacture

of an item found in most homes.

But where exactly am I? Well, it's high time I told you.

I'm in Devon, in the market town of Axminster -

and very pretty it is, too.

But I'm not here to buy a rug or a carpet.

Nope, I'm in search of property bargains.

Locally, there's quite a choice,

from character buildings to modern family homes.

But as ever, when looking for good investment,

you have to tread carefully. So what have we got?

Well, it's an ex-local-authority property, which as you know,

I think is really good news - they're really solidly built.

This is it. It's three-bedroom, end-of-terrace,

at a guide price of £90,000-£110,000.

Let's take a look.

The thing about ex-local-authority houses

is they're generally very well built,

the rooms are a good size...

Well, this is certainly going true to form.

This room here, a double-aspect living room, really nice.

Bit of a dated old fireplace, that's not a big problem. Great.

Lots of light, lots of space...

The other thing which they generally have is lots of storage -

and sure enough, lots of storage.

Come through here...

I love this kind of layout of a house, that you can actually

almost do a circuit of the ground floor,

because you're coming into the kitchen here. Really nice.

OK, don't look at that. It will be fantastic when you've done it up.

You've got this really nice space.

You got the kitchen area there, a dining area there...

Again, it's dual-aspect.

Lots of utility areas going out that way

and then back to where we started.

How charming.

Up here, the perfectly sensible layout continues.

Nice landing area.

Bathroom there... Well, you know,

a bit like the rest of the house -

it does need some tender loving care and updating,

but at least it is up here and it's a good size.

As are the bedrooms.

There's three of those - one there, another one there.

And the thing I love about the house

is it does have this feeling of light and airiness, which is fab.

In the smallest of the bedrooms, though...

Great wallpaper!

Yes, there's a slight feeling that time has passed this house by.

Not a big problem and, actually, wallpaper aside,

this is looking rather good.

Well, another thing which ex-local-authority houses often have

is half-decent-sized gardens, and that's certainly the case here.

It needs a good few hours with a strimmer,

but apart from that, it's brill.

A lot of this area is ex-local authority

and, in this case, that does bring with it a few caveats,

because in order to try and keep some of that housing

in the hands of locals,

this particular local authority has said that whoever buys it

has to have been a resident of Devon for the past three years.

So that's a really important thing to know before you bid.

If you ever did need reminding,

you must check the legal pack before you buy at auction,

because you just never know what you might find.

Restrictions like this one

are designed to ensure that local people

can have access to affordable housing

and to protect community cohesion.

If you meet the Devonshire criteria,

this property has a lot going for it,

because you're not just getting a good-sized garden,

there is a garage and off-street parking with access at the rear.

And I think this side extension is really underutilised.

It's got electrics and plumbing already in place

and could make for a fantastic kitchen.

Or perhaps move the bathroom downstairs

and create an extra fourth bedroom upstairs.

Or even better, make it a two-storey extension.

But what can the auctioneer who sold the house tell us about it?

The beauty of the house is that it flows

and works however you want to lay it out.

You've almost got a farmhousey-type kitchen as you come in,

you've got a nice sitting room here,

there's plenty of room for sofas and chairs and a PC and so on,

and you've got good bedrooms upstairs.

Good garden, off-road parking, handy for the town

but tucked away in private... It's got everything going for it.

And the clause stays forever with this house,

which means if you want to sell it on,

you could only sell it to someone

who has lived or worked in the area for three years.

But given that, what does the agent think it would make once modernised?

I'd see it on the market at about £165,000.

The rental demand for the house just made the very best of what's here

would be in the region of £700 per calendar month.

What about if that side extension was refurbished

and the house maybe configured to make it a four-bed property?

If one simply extended this existing three-bedroomed house

and turned it into a four-bedroomed house,

you'd be looking at a value in the region of £185,000...

..and a rental value of maybe as much as £800 per calendar month.

So, encouraging numbers.

Well, pretty much as you would have hoped for -

a solid house, a nice location,

and a great family home with not that much effort.

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

We're in East Devon, just about one of the sweetest houses I've been to.

It's a good, honest, straightforward house. Big garden, handy for town...

So who's going to say 100 for us? Nice and simply, 100,000.

