Episode 74 Homes Under the Hammer

Hello, and welcome to the show.

Property developing can be very rewarding.

Both for the satisfaction of doing up the property

-and, of course, for investment purposes.

-But it's not always straightforward,

so it's best to expect the unexpected.

And one way to gauge your local market is to get down to your local property auction.

The world of property is a fast moving environment

and as Martin and I know, you've got to know what you're doing.

Yes, so let's see what today's buyers bought.

We start in London today, where a developer hopes he's got the perfect plot for making a profit.

Property values in this area might possibly go up as much as 40%.

From the capital city to the beautiful beaches of Devon.

But what do you really wish for in a flat at the seaside?

A view of the sea.

But the views inside this property in County Down aren't quite so picturesque.

Ah.

All these properties have been sold at auction -

we'll find out who bought them and what they paid for them when they went under the hammer.

This is Abbey Wood in south-east London, close to the Kent border.

Near to the banks of the River Thames,

the area was once mainly farmland and fields.

Although now you're much more likely to come across commuters than cows,

with decent train links that are due to get even better

with the arrival of Crossrail in 2018,

predicting journey times from Abbey Wood to Bond Street of just 25 minutes.

# Take the "A" Train Take the "A" Train... #

Everyone wants to live close to the train station

to whittle down that daily commute.

So, around an eight-minute stroll is ideal.

An actual house to live in? Well, that would also be good,

because the lot I'm here to see is this...a plot of land.

Now, luckily it had planning permission for two homes

and a guide price of £110,000.

The land at one stage used to be a large garden

and has more recently been used as parking.

It's a lovely quiet road in a residential area,

so I'm not surprised planning was passed for two detached houses.

I can't wait to take a look at these drawings for the site.

# So take a look at me now

# There's just an empty space... #

Well, they're very interesting. The designs are for two three-bedroomed houses.

They're very square and boxy from the outside, but quite minimalist

and a nice change from your standard red brick, pitched roof affair.

Now, you've got your front door to the side here,

which frees up the rest of the space for living.

Into the hall, you've got storage and a shower room,

then a kitchen and dining area.

Then, what I absolutely love is this partitioned shelving area

which separates the space, but just maintains the flow downstairs.

You've got a living room at the back out onto a patio, which is fab. I love it.

Upstairs, we've got a double bedroom, twin and single,

which still looks generous, and then you've got a family bathroom.

It's a shame there's no en suite, but it's probably more important to have these built-in cupboards.

Overall, it's practical, modern and really rather nice plans.

I feel like someone's taken care with the design here

and really thought about how a modern family would actually like to live.

And two houses on this site doesn't feel like overkill.

It's an odd shape, slightly tapering off at one end,

but I think it's easily big enough for these two properties.

But there's more to these plans than meets the eye.

Ho-ho, yes. These are designs with a conscience.

Now, you've got a solar thermal panel on each roof,

which is used to warm your water.

Then, there's the sedum roof,

which is basically a living, green, flowering roof.

Which is great for insulation, noise reduction

and it stops water cascading down after heavy rain.

But what I love most are the PV panels,

which are essentially solar panels, but if you generate more electricity than you can use,

you can sell it back to the grid and make money.

Ecofriendly and profitable, which is fantastic.

# It's not easy being green... #

It's great to see that new builds are embracing the green way of living,

but is there any cash to be made?

We asked along a local estate agent to see what he thought.

I think the plan's good. Downstairs we've got open-plan living space,

which is ever more popular in recent years.

We've got a downstairs shower room, which is very important.

People don't want guests going up to the top floor to the bedrooms.

Upstairs there's three good-sized bedrooms and a family bathroom.

Storage, as well, has been accommodated in them.

But is a new build development right for the Abbey Wood area?

New builds do sell very quickly - there's high interest in them.

We've just sold one two roads down from here,

which went within a matter of weeks.

OK, let's talk money. The site alone was guided at £110,000

and build costs are likely to be around £200,000 for the two houses.

So, that's at least a £310,000 investment.

So, what kind of profit would we be looking at here?

Once built, I think these properties are going to achieve between £315,000 up to £325,000.

Oh, so that could be a great two-for-one offer,

with one house covering costs

while the other could potentially be a straight profit of over 300 grand.

I like these designs and the site seems really rather nice and straightforward.

Famous last words.

But still, bought at the right price there is certainly profit in it -

let's see what the price was at the auction.

Right, lot 14 is a well located site,

approximately about 5,000 square feet.

You've got planning for two three-bedroomed dwellings.

Who'd like to kick off on this? I don't know, £70,000?

£70,000 on my right. 75 anywhere?

75 with you. 80? 80.

85? 90.

Maybe not surprisingly, there was a lot of interest in the building plot

and we rejoin the bidding at 190,000.

190.

195. 200.

205?

201?

Might just do it, yeah? 201. 202.

203 elsewhere?

202, first time.

Second time.

Third and last time - have we all done?

Sold, 202.

Well, that £110,000 guide price went completely out of the window

and the successful bidder at 202,000 was Pram.

Now, Pram has been an IT consultant for 25 years

and this is his first foray into the world of property developing.

And what a start.

# Start. #

I met him back at the site with his architect, Paul,

who will be overseeing the build with him.

