Episode 79 Homes Under the Hammer

Hello, and welcome to the show.

Now, people buy property for all sorts of different reasons.

To make money quickly, as a long-term investment

or, let's not forget, also as their home.

Just as there are many types of houses, there are so many different

types of property market as well,

depending on which area you're buying in.

So, how do YOU find out what's happening in YOUR local area?

One way could be to visit your local property auction.

Well, it's not always easy to get yourself a bargain when

it comes to buying properties at auction.

You may well spot a bargain,

but other people may have seen the property as well.

So you could find yourself in a bit of a bidding war.

So let's see what today's buyers bought when they went to auction.

In Stoke-on-Trent, we return to a property we saw a while back.

It surprised us then, will it surprise us now?

I wasn't expecting that!

And for me, the surprises just keep coming in a property in Bexleyheath.

-SHE SQUEALS WITH LAUGHTER

-Really?

But in Cornwall, I surprise myself with my brute strength.

SUCKS TEETH

Ahem. Right. New ceiling and roof possibly required.

All these properties are being sold at auction.

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

when they went under the hammer.

Sold!

We're going a little back in time now,

out to Stoke-on-Trent in Staffordshire.

So, terraced property, terraced property, terraced property. Gap.

Terraced property...

Not terraced property.

Er, that's kind of interesting,

because you'd expect that to continue, but, no.

This big, cream building is the property that was up for auction

and a terraced property of standard proportions it is not,

hinted at by the guide price, £115,000-plus.

Let's take a look.

I wasn't expecting that. Wow. Look at the size of this room!

Even a baby grand piano is lost in this space.

It's enormous.

Nice floor, looks to be in reasonable condition.

HE LAUGHS

This is incredible.

I thought that was big, look at this!

So, not your conventional terraced house.

More like three knocked into one.

It was vast, with large, unusually proportioned rooms downstairs.

Whereas upstairs was more of a warren of rooms.

For the life of me, I can't figure out

what this building was previously used for.

I mean, it's obviously been extensively refurbished

and it is extensive in total.

I mean, we've got more and more rooms.

One there, there's another one over this way.

You've got this big room here, which

is almost a walk-through, which isn't ideal.

So I mean, were these let as individual rooms?

I mean, was there... I don't know. I'm really at a loss.

Because you come in here, there's more rooms.

There's one over there, there's one here,

there's a separate little kitchen area there. Steps down to...

..that's the kitchen area again, I don't... I'm not sure.

It's very easy to get disorientated as you wander round.

MUSIC: Confusion by ELO

# Confusion You know it's driving me wild

# Confusion It comes as no big surprise

# You've lost your love and you just can't carry on

# Can't carry on

# You feel there's no-one there for you to lean on

# To lean on... #

Yes, there was room, after room, after room.

With bedrooms, lounges, bathrooms, two kitchens. It was a maze.

In fact, it was quite tricky to work out which direction

I should be going in.

MUSIC CONTINUES

Should it be converted into flats, bedsits or just one humongous house?

But, with what was a £115,000-plus guide price,

I was fascinated to see who it would appeal to at the auction.

Lot 91 is a substantial corner terraced building.

Large accommodation, lots of rooms. Should we say 115, then? Lot 91.

115, back left at £115,000. 120 going to say now.

£120,000. 125, £125,000.

130. 130,000. 135, £135,000.

140? No, no. 135,000, by the door.

136 anywhere else? 136, seated.

137, 138, 139, 140. 141, 142.

Shaking his head, 142 seated.

143 anywhere else?

If not, I'm selling it at 142,000 to the gentleman seated

for the first time.

At £142,000 for the second time.

Third and final time. At £142,000...

BANGS HAMMER You bought it sir, well done.

And so the hammer fell at 142,000.

And the successful bid had been made by Neil who had bought

it as a joint purchase with business partner, David.

Neil was an independent financial adviser

and so will be sorting out the financial aspects of the work.

While David was a builder and he was going to oversee

and look after the practical side of the refurbishment.

So I was intrigued to know what the pair have planned

for this rather oversized terrace property.

Neil, David. Good to see you both.

What about this place, then?

-Yeah, it's big, isn't it?

-Why did you want to buy it?

Simply the sheer size of the property made it an attractive option.

OK, so what are you going to do with it, then?

-Well, the intention is to put it into about ten flats.

-Ten flats?

See if we can get eight to ten flats, yeah.

-What, individual, self-contained flats?

-Yes.

Upstairs is virtually divided into flats,

it's just sorting out the downstairs.

If David and Neil's plans to convert this into flats went ahead, they

either plan to sell on the entire development to an investor, or to

sell some of the flats individually and keep some to rent out.

But whatever route they chose,

it was all dependent on planning permission being granted.

So, how would the ten flats work layout-wise?