Scott has. 100 we've got. At 100.

102, 104...

It quickly became clear that this was a popular lot.

We rejoin the bidding at £120,000.

120. 121, do I...? 121 I've got.

The lady. 121.

122...

122...

122. What do you want to tell me?

123, OK.

124. 125, you heard the call.

125.

126, 126,500.

127, do I...?

127. 127,500. 127,500.

I'll take 128. He does, 128.

At 128 I've got, stood.

At 128. First time.

At 128, second time.

128, third and last time.

The property is sold.

Sir, yours. Well done.

And so the hammer fell at £128,000

and the new owners of this Devon delight

are bidder Craig and his partner, Cathy,

who unfortunately couldn't come along on the day.

Cathy has lived in Devon for nearly six years

and Craig has just finished

renovating a property for her in Ivybridge,

so that resident clause in the legal pack won't bother them.

-Craig, good to meet you.

-Good morning.

-Congratulations.

-Thank you.

Tell me why you wanted to buy this place.

Er, situation mainly. Axminster, close to the town centre.

East Devon, good postcode.

-And it's a good solid house for a new project.

-Project?

-Yes.

Tell me about that.

Well, hopefully... It's only minor changes we want to do.

There'll be... The bathroom upstairs will be reorganised.

The chimney breast is going to come out

all the way up through the bedrooms to square the bedrooms off upstairs.

Then the kitchen's going to flip over onto this side

-and this will be the dining room area there.

-Right.

We'll probably brick one of the doorways, this doorway up,

round the back, to stop the merry-go-round from the lounge.

And then maybe build a two-bed on the side.

-And maybe build a two-bed on the side?!

-Yes.

-Right.

-An entire new house?

-Yes.

They'll be tagged onto the side of this,

so this will become the mid-terrace and then there'll be one on the side.

Crikey! I didn't see that coming.

Not just a full refurbishment or re-vamped extension,

but a complete new-build of a two-bed house,

provided, of course, the plan is agreed.

But with an existing structure in place,

albeit in the form of a single-storey extension,

and potential road access and parking,

Craig has a reasonable chance of success.

Talk about maximising your investment!

-Is this something you do?

-Er, yes.

-I've been trained in interior architecture and design.

-Oh.

-So I know a little bit about it.

-Sure.

And I also come from the construction industry as well, so...

-hands-on as well.

-That sounds like an ideal combination.

Are you doing this as a business? Is this your main job now, then?

Semi-main job. I still do other work as well.

Design work and that, for other people, and then this fills in.

Right. And what's the timescale then, do you think?

-Six to 12 months, I presume.

-OK. So, let's talk through budgets then.

-Just doing up the house as it stands...?

-Yes.

-I think it should be about 10,000 to 12,000.

-OK.

-And...

Not really worked out the house yet,

-but something in the region of 70, I presume.

-Right.

And do you have any idea of the value when it was finished,

if it was a £70,000 build?

Well, these properties are going on the market for 180,000.

-180?

-Yes.

-Right.

-When they're spruced up.

-Right.

So it'll be a little bit less,

because it will become a mid-terrace, I presume,

and then it'll be low hundreds, I presume,

for that one there, next door.

Wow. So potentially loads of money in this.

Yes. Hopefully! THEY LAUGH

-Well, congratulations.

-Thank you.

-Sounds a very interesting project.

-Hopefully so. Should keep me busy for a while.

-Yeah. Good luck with it.

Thank you.

Well, Craig coming up with an idea that I hadn't even considered.

Literally knocking that down and building another house in its place.

Suddenly, this has gone from potential profit

to potential big profit,

but it all relies on that all-important planning permission.

Will he get it? You can find out later in the show.

Coming up, I'm reshaping rooms in Ilkeston.

And suddenly, you've got a really nice, still three-bedroomed

but bathroom-upstairs property.

Result!

And Craig needs all his skills and patience in Axminster.

We originally tried for a three-bedroom house

but, unfortunately, they were not very keen on that.

We're back now to the home

of Elton John's favourite football team, Watford.

This two-bedroom terraced house showed real promise,

but it had been left more than a little sad and neglected,

with dreadful, dated decor,

and a frankly frightful first-floor layout.