-So, congratulations, guys. Pram, you were successful on auction day. Well done.

-Thank you.

-You've got the site. Now, I know it comes with planning permission...

-That's right.

..with plans already drawn up of two really nice looking houses.

-Are you going with those?

-Yes, we are.

We've decided that we're actually going to construct the houses,

go for a really nice design

and, hopefully, within the next six to seven months, the houses will be built.

So, Paul, what part are you going to play within this development?

I have an architectural background, but I'm working for the contractor.

And I've taken the brief from Pram to improve various aspects of the design,

which is fundamentally sound already.

But we're going to improve on things like the green roof,

the photovoltaic cells and make the building even more energy-efficient.

You see, I absolutely love the plans. Looking at them they seem very practical.

I love the space, I love the flow of the property.

How are you going to tweak them and how you going to make them better?

Good space standards, you're right. But there's aspects of connectivity with the garden.

So, Pram's asked, could I improve that?

And we've decided there's going to be a folding opening screen at one end,

instead of a window and a couple of French doors.

So, there'll be really good connectivity into the garden. Lots of light flooding into the property.

Into the ground floor, in particular. And good access into the garden so you can enjoy the patio.

We're just going to tweak it to add that little bit extra kerb appeal

-to give Pram a better margin on the profit.

-That's right, yes.

So, one of the ideas is to actually...

We've got two double bedrooms and a single one.

So, we actually want to try and increase the floor space slightly

on the top floor,

so that we can make it three doubles, instead of a single.

So, how much are they going to cost to build?

The build costs are going to be approximately £105,000 per house.

-So, that's 210,000 for both.

-That's right.

And on top of that we've allowed a 10% contingency.

I mean, you never know - by the end of the build, property values may be rising still.

Well, with the Crossrail coming here - and this is the end of the line for the Crossrail -

it's been predicted that property values in this area might possibly go up as much as 40%.

40% more? Crikey. This site just doesn't stop giving.

It really looks like a sure-fire winner.

But where property is concerned - and particularly new builds -

well, you never really know until it's built and then sold.

So, Pram, are you going to be on site every day driving this project?

Um, I won't be here every day. Paul will be taking quite a lot of the responsibility

with the building contractor, as well.

But I will be receiving weekly reports via e-mail

and photographs and I possibly will be coming down at least once a week

to have a look at the progress.

So, Paul, it's all up to you. It rests on your shoulders.

-Well, let's see in seven months.

-Whoa. So, how do you feel about that?

I mean, how well do you know the contractor?

I'm invigorated. I've known the contractor for five years now -

we've been friends and now I'm actually working with him.

Really looking forward to the project. We've got a great relationship.

As far as I'm concerned, we are a great team.

I love your positivity, but I love the design, as well.

I can't wait to see what they look like.

Guys, good luck with this project. It's going to be really exciting for us to see the outcome of them.

-Congratulations.

-Thank you, Lucy.

-Thank you.

Well, Pram has a fabulous site here

and perhaps an even better investment than he first thought.

And the houses themselves? Well, I think they might be really rather interesting.

You can find out if they are later in the show.

I'm in the charming East Devon coastal town of Budleigh Salterton.

Only 12 miles from Exeter and yet a world away from...

Well, anything vaguely stressful, really. I could spend hours here.

Luckily, this is the place that the auction property is situated.

Let's go and take a look.

And what a place it is!

Budleigh Salterton is one of the most desirable coastal towns.

It's situated on the western end of what is known as the Jurassic Coast,

England's first natural World Heritage site,

sitting alongside the likes of the Grand Canyon

and the Great Barrier Reef with good reason.

It is spectacular.

# Come with me

# To the sea... #

Well, just a short walk from the seafront

and 100 yards from the town centre is the property I'm here to see.

It's a two-bedroom flat in this purpose-built block.

Guide price was £155,000.

Described in the auction catalogue as being spacious, so that's a really good start.

Let's hope it lives up to expectations.

From the outside, the building looks in good nick

and I love the look of that balcony.

A well-kept communal stairway is a plus.

Ooh! Well, it's certainly a really nice start.

Lots of space in this large hallway.

Lots of light coming in from the kitchen there, through this glass wall.

Although...

I'm not a fan of glass being used like this.

It's too easy to break and it makes it a real safety hazard.

So, either replace that with safety glass or get rid of it altogether.

Kitchen itself, again really light and airy. There some lovely views out the windows

across to the hills over there.

And it doesn't look like it's bang up to date, but it's a pretty decent condition.

Lots of storage, which you don't always get in flats, so that's nice.

Two bedrooms - they seem to be a really nice size.

And a real additional bonus, a loo and a separate shower room with its own loo.

So, that's fantastic. And then through into, er...

Well, I suppose your main living area.

And, again, what a great feeling this place has.

It's only a two-bedroom flat, but it immediately feels so, so nice.

Ah. At last, a negative. Not that I'm searching for negatives,

but it's nice to show a bit of balance.

Storage heaters or electric heaters.

And that clearly means there isn't central heating.

That's probably something you want to put right.

And it's just a case of, "where is the gas?" if that's what you want to go with to connect into it.

But all in all... lots of ticks on this one.

# Everything is awesome

# When we're living our dream. #

This place has everything you could want.