Well, there's two staircases into the building,

there's three front doors.

Potentially, the front door which is right in the centre

will serve two flats on the ground floor.

We've then got the two staircases which, hopefully,

would serve probably four flats, two downstairs, two upstairs.

And the other back door will probably serve

-three upstairs, two downstairs.

-Right.

This area here, it'll be split into two flats.

There's another flat at the front, there.

There's another flat round the corner,

and we should be able to squeeze another flat in next door.

Right. What kind of cost do think

there would be involved in creating ten flats?

I think I'm looking at, or we're looking at, roughly around 200,000.

And along with the £200,000 budget,

David was hoping that, planning permission notwithstanding,

his building team could turn the redevelopment round

in just four months.

Well, that was in April 2014.

And when we returned, six months later, well,

plans had changed a little.

We've looked at producing eight flats, now.

Originally we'd hoped to get nine or ten, reduced slightly,

but it means each one's slightly larger than originally planned,

and we think that's going to make them more attractive.

But the delay in getting planning permission had meant

work was not as far advanced as David and Neil hoped.

Basically, there's one flat which is completely finished.

Er, we've then got two flats which are ready for decorations.

We've got one more flat which is ready for second-fix joinery

and we've got three more flats which are ready for

partition work going up, stud work going up,

that's going to be complete in the next three or four weeks.

Well, nice as it was to see one of the flats ready,

there were still another seven to go.

So, nine months after our first visit, we're going back again.

And you can see how to turn one huge terraced property

into eight one-bedroom flats, later in the show.

MUSIC: A Kind Of Magic by Queen.

# It's a kind of magic

# Magic, magic! #

Well, there might be some property magic going on in Staffordshire

but I reckon if you're looking for an investment opportunity

I've found a place that might just do the trick.

Bexleyheath, in southeast London, has ideal rail links that will

get you into the centre of the capital in just under an hour.

And beautiful parks and houses make this a very appealing area.

The old Roman road divides the suburb into two,

a DA6 postcode to the south

and a DA7 postcode to the north.

Now, this property is in the DA7 section of Bexleyheath.

It's two separate two-bedroom flats, two separate lots sold at auction,

and they were sold one after the other.

Are you keeping up?

Now, the first thing that strikes me, it is a pleasant surprise,

it's that this flat has its own front door

and the bottom flat, well, it's just around the side.

Most have to share a front door, so that is a big old bonus.

Let's go into the first flat, come on!

'This first flat is guided at 170,000-180,000.

'From the outside, well, that looks like a pretty good deal.'

It's freezing outside, luckily it's toasty warm in here

and that's because the storage heaters are working,

which says no gas,

so that is something to bear in mind with this property.

But it seems like it's in not bad condition.

You've got a bathroom through here, all white and shiny so, yep,

I could go with that.

And right at the back of the property, well,

a small kitchen but very functional indeed.

The units look nice.

So far, so good.

So, straight off the landing you've got a bedroom next door

and this really nice, sunny lounge.

I am quite taken aback by how ready-to-go this flat is.

It's spacious in here, you've got nice high ceilings,

it's been freshly painted,

you've got three fabulous big windows letting in loads of light.

It'll all have been insulated and soundproofed.

I mean, this flat really would be fantastic for renting

because you could almost advertise this straightaway.

Yes, you barely even need to decorate in here.

The kitchen is in good order, as is the bathroom

and the whole place, well, it's filled with light.

Up a set of stairs there's a loft conversion

that's a clever use of the space, turning a one-bed into a two-bed.

Property number one gets the thumbs up from me.

Now, let's go and have a look at the other lot.

So, that was the upstairs two-bedroom flat.

I'm going to take you now to the ground-floor flat

in this building and my, oh, my!

Wait till you see the spectacular entrance.

Look at this! Electric gates that let you through to the other side.

# Dun-dun-da! #

Leading me through into the next flat.

So, to have a private driveway is one thing,

to have electric gates is another.

To have a garage at the end is something really special.

We've got a little garden here and look at the entrance.

All for a guide price of £160,000-£170,000.

And inside flat two, there's a lounge, kitchen, in good condition,

and there's two bedrooms.

Unlike upstairs, this flat does have central heating.

What more could you want?

But there's one thing I'm looking for and I can't find -

and that is the bathroom.

No, not in there.

It's not in there.

It's not this tiny little broom cupboard in here, is it?

SHE LAUGHS

Really?!

Down those steep stairs?

Wow!

Now, the first flat made good use of space with the loft conversion

but flat number two is plumbing new depths

with this basement toilet conversion.

Speaking of uses of the space,

well, the flats are in the same building so

if you were at auction you'd really want to buy both, wouldn't you?

And if you got them for the guide price

you'd be looking at around £330,000 for two London flats.

We could be talking major profit here.