OK, there's two bedrooms,

but you'd have to walk through one of them

to get to what is a massively oversized bathroom.

Not a good use of space.

# And I guess that's why they call it the blues

# Time on my hands

# Could be time spent with you

# And I guess that's why they call it the blues... #

But don't despair!

Enter Lee, chartered surveyor, property developer,

and all-round confident guy,

who bought the property for £242,000 at auction,

and was here to sort it all out.

So how long is it going to take you before the property's shipshape?

-Ten weeks.

-Ten weeks?! Is that ten weeks and that's it?

-No quivering, wavering - ten weeks to the dot?

-Ten weeks, easy.

-Ten weeks.

-Really?

-Yes.

-Do you feel confident with this?

-Very much so.

-Why do you feel so confident?

-Because I've done it before,

I know what things cost, I've got a good team who I work with,

and I'm very comfortable with the budget.

MUSIC: It Never Will Go Wrong by Jona Lewie

# It never will go wrong

# It never will go wrong

# It never will go wrong. #

Lee knew what he wanted from the property,

and with a budget of 40,000-50,000, he was confident he could get it.

So exactly ten weeks later,

we returned to see if Lee was correct to be so confident.

MUSIC: Hate To Say I Told You So by The Hives

Well, Lee said it would take ten weeks,

and it's looking pretty good to me.

# Hate to say I told you so All right. #

Right, before we take a closer look -

Lee, on your marks, get set, go!

Er, well, where to start? We...have gutted the house.

We have replastered throughout, we have re-plumbed throughout.

We've put in a new bathroom upstairs and changed its location.

We've re-wired. We have opened up the kitchen.

We've put in a cloakroom at ground-floor level.

We have repaired the bay roof above the front bay window.

We had full timber and damp survey done.

We have paved the garden and turfed the garden.

We have redecorated throughout.

Wow! I hope you got all that,

because we will be asking questions later.

Was that everything?

And also turned the staircase around to facilitate the upstairs layout.

Of course that wasn't everything!

As you've probably gathered by now,

Lee's pretty much overhauled the whole house.

The lounge has been redecorated, as has the living area behind.

Here, Lee's added glass doors

that lead out onto the newly tided garden.

MUSIC: Smooth Operator by Sade

A new kitchen's been fitted, along with a ground-floor loo.

That's not even the big change! Let's go upstairs.

Through turning the staircase around,

we have allowed ourselves to create a hallway upstairs.

The middle bedroom has remained as it is.

The rear room at the back previously used to be the bathroom,

but it has now become the third bedroom.

The front bedroom, which was previously very large,

has now been divided slightly to create a small bathroom

on the right-hand side, with a bedroom -

still a good-sized double - on the left.

We have also created an airing cupboard on the hallway

to house the washing machine and dryer.

# Smooth operator

# Smooth operator... #

Lee's making this look easy.

By moving the stairs and creating a landing,

Lee's not only solved the access problem,

but added an extra bedroom as well.

And he's done all this

while sticking to his schedule of ten weeks.

Impressive!

But did he stick to his budget of 40,000-50,000?

The budget has come within that.

We're just a tad over 40,000.

So, Lee spent £40,000 on the development,

along with the £242,000 he bought the property for at auction.

But will that add up to be a nice profit?

We asked along two local estate agents

to give us their opinion.

Er, well, I thought the quality of the refurb was really good.

Going upstairs, it's a rarity

to have three double bedrooms in these style of houses.

Because it's over the alleyway,

you get a little bit more space upstairs, which is a real benefit.

He's made massive changes to the property.

Originally it was a two-bedroom, now he's turned it into a three-bedroom

with a bathroom upstairs as well. They're good-sized rooms.

It's all modern, all brand-new.

And the rental market is definitely going to be

looking for a property like this.

Lee's hoping to rent the property,

but having spent £282,000 in total on the development,

what could he expect if he were to put it up for sale?

I would probably quote between £335,000 to £345,000

to achieve very close to the asking price.

I would place this property on the market for £335,000.

A sale of 335,000 would give a Lee a profit of £53,000,

minus the usual taxes and expenses.