You know I'm a fan of a separate WC and bathroom.

Bedrooms are a great size, too. Particularly if you remove the built in wardrobes.

And, as if that wasn't enough, a door from the lounge

gives you a south-facing balcony, so you can soak up the rays.

This place seems perfect.

Well, what do you really wish for in a flat at the seaside?

A view of the sea. And from this window, you get it.

Now, that's nice, beautiful.

It also makes this flat even more desirable.

# You're just too good to be true

# Can't take my eyes off you. #

I can't get over these stunning views,

especially on such a lovely sunny day.

And outside has another pleasant surprise.

Well, parking outside the front of the flat is a little bit snug.

But, joy of joys, no problem at all because the flat comes with yet another bonus...

its own garage.

So, a balcony, garage and sea views - this place seems ideal.

And guided at £155,000 plus,

it could also be a bargain for the area,

as a local property expert can explain.

Property prices in Budleigh Salterton can be very high.

Certainly, there are properties on the market in and around the area

for £2 million, and a little bit less.

But, also, there are properties available for purchase

at more modest prices.

This particular flat is pretty well kept, decorative-wise.

The kitchen and bathroom suites are a little tired now,

so they could do with a little bit of TLC.

But not an awful lot of effort would put this flat into top-notch condition.

Now, this flat is freehold. And as it sits in a block that is mostly leasehold properties,

this can be a big advantage.

Freehold means you don't have to pay ground rent,

you're free to renovate the property without restriction

and any changes to the block itself would have to be approved by the owner of this flat.

Freehold flats are great if your neighbours are leasehold.

It means there aren't any nasty surprises hidden away.

Having a share of the freehold interest is actually quite important to some people.

Because, with respect, some members of the public don't quite understand leasehold.

So, having the freehold of their flat in a building where there's only four freehold,

it means they've got total control and they feel more comfortable with that situation.

Well, I'm wondering, with its size and location,

if this might make a good holiday let for seaside visitors.

Not THOSE kind of seaside visitors.

This particular property - you're not allowed to do holiday lets here, for obvious reasons.

If you lived in the building, would you want new neighbours every week or every fortnight?

Although, differentiating from a holiday home,

it would make a perfect holiday home for the owner.

Oh, well. You don't ask, you don't get. So, what about values?

Once this property has been refurbished, we would expect the value to be circa £210,000.

Once renovated, we would expect this property, if it were exposed to the rental market,

to derive a yield of about £750 a month.

Well, a home by the sea is a lot of people's dream.

And in terms of property prices, houses situated by the coast

can often be a really good investment.

So, absolutely loads going for this particular flat.

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

Vacant, spacious, two-bedroom flat for updating,

in a cul-de-sac location close to the town centre and seafront.

It's £155,000.

Anybody like to have a crack at this at £155,000?

155, ladies and gentlemen? Come down from 175.

Anybody like to have a bid at 155?

Or a bid of your call? 155?

Don't be shy, now's your chance. 155, back corner. Good man, well bid.

155, with £20,000 under the original guide at 155.

Any advance on 155?

£155,000 standing. Looking for 160, if I can.

A lot of debate going on over here. Do you like this one?

No, thank you. That's very polite. Thank you.

£155,000, one bid. Looking for 160.

Well, we'll call it for first time, you know the routine now.

Second time at 155, standing in the blue shirt.

Third and last time.

Nice little opportunity. Standing in the blue shirt,

for the last time at £155,000 in the room.

Done. Yours, sir. Thank you. One bid, one sale.

# I am the one and only... #

Craig was the one and only bidder at £155,000.

I caught up with the one-bid wonder to find out his plans.

-Craig, good to meet you.

-Good to meet you.

-Congratulations.

-Thank you very much.

-Tell me why you wanted to buy this place.

Well, there were three reasons, really.

One was the location, two was the price,

-and three was that there didn't seem to be that much work to be done on the property.

-No.

So, I thought ideal first property to, sort of, do a bit of renovation on.

Right, so this is your first venture into this kind of thing.

-It's my first adventure, yeah.

-Right, so why now?

Well, my profession is a teacher. I was teaching for many years.

-What level? What age?

-Primary age children.

But in the last six to seven years, I've been working with special needs children,

-with children who have been excluded from school for behaviour reasons...

-Oh, wow.

..displaying challenging behaviour.

So, I thought it's about time I took a bit of a break from that line of work.

It must be quite challenging in itself. Rewarding, I'm sure.

Rewarding and challenging. So, I thought I need a new challenge.

-So, I thought property development.

-And why here?

It's a lovely coastal town. SEAGULLS CRY

Seaside, obviously we've even got seagulls.

THEY LAUGH

-Yeah, I thought ideal place and lovely.

-Are you local?

-Exeter, not too far away.

-It's a lovely flat. What did you like about it?

I like the fact that... Well, like you said earlier,

the location. Beautiful location.

And looking around it, there was nothing that frightened me about it

as regards to the work - it was all doable.

And I thought, "I can do this, I can do this."

I've done work on my own properties at home

-and so I thought it was a change in career.

-Yeah.

-This is a good start.

-A good start indeed.

A flat bought bang on the guide price and in a prime location.

You couldn't have asked for more. So, what does he plan to do?