But only one way to be sure would be to ask a local property expert.

There's always the option to convert the loft and the basements, as well,

so where you would have had two one-beds,

they've done very well to utilise the space and create two two-beds.

The only thing it would benefit from

is having some gas central heating fitted,

doing away with the storage heaters.

But in terms of the decor, the carpets, the kitchen, bathroom,

I don't think you'd need to change anything, if it's for rental or sale.

So, for this upper flat

what would you expect for the resale and rental?

This property should achieve anywhere in the region

of £215,000-£225,000.

The rental for this property,

if you was to put it on the open market now,

you'd be looking somewhere between £900-£950 per calendar month.

So, there really is potential for some profit here.

How about the second flat?

Similar money.

215-225 for the downstairs apartment.

Rental for this property,

somewhere in the region of 900-950 per calendar month.

These flats are an ideal investment.

I mean, come on, how can anybody resist these electric gates?

They're ready to rent out but I would, potentially,

take the gas upstairs in this flat and rip out those storage heaters.

So, any hungry developers might be interested in these.

How can you lose?

Let's see what happened when we went to auction.

We move now to lot 95.

Got a guide of 160-170. Start me where you will.

160,000, bottom end of the guide?

In your hands, 150, then.

Got to be worth 150. Thank you very much, sir.

£150,000, I'm bid.

152 do I see?

152.

And 5? And 5.

And 8?

And 8. 158 at the back.

And 60? Is that 1?

159, I don't mind. 160.

161? No?

At 160,000 at the very back of the room,

at £160,000.

For the first time at 160,000.

For the second time at 160,000.

For the third and final time at 161,000, are you all done?

Sold at 160.

And, standing on the right, the smiley buyer of the lower-floor flat

is Johnny, paying the 160,000.

Now for the next lot, the upper flat.

Will he be lucky enough to secure this one, too?

How would you like a pair?

Lot 96, two-bedroom maisonette this time.

Electric gates leading to a parking garage.

It's got a guide of 170-180.

Is that 160? Thank you very much indeed.

£160,000 I'm bid, got my underbidder.

At £160,000 I have,

162 do I see?

At 162...

Well, it looks like Johnny is after the pair.

Could be a shrewd move.

At 170,000 for the first time.

170,000 for the second time.

170,000 for the third and final time, are you all done?

Sold at 170,000 and that's the same buyer, A790.

Thank you very much indeed.

# Two for the price of one... #

So, that's £330,000 for two London flats.

Time to find out Johnny's plans.

-Johnny, congratulations.

-Thank you.

-Fantastic meeting you.

Wow, you got a bit greedy buying yourself two flats, didn't you?

-Well, yeah, we got a bit carried away.

-How carried away?

Did you do much research with these?

-No.

-Any research?

-No.

-Did you read the legal pack?

-No. Not at all.

-Did you view them?

-No.

-Did you know you were going to buy them?

-Not at all.

-# Let me hear you say yeah

-Yeah!

# No, no, no, no, no, no

# No, no, no, no... #

Well, having managed to say no to every rule

in my Homes Under The Hammer check list, well,

Johnny is a lucky boy to get two fantastic properties

but he's been developing properties since he was just 16 years old

as part of a family business.

Johnny's very experienced and that is why I am going to give him

an extra hard clip round the ear for buying blind.

No, no, no.

Johnny, I've heard of people taking a risk once at auction

but twice, buying two flats that you've not even seen?

Well, the way I look at it, if you buy in London you can't lose.

That's why we bought it.

So, what happened when you got the keys

and you walked through the front door, what did you think?

-Well, I had the biggest smile ever!

-Happy days!

-Happy days. Yeah.

You know, because I've bought some bad ones in the past

and this one's turned out very nice.

Mm-mm. Very nice.

So nice, in fact, Johnny doesn't think anything needs doing

except installing central heating in the top flat.

So there's no budget and Johnny's a qualified electrician and plumber

so he can do all the repair work that's needed.

Why don't you see the point in maybe tarting them up,

doing a bit of painting, putting in a new fridge, a new washing machine?

Are you not even going to go to that extent?

I don't think I need to, in the condition they're in.

I feel that, you know, OK, there's washing machine etc there,

we'll probably leave them in for the tenant

but the tenant can have them, it's not a problem.

OK, now this flat is the smaller flat but you've got that

fantastic entrance, you've got a driveway,

you've got electric gates!

I know it's a bit silly but I got so excited

when I saw that amazing grand entrance.

I mean, how lovely for a downstairs flat to have that?

Well, it's beautiful.

And also there's plenty of space outside, the gates are closed,

it's nice and safe, both flats can have a garage each.

There's a lot of ticks in boxes with this property.

-And it all works.

-And it all works!

That's the great thing about it, it all works.

So, have you had a chance yet to get an estate agent to value them

and do you think you bought undervalued property?