Now, what about that all-important rental valuation?

If you were looking to rent the property,

I would imagine a figure of £1,400 per calendar month.

I would ask £1,400 per calendar month.

£1,400 per calendar month would give Lee a 5.9% yield.

I think they're in the right region.

I marketed the property myself for £1,350.

I have agreed to let it to three young professional sharers at £1,350.

Perhaps I could have got a little bit more,

but I'm happy to have found the right tenant, so I'm pleased.

Lee has turned out a very good-quality home

and has had no problems getting good tenants.

Right from the beginning, he was confident about this project.

So, apart from being professional, having vision,

and having very good ideas,

what is the secret of his success?

I think as long as you have...

You're organised, you've researched your market

and you're prepared, then give it a go.

Welcome to Ilkeston in Derbyshire.

In its heyday, this town was booming,

with Stanton Ironworks employing, at its height, around 7,000 people.

These days, Ilkeston opts for lighter industries

and is a popular choice for commuters

working in Derby and Nottingham.

Well, in this pleasant, tree-lined street,

not far from the town centre, is the property I'm here to see.

Three-bedroomed mid-terrace.

Guide price at £55,000.

Let's take a look.

# Pink It's the colour of passion. #

I quite like the colour. Rather welcoming,

as are some of the unusual features.

But it seems that the previous tenant wasn't so welcoming.

But already, just coming through the door, I'm tickled pink.

Well, nice, bright entrance corridor - we like that -

and a few original features, which is good news.

Then into this room here.

Erm, my guess is this was originally two rooms -

a front sitting room and a rear sitting room,

that have been knocked through into one.

Whether or not you like that is down to personal choice.

I actually quite like the feeling of openness it gives.

Can't work out what that is.

I mean, it throws a bit more light into this room.

But for a start, it's wonky.

So, not ideal, but you've got the nice bay window there,

a nice fireplace too. Er...

Not quite as nice, this one. But overall, it's a good-sized room.

Heading back into the property - kitchen,

in need of some work in here, as you can see.

But that's not bad, that's actually good news.

You can add value by doing a really nice kitchen in here.

Something a bit more serious - through there,

the only bathroom and loo in the property.

Now, clearly moving that is going to be a bit of a priority.

Where it's going to go, I don't know yet.

# Yeah Put it where you want it

# Put it where you want it

# Put it where you want it. #

So upstairs on my quest for somewhere to put that bathroom.

What have we got? A back bedroom there. It's not a bad size.

Middle bedroom here. Ooh, love the fireplace. Absolutely gorgeous.

Quite interesting colour choice in that room!

Down this little corridor, big front bedroom.

So, right, what are we going to do? It's come to me.

I reckon you've got enough space in this room,

starting at this wall here, and in that bedroom

a similar amount of space, to build a few sub-partition walls -

a bathroom.

Have your door here so you can get access to it,

obviously off the landing.

You wouldn't lose too much space for the two bedrooms.

You've solved that problem downstairs.

That can become your utility room and, suddenly, you've got

a really nice, still three-bedroomed but bathroom-upstairs property.

Result!

# Oh, what a result

# Top of the league

# On a winning streak. #

And if you thought there was plenty of space inside,

there's plenty outside too.

Well, with a property like this,

you might not expect too much space out the back.

Maybe just a little yard. But now we're here, really good news -

a nice-sized garden.

And it looks a bit dilapidated, but you've even got a shed.

Brilliant.

Well, I don't think the buyer of this place

is going to "shed" any tears. There are so many positives here.

Lots of features, like the fireplaces.

There's plenty of "hooks" for this property.

I think this has a lot of potential.

Let's see what a local estate agent thinks of the property,

which was guided at £55,000.

Upon inspecting the property, I think it's a very good size.

I was actually impressed, looking from the street

to going inside - it's actually bigger than what I expected.

The property just needs general modernisation throughout.

It would benefit from having a new kitchen and bathroom.

The size and layout are definitely good points about this property.

It's great that you've got an entrance hall,

rather than going straight into the lounge,

and also you've got your two reception rooms.

Once renovated, I think the property could be marketed

anywhere within the region of £95,000-£100,000.