The main thing is, I want to get central heating in.

At the moment it's electric storage heaters.

There's gas in the building, but there's not gas in this property.

So, that's the first thing I need to do is get gas connected to the property.

And then the electrics look a little bit dated, so they need to be updated.

And generally, it's just decor. The kitchen is OK,

but I think it could do with updating again.

The two things you mentioned, the electrics and the gas, you have to get other people in to do.

-Yeah, yeah.

-What about the rest of it - could you fit a kitchen?

I could fit the kitchen, yeah. I could fit the kitchen and do the decorating, tiling...

Yeah. So, I will be fairly hands on.

What's the plan for it, then? Is it to rent it out, or to sell it on?

Hopefully to sell it on... as quick as possible, really.

-And then move on to my next project.

-How much budget have you got?

-I've got up to £10,000.

-OK.

Which should be OK.

I do have a contingency of a couple of thousand.

Because the gas and the central heating is going to swallow up probably half of that, isn't it?

-There's still a few unknowns there.

-OK.

So, hopefully, around about the £10,000.

If I can do a lot of the work myself, that would keep costs down.

Craig has a six-to-eight-week timescale,

but I do think he's been pretty optimistic with the budget.

There really isn't much room for any unforeseen costs that may occur.

-How was the auction experience?

-Lovely.

-It was a really, really nice experience.

-Yeah?

I've never been to an auction before of any type

and I couldn't believe it.

The property came up, I had an idea of what I wanted to pay for it

and it went for the guide price.

Which was... You know, I was prepared to go higher than the guide price

and I was the only person that bid for it.

So, there was either something that I was missing...

or I got a good property at a good price.

-Well, I think it's the latter, isn't it, really?

-I hope so.

-Yeah, definitely. Well, congratulations.

-Thank you very much indeed.

-Good luck with it.

-Cheers.

-I look forward to seeing how you get on.

-Thank you.

Well, it's a new career for teacher Craig,

but I think he's already learned some really important property lessons.

Choosing a good location, somewhere that doesn't need too much work

and buying things at the right price. He's done well.

Will his £10,000 budget stretch?

He hasn't had the quote from sorting the gas yet.

You can find out later in the show.

Coming up, in County Down, what looks like hard work could be deceptively simple.

-I've come into places far, far worse.

-Right.

This here wouldn't annoy me.

While, for Craig, something simple turns out to be very hard work.

Getting the woodchip off the ceilings took me three weeks.

And now it's back to Abbey Wood in south-east London

where this plot of land came with planning permission for two three-bedroomed houses.

It was snapped up by Pram, a full-time IT consultant,

who forked out 202,000.

Sold, 202.

Pram had good reason to be delighted.

With this area of London scheduled to become the final stop

on the new Crossrail service from Heathrow Airport,

an investment in property now could pay big dividends further down the line.

It's been predicted that property values in this area might possibly go up as much as 40%.

With existing plans already approved,

was Pram or architect Paul tempted to change the original design?

I've taken the brief from Pram to improve various aspects of the design,

which is fundamentally sound already. But we are going to improve on things like the green roof,

the photovoltaic cells and make the building even more energy-efficient.

Pram set his architect and builders a time of six to seven months

and allowed a budget of £210,000 for the build.

We returned 18 months later to see what he had managed to create

from his patch of scrubland at Abbey Wood.

Well, we were expecting square and boxy on the outside and that's what we've got.

Pram and his architect Paul decided to go their own separate ways

and so there were some changes to the initial plans.

I loved Pram's eco-ambitions and he did install the PV panels.

But, for the roof, he opted for a lightweight aluminium

rather then the sedum he'd planned to use.

We decided to have an aluminium roof because, as opposed to a green roof, the maintenance was a lot easier

and overall we thought that the life span of an aluminium roof would be much longer.

There's still landscaping work ongoing, but inside it's a different story altogether.

Both houses have identical layouts and fixtures and fittings.

Pram decided against having the shelving partition between the kitchen and living room,

preferring to keep it as one enormous space, which I agree with.

Pretty impressive.

This is plot B and what we've decided to do was go for a black-and-white themed kitchen.

High-gloss kitchen units, integrated dishwasher and oven and appliances.

And at the same time we decided to go with porcelain white tiles,

so it's nice and airy and nice and bright with the reflective lights and LED lighting.

And I'm really pleased with the way it's turned out and the kitchen looks really fabulous.

Well, I can't argue with that, Pram.

Completing the downstairs accommodation is a nicely finished wet room.

Upstairs, the approved plan allowed for two double and one single bedroom.

But thanks to a clever redesign, the single bedroom has increased in size to a double.

What we've done is created an overhang on the first floor,

so the single bedroom has now become a double bedroom

and the bathroom has been pushed back further towards the back of the house.

We've gone for mainly a modern-style look.

Modern fittings and a lot of windows for a lot of daylight

and we've kept the overall appearance quite neutral.

Well, I'm glad to see Pram has been using his skills as an IT consultant.

Well, he must be familiar with installing WINDOWS.

Apart from some minor snags and landscaping,

the houses are finished and ready to sell.

Were there are any problems that Pram and his team faced along the way?

One of the challenges we had was, after the soil tests we had to do piling.

That involves basically doing some boring in certain points

down to a depth of about eight to ten metres.

And at that time the weather was quite bad.

It basically delayed us by about a few months.

And one of the other challenges was there was a shortage of bricks.

So, it took us approximately six to eight weeks to procure bricks

for both houses at one time.

As well as adding time to the project, those setbacks also cost money,

with the soil tests and piling alone adding an extra £30,000.

Another added expense was running services to the new houses.

We've gone over budget by about £70,000.

So, in total the spend has come up to about £280,000 for both the houses.

Add to that 280,000 the 202,000 he paid for the land and his

total spend comes to 482,000. Well, that's a big investment.

There's only one way to find out if it could pay off.

That's right, it's estate agent time.

I think the properties are quite unique for the area.

There aren't many new-build houses.

They're extremely light and airy,

and with off-street parking, which is quite important around here

with the parking restrictions

for a couple of hours during the day.

The houses have a very nice finish to them.

I like the open-plan living space

that you've got downstairs.

The owner's factored into the ground floor with a wet room

and a bathroom upstairs with three double bedrooms. Very good accommodation size.

Now, the houses themselves are mirror images of each other

but the plot of land on the right has a slightly larger garden

and parking area. It's not a lot but this is London, after all.

And any land is at a premium.

So, let's get those all-important valuations.

If the properties were to come onto the market,

I would value the property on the left

at between £360,000 and £370,000

and the property on the right, between £370,000 and £380,000.

The house on the left-hand side, I would place in the region of £370,000 to £380,000.

The house on the right-hand side, I would place

a value in the region of £380,000 to £390,000.

At those valuations,

Pram could be looking at a total price

of between 730,000 and 770,000,

giving him a whopping potential profit of 288,000.

That's before fees and tax.

Well, the properties are on the market for £400,000 each

and we have just recently accepted offers on both properties

and the valuations that the agents have given are in line

with the offers we have received.

So the £288,000 question is,

will Pram be going back to IT consulting?

I actually quite enjoy both, you know,

obviously I've been doing IT for a long time but I would say

that, in the long run, I would prefer to do property development.

It's nice to see what you started out with and what you've achieved

and the end result is always good.

20 miles south of Belfast, it's Downpatrick,

one of Northern Ireland's most ancient towns.

Legend has it that the remains of St Patrick himself lie within

this grave at Down Cathedral, making it a site of pilgrimage for many.

15 minutes' walk from Downpatrick centre is the property

I'm here to see. And it is this.

A three bed end-of-terrace, had a guide price of £30,000.

Big question is, is it a saint or a sinner?

MUSIC: Saints And Sinners by Johnny And The Self Abusers

Ah.

Well, I think it's definitely coming into the sinners camp, for sure.

Let's look at what we've actually got rather than the state it's in.

That's a classic error.

Front room there, it's a good size. Nice sized hallway,

stairs up to the bedrooms there. It's obviously

had a few problems in its recent life

because there's quite a lot of damage inside and,

obviously, there's some major...

Sorry, cover your ears... Just do it, trust me.

GLASS CRUNCHES

Ooh, few bits of glass on the floor there.

Yeah, so the kitchen needs a bit of work. But I like the size,

I like the design.

I just need to really polish my rose-tinted spectacles.

So, first impressions not so good.

# Walking on, walking on broken glass. #

If this was a first date I'd be checking my watch,

scanning for the nearest exit and rehearsing my,

"Er, there's a bit of an emergency at home" excuse.

But let's see if this home emergency has spread upstairs.

# Walking on, walking on broken glass. #

Well, upstairs... And, surprisingly, it's sparklingly clean.

Er, no.

However, let's look again at what we've actually

got in terms of the fabric of the building.

Three half-decent-sized bedrooms.

Two at the front there and one at the back.

And, you might not have expected this, but look at that!

A really decent toilet.

So now it's a case of just figuring out what is actually stuff

that we can just dump in a skip and get rid of and sort the place out,

What is actually structural - I don't know if there's much of that -

what's cosmetic, there's probably quite a lot of that.

But do that, and what you've got here is a great house.

So things are looking up.

The fabric of the house seems to be in good order,

it just needs a really good clear out.

# Can't judge a book by looking at the cover. #

So, what do you think?

Well, I am now going to attempt what's called a paradigm shift.

That is where you change somebody's opinion or viewpoint

based on new information.

That new information is that there is a massive demand for

rental property around these parts and there's a shortage of houses.

A house like this could easily rent out for around

£450 a calendar month. That's £5,400 a year.

If you get this property for anything like that

£30,000 guide prize, that's an 18% yield.

Viewpoint changed, perhaps?

Potentially very impressive rental figures.

But for a sales valuation,

we've invited a local estate agent along to give us his opinion.

First impressions of the house,

it's a specious set-end terrace property

in need of total refurbishment.

It requires a new kitchen

but there's no signs of damp and, to be honest,

just cosmetic work, really, is required to the property.

I believe that the property would be worth around £65,000

once the work is done.

OK, when you consider that £30,000 guide price and the potential

rental yield, these numbers are beginning to look very attractive.

Well, you could easily set one foot inside this property

and say to yourself, "No way, Jose."

However, I think if you did that you'd be missing a trick.