If the property was modernised, I think you could rent it out

for in the region of £450-£500 per calendar month.

Well, a good opportunity, this one.

For anything like the guide price, I think there's money to be made.

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

Three-bedroomed accommodation,

with a bay window.

It's passaged downstairs, gas centrally heated,

mostly double-glazed.

Start me on this one at 55. On the guide price. 55? 55? 52?

52,000 for it?

Who's got 50 to start me? It's worth all of that. 50,000 in two places.

51. At 51. 52. 53.

54. 55. 56.

57. 58. 59. 60,000.

61. 62. 500?

62,500. 63,000.

63, it's in the market. 63,500?

63,500, got you. 63,500. 64. 64 is bid. 64 and a half.

At 64 and a half, that side. 65 anywhere else?

At £64,500, for the first time.

For the second time. Third opportunity. All done with it?

Sold at 64 and a half. 245.

The successful bid of £64,500 was made by Nicola.

We met her at the purchase

to talk about her plans for this three-bed house.

-Nicola, great to meet you.

-Nice to meet you too.

-Congratulations.

-Thank you.

-Tell me why you wanted to buy the house.

-Erm, as a property investment.

-OK.

-To do up and to rent out.

That's the plan.

-Is this what you do?

-It is, yeah.

I gave up IT in September.

I was in IT for 26 years.

And I'm now doing property development.

-How's it gone?

-Er, OK.

-A bit scary. I've got four properties.

-Ooh!

Another one going through. So two of them are renting out.

This one is a big project, this is my biggest project.

The last one I bought just needed decorating.

So I've nearly finished that.

Probably another week or so to do that one

and then, with this one, it needs an awful lot doing to it.

But, yeah, I'm looking forward to it.

26 years in IT and then you wake up one morning and think,

"I've had enough of this." Is that what happened, or what?

Yeah. I'd been thinking about it for a couple of years.

I had somebody who was in estate agency for a while,

and she sort of started mentoring me so...

-She's given me some great advice.

-Oh, good!

So haven't had to do all the due diligence, albeit I should,

but she's been telling me which places to avoid

and where to buy and how much to offer, so I've had that help.

So, yeah, it's worked out well.

What's the big attractions

of becoming your own property developer?

Erm, just my own boss, really.

I can get up, I don't have to travel round the country selling IT.

I can just get up when I want, I can go swimming.

I've got quite a relaxing day, albeit with this property

I've probably got a few months' hard work ahead of me.

Yeah, it's being my own boss, really.

# Oh The best job ever forever

# We've got the best job ever. #

I agree with Nicola.

Property is a great job if you want to be your own boss.

But it does come with a lot of hard work and some sleepless nights.

Although she's just starting out, Nicola and her partner Andrew

hope this will help them build a retirement fund.

She already has a target in mind

when it comes to the number of properties she wants to own.

-My plan is to get 23 properties.

-23?

-Yeah.

I know it's a weird number, but that's what we've worked it out as.

That we can both retire on 23 properties and be financially free.

-Is that 23 rental properties?

-Er, yeah, potentially.

I mean, the plan is to do this up and rent it out,

but it may mean that we do end up selling it. It just depends.

But, yeah, that's the plan - to have 23 rental properties.

This is Nicola's biggest project so far,

and she knows she's got a damp-proof course to sort

and joists in the dining room that need replacing.

So what else does she plan to do?

It needs all new carpets throughout, decorating.

I'm potentially going to make these back into two rooms,

the living room and dining room, and put the doorway through there.

-Bathroom's going to go upstairs.

-Oh, good.

But I'm not going to take out one of the bedrooms.

Potentially, it might go in the front room or in the side room.

I'm just not sure yet. And then new kitchen and...

yeah, it just needs decorating throughout, really.

Some nice features, so...

I like that sort of thing.

I like the restoration side of things as well,

so some of the features around here as well are nice.

-What about outside?

-Erm...

I'm not sure about the colour of the building.

But it's probably going to be too painful to take that off.

So probably not too much, but... It's nice.

Outside, the back, it's all enclosed.

It's a nice garden, it just needs tidying up, really.

So probably not too much outside, concentrating on the inside.