Because, actually, intrinsically, it's a really good little house.

For that guide price, definitely worth looking at.

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

It's a three-bed end terrace, guide price is £30,000.

Someone like to get us away at £30,000?

We have 30,000 bid here, at 30,000.

Any advance on the £30,000 we have?

31 we have, at 31, we have.

32, we have 32 at the wall here at 32,000. 33, seated at 33,000.

33 again, 34. The wall, 34,000.

This man here, 35,

selling at 35,000.

A ding-dong battle got

under way for this property and we rejoin the auction with the bid

standing at 45,000.

At 45, 45, he's gone to 45.

At 46, 46, 46, seated at 46,000. All sure? Last call.

47, at 47 at the back of the room, at 47,000.

At 47, 47,500, 47,500, 48. 48 at the back of the room, at 48,000.

48,500, at 48,500, at 48,500, 49. At 49,000.

49,000 we have, at 50,000. Seated at 50,000.

Seated at £50,000, we have 50,000. Seated at £50,000.

All sure? Last call at £50,000. Going once,

seated at 50,000, going twice,

sold 50,000.

Number there, please.

MUSIC: Big Brother by Stevie Wonder

Paying £20,000 over the guide price was Michael.

Who, together with brother Adrian, run a building contractors,

an estate agency and also let out properties in the local area.

Busy boys.

I met up with the fabulous builder brothers back at the house.

# Your name is big brother. #

-Michael, Adrian, good to meet you both.

-Good to meet you, Martin.

-Nice to meet you, Martin.

-Congratulations, I think

you got yourself a bit of an investment here.

-Yes, well, so we have, yes. Hopefully it goes well.

-Hopefully it will.

Tell me why you wanted to buy this house.

Well, we were looking for houses

and I had seen this was coming up auction.

Went and viewed it, thought it was a good area,

thought the house was in good shape, even though it may be wrecked inside,

but I knew it was a good standard house, so that's why I went for it.

So how do you divvy out the work?

Mostly, Michael will do most of the estate agent work. Well,

he does all the estate agent work and I got the short straw.

HE LAUGHS

I could have guessed that by the way you're dressed.

You look like an estate agent

and you definitely look like you're ready to do some work.

Ready to do some work and I do all the rough work

and all the building end of things.

Right, and how do you make the decisions in terms of which

properties you going to go for? Again, that's a joint decision, is it?

No, generally I would try and find the properties, mainly online,

go to the auctions, see what the area's like,

potential of the property...

Generally would probably make the decision.

-And Adrian would then come and do the labour-intensive work.

-Right.

That's generally what happens.

So you pick up the pieces of his decisions?

I pick up what's left over, yeah.

MARK LAUGHS

There are plenty of pieces for Adrian to pick up in this house.

But being experienced contractors,

the brothers obviously aren't put off

by the appearance of the property.

When I was here viewing the property, there was a lot

of people here and when you come in

and you see such a mess that it's in, you think,

"My God." They just couldn't see past a skip full of rubbish, you know?

Plus the windows smashed and all that would generally put people off.

We've come into places far, far worse and we've done them up,

renovated them and put them back into the control of the tenants.

This here wouldn't annoy me.

And you paid a bit more than the guide price, obviously.

Yeah, well, I knew 50 was my mark. I thought it would go to 50.

I probably might have put another couple of bids on

-but I knew 50 was the mark for it.

-Sure.

But even at that, you're getting over 10% as a yield, aren't you?

Yeah, yeah, you would be, yeah. So, happy enough.

So, Adrian, tell me what you need to do to get it into a habitable state.

First thing I'll do is get it all cleared out

and get a kitchen ordered, get the glass ordered.

You won't replace the windows, then? You'll put new glass panels

-in, will you?

-Yeah, we'll put new double glazing units into it.

Is that cheaper? A lot cheaper?

There's really nothing wrong with the windows except the glass

is broken in them.

The windows are not damaged. The window frames themselves,

just the glass.

Central heating, there isn't any at the moment.

-Well, there's radiators but there's no boiler.

-Well, there's no...

copper cylinder, it's gone.

-But there is a boiler out the back in the boiler house.

-Ah.

I didn't find that, you see.

I didn't find that the first day I was here either.

-But I found it at a later visit.

-Oh.

-It's there, hidden round the back.

-Right.

But the copper cylinder, it's disappeared.

-It was probably worth a few pounds, so it's gone.

-Right.

Bathroom's obviously quite spectacular.

Yeah, that's the surprising thing about the house, the bathroom.

Really, the only problem with the bathroom is that the shower

door's been smashed. Apart from that, pretty nice bathroom.

Yeah, so what's the budget for the work?

Probably 7,000 to 10,000 at the maximum.

-Is that costing in your time?

-Well, that would include my time.

Need to get stuck into it.

Yeah, yeah, for sure. And what is the timescale, then?

-Five, six weeks.

-OK. And then on the rental market.

I've already been approached by a couple of people just today here.

-Really?

-Yeah. To move in, so...

-Wow.

Well, didn't I tell you there was a shortage of houses in this area?

It looks like these brothers have got this business sewn up.

And how does it work, the two of you working together?

We played football often enough together for a long time

and we never fell out during that. It's just the next move on.

When we were young we would have hung round together, so...

-It's really nice, then, that you can both...

-Natural move.

Yeah, and you've both got complementary skills

-and areas of the business you're happy to sort of focus on.

-Yeah.

-Yeah, that's great.

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

-Thank you.

-I look forward to seeing how you get on.

Well, it seems that brothers

Michael and Adrian have certainly got the winning formula

and all the expertise it needs to take on this project.

Lots to do but how will it turn out when they're finished?

You can find out later in the show.

Well, we've already seen how one property did,

but what about the other two?

Will we see big changes and potential profits?

Let's find out.

We're back in the quaint seaside town of Budleigh Salterton

in East Devon.

With seagulls and sunshine and sand

and this two-bed purpose-built flat with a guide price of £155,000.

It was bright and spacious and, although it didn't have central

heating, when it offers views like this,

I think we can forgive it.

What a great feeling this place has. It's only a two-bedroom flat

but it immediately feels so, so nice.

MUSIC: Perfect by Fairground Attraction

And buyer Craig must have thought it was perfect too, especially

when he was the sole bidder paying the exact guide price of £155,000.

Craig was taking a career break from teaching children with

special needs and thought this was an ideal first property to develop.

I like the fact that looking around it, there was

nothing that sort of frightened me about it - it was all doable.

And I thought, you know, "I can do this, I can do this."

# I wanna do great things I don't wanna compromise. #

That's the spirit but will spirit be enough?

Craig had a budget of £10,000 but wanted to install new gas

central heating which could take up almost half that money alone.

Would he be able to stay within budget

and finish within his six-to-eight-week timescale?

Well, three months have passed

and we've returned to see how Craig got on.

The flat looks great - but, then, the flat looked quite good before.

So, how much work did Craig have to do?

I put gas into the property and put in central heating.

Prior to that it was the electric storage heater.

I've had to rewire the whole property,

which was an unexpected expense

cos I wasn't expecting it to be needing a total rewire.

I've put a new kitchen in completely.

The old one was ripped out and I've had it redesigned.

And now this is a kitchen-dining room.

One or two of the walls needed replastering

and redecorated, and new flooring throughout.

So, in the end, quite a bit of work needed.

In all seriousness, though this flat didn't look too bad

when we first visited, Craig's work sorting out the central heating

and electrics makes the flat so much more practical.

He even got rid of that unsafe frosted glass

and his cosmetic changes in the kitchen,

and throughout the rest of the flat, bring the style bang up to date.

Craig got professionals in to install his gas central heating,

rewire his electrics and fit his kitchen.

But he wasn't afraid to get stuck in himself. How did he find it all?

I'd always done a little bit of DIY but with a project like this,

obviously, you needed skilled tradesmen to come in

and I think you learn by watching the tradespeople.

So, if I did this again, obviously I picked up a few skills from them

but, yeah, it has been a learning curve as well.

But a very good learning curve.

The most onerous job, I would say,

was getting the woodchip off the ceilings off all the rooms.

Believe it or not, it took me three weeks to do that job.

# And I hate everything about you

# Everything about you. #

Three weeks up a ladder scraping woodchip is not the most

glamorous of development jobs.

Good thing he had these views to keep his spirits up.

Craig's original timescale was six to eight weeks -

it's actually taken him three months.

But it wasn't the timescale I was worried about, it was his budget.

So how did he get on?

I think I said my original budget was between 8,000 and 10,000.

I think I've actually spent just a little under 12,000.

The overspend went on the electrics

and the central heating was a little more than we thought.

I've also gone for a slightly higher spec on the kitchen.

But I'm pleased, I'm pleased with what I spent.

And that is why it was very wise for Craig to have his contingency fund.

Even in this flat where everything looked pretty sound,

there were a few hidden problems.

However, I certainly think it was worth spending the extra

to get that central heating in. And the kitchen looked great.

But will he be able to recoup those £12,000 development costs

on top of his £155,000 purchase price?

We've asked along two local estate agents

to get their opinion.

He's added some really nice contemporary touches,

i.e. the kitchen particularly, but I do like the doors

which are a major uplift and really do work well in the property.

Nice light carpets

because, being south facing, you get plenty of sunlight.

Because of the colour schemes on the walls, that reflects the sunlight

and gives the whole flat a nice warm sense about it.

There aren't any obvious negatives, really.

Other than the fact that the flat market

is not particularly strong.

It hasn't been good for two or three years,

and it's quite well supplied with properties.

Craig's done a great job sprucing the place up

but it sounds like he's fighting against quite a weak market.

Both estate agents recommend a rental valuation of £800

per calendar month but Craig wants to sell, so what could he expect?

My recommendation would be an asking price of circa £190,000 to £195,000.

So currently I wouldn't expect it to sell for more than £200,000.

If they delay a sale until the spring,

the market could be tested at perhaps £225,000.

But I think that would have to be kept under close review

dependent on the viewing levels generally.

If I need to wait till spring to sort of get that sort of figure of 225,

really it might be worth me

hanging onto it for a couple of... Three months

and then try the market then.

-So, that sounds OK.

-It wouldn't half.

With his total spend of £167,000,

that top valuation of 225,000 would give Craig

a profit of £58,000 minus the usual taxes and expenses.