-What's the budget?

-OK.

-Erm, I've got about 15,000 budgeted.

-OK.

So I'm hoping I've got a bit of contingency in there as well. So...

And how much of the work are you going to do yourself?

Erm, I'm going to do a lot of the...

Well, I'm going to do all of the decorating. I can do tiling and...

-Oh, great.

-Lay floor, if I have to.

Getting my hands dirty, it basically brings down the cost,

and it's my job now so I'll be here every day, so...

Until it's finished, which is hopefully going to be three months.

And you've been going for six months now.

What's the biggest thing you've learnt in that time?

It's hard work. I've lost weight.

I didn't have a lot of weight to lose,

but I've definitely lost weight going up and down ladders and...

things like that. So that's good. That's a really good thing.

It's start-up costs and things like that

that you've got to take into account.

I do keep fretting about it working,

and I keep getting reassured that it will work.

-Well, listen, congratulations. Good luck with it.

-Thank you.

-We look forward to seeing how you get on.

-Thank you very much.

So, Nicola well on her way to her 23-property goal.

Sounds like she knows exactly what she's going to do here,

and I'm delighted she's going to move the bathroom upstairs,

although it'll be interesting to see how it turns out.

You can find out later in the show.

So, Martin, we've seen how one of the properties has panned out

on today's show. What about the others?

Yes, let's find out how the other two purchasers

got on with their properties.

We return now to Axminster in Devon,

where I was rather taken by this former local-authority house.

However, it did come with a restriction

which could have caught out any unwary buyer.

The legal pack revealed a covenant

ruling that only people who had lived and worked in the area

for a minimum of three years could ever buy it.

However, this was no problem for Craig and his partner Cathy,

who fulfil the criteria as she has lived in Devon for several years.

They bought the three-bed house for £128,000

and it looked like a pretty straightforward renovation job -

at first...

-It's a good solid house for a new project.

-Project? Tell me about that.

Well, hopefully... It's only minor changes we want to do. There'll be...

The bathroom upstairs will be reorganised and, down here,

we're probably going to take the chimneys out down here

and into the bedrooms.

And also swap the kitchen round into this back area.

And then maybe build a two-bed on the side.

-And maybe build a two-bed on the side?

-Yes.

-Right.

-An entire new house?

-Yes.

-Which would be a separate build...

It would be tagged on to the side of this,

so this would become the mid-terrace and then there'll be one on the side.

Wow. An unexpected and ambitious plan.

Just what we love on Homes Under The Hammer.

Craig is not only a builder, he's also a trained architect,

so his timescale of six to 12 months seemed possible.

So, did he manage to pull off his ambitious plan?

# It takes two, baby

# It takes two, baby

# To make our dream come true. #

16 months later, and it's not quite there just yet.

We had some properties we had to sell, which we sold nine months ago.

Then there's been a slight delay on the planning issue,

and the main delay's been through having to have a sewer diversion.

It originally ran across where the new property is going to go,

so we've had to have a sewer diversion

to divert it around the property.

That was initiated about five months ago

and was only just completed about a month ago.

And since then, we've managed to get the slabbing

and get the frame nearly watertight.

Originally tried for a three-bedroom house,

we wanted it to come a further metre out at the back.

But, unfortunately, they were not very keen on that,

so we compromised and went for the two-bed.

This is the downstairs of the new build.

It is going to be basically open-plan.

There's got to be a toilet going underneath the staircase there,

and the kitchen area's going to be across and round the back there.

And then this is just general living area.

Upstairs will be the two bedrooms and a small bathroom.

And considering this whole extra house is an added bonus,

I'm impressed to see how well this is taking shape.

But progress on renovating the original house

hasn't been quite as dynamic.

Right, well, this is the kitchen/dining area.

We've taken all...

There was a big chimney breast

and all the water cylinders and everything

and a back boiler in that corner.

The window behind you has been changed

to a window-and-door combination.

We've bricked up the doorway to the lounge

and we're going to move the kitchen area back down to here.

And that's going to span round the corner here,

which should make a lovely kitchen/dining area.

I think this is a really promising project.

So what will two local property experts make of it?