And despite those expenses increasing the longer

he holds on to it, Craig should still be in for a healthy profit.

So, knowing that,

how does Craig feel about his first property development?

It's turned out far better than I thought.

I've had such a positive experience doing this one so, you know,

I can't wait, really, to go ahead and get another property.

Time now to return to Downpatrick in Northern Ireland.

This three-bed end terraced house had a guide price of just £30,000.

It was going to take some renovating, though.

The place was a mess.

# Big mess, big mess He was a

# He was really mixed up. #

But here on Hammer we try to see past the superficial.

It had good-sized rooms

and was in an area with a very high demand for rented property.

So, now it's a case of just figuring out what is actually structural -

I don't know if there's much of that - what's cosmetic.

There's probably quite a lot of that.

But what we've got here is a great house.

Brothers Michael and Adrian clearly agreed.

They were successful at auction with their bid of 50,000.

The brothers run building contractors and estate agents

and are a well-oiled machine when it comes to renovation.

Generally I would try and find the properties

-and Adrian would then come and do the labour-intensive work.

-Right.

-That's generally what happens.

-So you pick up the pieces of his decisions?

I pick up what's left over, yeah.

MARK LAUGHS

# It takes two, baby

# It takes two, baby

# To make a dream come true. #

With a budget of £7,000 to £10,000

and a time scale of five to six weeks,

could the two of them transform this terrible terrace

into a dream come true?

# Just take two. #

Just under four months later, we're back to find out.

Outside certainly looks good. Let's see what they've done to the inside.

-# Sunshine on a rainy day

-Sunshine

# Makes my soul, makes my soul, drip, drip, drip away. #

Wow, the kitchen is spacious and bright with new appliances

and room enough for a dining table.

And in the living room,

they've even managed to keep some of the house's original features.

Upstairs, the bedrooms have been redecorated in neutral tones,

while the bathroom has had a new shower and taps fitted

and a general clean and tidy up.

This could now be a lovely family home.

There was nothing structurally wrong with the house.

The biggest challenge was probably with cleaning it out at the start.

Two skips had to come out of the place.

Just cleaning it up, general cleaning it up.

When we had everything cleaned up we were fine.

# I can move, move, move any mountain. #

I think Adrian's underplaying just how big a job clearing

this place out would have been.

Still, taking on the lower skilled labour-intensive jobs

yourself is exactly the way to keep costs down.

Of course it helps

if, like Adrian, you have your own team of builders you can call upon.

But that wasn't the only way the brothers found to keep costs down.

So, when we arrived the windows were all smashed

but they were boarded up and we just took out the boards, put new glass

in and managed to save the windows, which saved a fair bit of money.

Michael, who's in charge of the administrative side

of the project, estimated that by only replacing the glass

they saved up to £550 per window.

Money they needed as, when we last looked at the property,

the central heating needed a major upgrade.

And someone had stolen the copper cylinder.

What we more or less had to do with the heating was to replace

all the copper pipes in the dwelling.

So we have replaced all them with PVC plastic,

so there's going to be... Nobody's going to be near them again.

So did they manage to keep within their budget?

We spent roughly £7,200 to get it to this current standard.

We had hoped to have the project finished in about six weeks but

it's taken a bit longer because we had other projects going on.

But, overall, we're pleased.

In fact, it took the brothers 16 weeks in total

to complete the renovation.

However they did only spend £7,200 on it, along with

the £50,000 they paid at auction.

We've asked along two local estate agents to see

if Michael's good eye and Adrian's hard work have created a winner.

From the last time I was here, there's been quite a change.

In fact, it's hard to believe, actually, it's the same house.

The vendor has done a very,

very nice job of refurbishing the property.

Particularly downstairs in the kitchen.

Main selling points - it's a very spacious terrace property.

Every room is a very good size,

particularly the kitchen's got a lovely open-plan feel to it.

And you got a separate lounge and three good-sized bedrooms

so it makes it a family home.

There's a good demand for both buying and rental of this style of property.

This property would appeal to investors or, most likely,

a first-time buyer or a young professional couple.

Michael and Adrian have turned this mess of a house into a desirable

family home and in an area with goods demand for property like this.

Can they make a profit on their total spend of 57,200?

Let's get those all-important figures.

In the current sales market I would expect this property

to achieve between 65,000 and £70,000.

In the resale market I'd expect this property to achieve around £65,000.

Were they to achieve the higher value,

this would give the brothers a pre-tax profit of £12,800.

But it was always their plan to let the property out,

so what could they achieve on the rental market?

In the current rental market,

I'd expect to achieve £450 per calendar month.

In the rental market I believe this property could achieve

£450 per calendar month.

Yeah, well, I'm happy with both valuations.

Obviously, we've made a bit on the property

and the rental value would be where we would think it would be.

So it gives us a good return.

That rental value would give the brothers a yield of over 9%.

It looks like their teamwork has paid off.

So, do they have any tips for us?

To any would-be developers my advice would be, don't take on

too much financial stress on the property

and make sure you see a way out financially.

Yeah, and get a good tradesman.

Especially me.

Well, that's all we have time for today.

But we'll have plenty more stories for you next time

here on Homes Under The Hammer.

-See you then.

-Goodbye.

-Goodbye.