First, let's have some expert information about that covenant

on former local-authority houses

and if it will have any impact on the values.

It started in the '80s when they started selling the council houses,

and that was to keep them so they were affordable to the local area.

The property that's being built adjacent to this,

the new build, that will also have the restriction as well.

I've always found that not to be an issue in any way, shape or form

as to what you can get for the house eventually,

because the likelihood is it's going to be someone from Devon anyway.

That has a little bit of effect on the price,

purely because it limits your market to local people.

And also there's some companies, some of the mortgage companies,

that are a little bit limited in lending towards those,

but there are companies out there that will do it.

What do they think of the changes that the couple have in mind?

They've changed the accommodation downstairs

with swapping the kitchen and the dining area around,

which I think is nice

because we've got the kitchen overlooking the garden.

If you've got a family that are coming in,

Mum often likes to be in the kitchen and doing things

and she can look out over the garden,

rather than looking out of the front of the property.

Erm, they're going to put a new bathroom suite in.

Neutral, simple, you know,

nothing too extravagant for the type of property that you've got.

And same again with next door and, from what they're explaining,

that's the sort of thing they're going to do.

Sounds like Craig is doing all the right things.

But does that translate into profit?

The property was bought at auction for 128,000

and Craig reckons it will take 15,000 to finish the original house

and another 60,000 to do the new build,

bringing his total expenditure to 203,000.

What do the agents think the houses could sell for?

When the original, the mother house, is in apple-pie order,

I'd expect to see that on the market for £160,000.

I think, because you're going to make it from a semidetached

or an end-of-terrace to a mid-terrace now,

I think you'd be looking somewhere in the region of £150,000-£155,000.

Yes, that's a little bit better than we expected. Yes, that will do fine.

No wonder Craig is happy.

Those valuations would net Craig and Cathy a profit of £17,000.

And what about that added bonus -

the new house that's going to be next door?

When the new house is a fully functional and lovely home,

I could see it on the market at £145,000.

We'd value the new build at somewhere between £140,000 and £145,000.

So, taking those top estimates for both houses,

that's a profit of just over £100,000 before tax and fees.

Oh, OK. That's a little bit more on the new build, but, um...

And about what I expected on this, so... Yes, that will be all right.

# It all adds up... #

The agents thought that the rental yield of the new property

would be around 13%. Pretty good!

So does this herald a change of direction for Craig?

Up till now, I've always done renovation works,

so this is my first attempt at new build,

and it seems to be going quite well at the moment

so I might try it again.

Let's change track and return to Ilkeston near Nottingham,

once home to the proud Stanton Ironworks.

But now the trains carry commuters, not coal.

We met Nicola, who bought this three-bed terrace for 64,500,

and property was quite a career change for her.

26 years in IT.

Then you wake up one morning and think,

"I've had enough of this." Is that what happened or what?

Er, yeah. I'd been thinking about it for a couple of years.

I had somebody who was in estate agency for a while

and she sort of started mentoring me. So she's given me some great advice.

-Oh, good.

-I haven't had to do all the due diligence, albeit I should,

but she's been telling me which places to avoid

and where to buy and how much to offer, so I've had that help.

Yeah, it's worked out well.

Advice is always essential,

and that knowledge saw Nicola get a property filled with character,

but problems, like a downstairs loo.

But I had a handy idea of how to fix that.

Have your door here so you can get access to it,

obviously, off the landing.

You wouldn't lose too much space from the two bedrooms,

you've solved that problem downstairs,

that can become a utility room

and suddenly you've got a really nice,

still three-bedroomed but bathroom-upstairs property.

Result!

Nicola hoped she and her partner Andrew would retire

courtesy of her portfolio,

and was very specific about her property target.

-My plan is to get 23 properties.

-23?

-Yeah.

I know it's a weird number, but that's what we've worked it out as,

-that we can both retire on 23 properties.

-Oh, right.

And be financially free.

She set herself a three-month timescale,

and four months later we're back for a look.

The house is still a rosy hue, but is the inside in the pink too?

What a brilliant renovation.

Light, bright and a delight! Hold on...

That old bathroom is now a smart new utility room.

Nicola has been as good as her word

and has moved the bathroom to exactly where it should be -

upstairs.

By dividing the master bedroom, she's kept three bedrooms

even though she used the smallest one for the bathroom.

Result!

This is the bathroom. Basically, we managed to bring it upstairs.

Keep the original feature.

And, yeah, it was trickier than I thought it was going to be,

but, yeah, managed to get it in and it looks great.

She's kept original features in the rest of the house too,

but not the original layout.

What was a single living room/dining room has now been restored

to two separate rooms.

I was advised by a couple of people at an estate agent,

that it was probably advisable to make it back into two rooms,

albeit I know open-plan sells.

I think because it is such a big house

and it's got some big spaces,

it would make it more workable to have two separate rooms,

dining and lounge.

Somebody else said, "You can shut your kids in one room

"and go in the other room." So, yeah, I took that advice,

and I think it works. It works well.

When I bought the house, it was in quite a bad state,

so it needed gutting.

I've decorated throughout, taken all the woodchip off the walls,

which was a nightmare. Basically put a new kitchen in downstairs.

Where I wanted to put the bathroom

wasn't actually the place it ended up.

The joists in the flooring upstairs,

I was hoping they were going to go one way

and, when I discovered that they were going the other way,

I had to get all the pipe work changed upstairs as well.

Restored the fireplaces, because they needed a little bit of TLC,

and carpeted upstairs and laminated downstairs.

Nicola had set herself a budget of £15,000 on this,

her biggest project so far.

So did she stick to that?

I actually did come in bang on budget.

I've spent £15,000, which I'm really pleased about.

I cleared a lot of the house myself

and took up all the old flooring, got out the old bathroom downstairs.

Erm, I haven't done any of the skilled work myself.

I had a really good team of people.

I needed a lot of help, it being my first project,

and, yeah, I got that.

Nicola's hard work and that added help

mean she's finished in three months, bang on time.

And now it's time to see what two local property experts

think of the new layout - and it's the auctioneer that sold it

and the agent who saw it when we first visited.

I think the new layout of the property is great.

I really like how they've added the utility room off the kitchen,

and they've managed to get the bathroom upstairs

whilst maintaining three bedrooms.

It's very interesting, isn't it?

Because 30 years ago, two rooms became one -

in the current age, one room now becomes two,

so you've put it back to how it was when it was built.

It's lot more family-friendly.

Paying £64,500 at auction,

plus her renovation of 15,000,

means her total investment is 79,500.

If this was being put on the market for sale,

I suppose the asking price would probably be about 99,950,

just short of 100,000.

I would expect to achieve about mid-90s, 94, 95,

maybe £96,000 for it.

If it was placed on the open market for sale,

we'd recommend an asking price between £95,000 and £100,000.

So a top valuation of £100,000

would give Nicola a pre-tax profit of £20,500.

What does she make of that?

Those figures sound really good.

I was thinking 95,000-100,000 anyway, so spot-on.

Spot-on, but maybe not much use,

as Nicola planned to add this to her rental portfolio.

So, what can she expect for lettings?

If the property was to go on the rental market,

we'd recommend an asking price of £500-£525 per calendar month.

If this went on the rental market,

it would achieve about £500 per calendar month.

And average valuation of £500 per calendar month

gives Nicola a yield of 7.5%.

Is that a PAWS-itive number, or a cat amongst the pigeons?

I think those rental figures are pretty low.

I've manage to get somebody to rent, albeit subject to contract,

for 575 per calendar month.

MUSIC: Feels Like The First Time by Foreigner

# It feels like the first time... #

Although she has already got three let properties,

this was Nicola's first major renovation job,

and I think she's done really well.

If she gets that £575,

her yield will be over 8.5%.

It looks like property number 23 will happen some day.

Is she happy with how it's all gone?

Hopefully, if a family can move in and make a home here, it's lovely.

It's huge, and for the price I bought for it

and what I've spent on it, I've made a good profit and I'm really happy.

Well, as you've just seen, investing in property

can be a bit of a learning curve.

But don't worry, we'll be back next time

with more hints and tips for you.

-Look forward to seeing you then, on Homes Under The Hammer.

-Goodbye for now.

-Goodbye.