I have had them valued, hence why I'm so happy.

Come on then, tell me. So, how much do you think you've made profit

already before you've done anything?

-Worst-case scenario, about 70,000.

-Wow.

Well, it looks like Johnny stands to make a fantastic profit

but I can't emphasise enough that you should never buy

without viewing a property, nor without reading the legal pack.

# Don't-Don't-Don't

# Don't-Don't do it, baby

# Baby. #

Now, I don't want you putting all my lovely viewers off

and making them think that's what everybody should do because

-that is not what you should do when you go to auction.

-Not at all.

Obviously, coming from our background,

if they were really bad we could have done them up.

You know, our profit margins would be down to 20,000

-so there is always the rough with the smooth, shall we say.

-Yeah.

We've just been very lucky.

Well, I'm really excited to see what happens when we come back

and view the situation

and to see if you have still got that smile on your face.

-OK. Thank you very much.

-Thanks, Johnny.

-Thank you.

Well, you get the kind of impression that Johnny,

with his experience, is going to make easy work of this one.

Remember his maxim -

if it's in London, it's going to make money.

Hm. Is that right, Johnny?

Well, this is in London and it didn't really cost the earth.

Surely, this is a cash cow,

or is it?

Join me later in the show and you can see if Johnny does cash in.

Coming up -

on a trip to Cornwall it's time to get your thinking caps on.

It's worth some thought.

We return to Bexleyheath in South London

to get some advice from Johnny.

I wouldn't recommended it at all. We've been very lucky.

But next, we're back to Staffordshire

and Stoke-on-Trent to see a property we first saw in 2014.

And it was a rather unusual lot, as it was not one, not two, but

three terraced properties combined to make one enormous property.

# What's that coming over the hill?

# Is it a monster? Is it a monster?

# What's that coming over the hill?

# Is it a monster? Is it a monster?. #

This is incredible!

I thought that was big! Look at this!

While downstairs was on giant proportions, upstairs was

a maze of rooms, with kitchens, bathrooms, lounges, bedrooms...

It certainly wasn't short of space.

And it was bought for £142,000 by property developing duo David

and Neil.

Neil has now retired,

but all his experience as a financial adviser is invaluable

when it comes to balancing the budget and sorting materials.

While David is a builder,

so it was down to him to take this building in hand.

OK, so, what are you going to do with it, then?

Well, the intention is to put it into about ten flats.

-See if we can get eight to ten flats.

-Individual, self-contained flats?

Yes.

But when we returned six months later,

only one flat was ready and their plan had altered.

# You've had a chance of heart. #

We've looked at producing eight flats now.

Originally, we'd hoped to get nine or ten.

Reduced slightly,

but it means each one is slightly larger than they'd originally

planned and we think that's going to make them more attractive.

So, with a large chunk of their £200,000 budget still to spend,

we left them to it.

But now, nine months after our first sighting of the monster,

we're back to see if it's now in eight bite-sized pieces.

What had been a troublesome gable wall is now repaired

and there are now four entrances.

Three leading directly into the ground-floor flats and one

leading into a central stairwell with the upper floor flats off it.

But what do they look like inside?

Wow! That's more like it!

And not only are the eight one-bed flats now complete,

two of them already have tenants.

So David really has been busy in the last few months.

There was a lot of planning went into the job.

Once I'd got it set in my own mind, it seemed to flow reasonably well.

We worked through it pretty systematically.

We had two teams on, we were tackling the first floor

and the ground floor, new walls, new partitions,

and then we just finished it off and worked through it.

With the building being a corner plot

and originally three properties,

all the flats are slightly different shapes and proportions.

So, does David have a favourite?

Here we are in flat four.

I know all the flats in this project are different,

but out of all of them, I think this is my favourite.

It's got the dual aspect, it's that little bit lighter,

little bit airier, it's a good size lounge and kitchen,

but it just gives you that little feel of being that little bit bigger.

I think it's all looking pretty good.

Well worth the slight delay caused by having to reapply

for planning and the extensive structural work on the gable end.

How do they feel overall about this project?

This property has probably been an easier one to work with,

but then, I'm not here every day.

David has more of the practical problems on a day-to-day basis.

I think it's nice

when you actually get involved in the building for several months

and you're in the one place and it's been very satisfying

when we took it back to almost bare brick, to actually bring it

forward and bring it into eight very habitable properties.

Even so, eight properties at once is quite a challenge,

but they do say there is economy in scale, so is that true?

Having a large empty building actually lends itself to

being a lot easier to work than if you're in a smaller crowded

position where you have to import everything.

Kitchens were all bought at the same time, at a very competitive price.

Same with the showers. It was eight of everything.

And you're in a much stronger position when you're negotiating.

# Living by numbers

# Living by numbers now. #

OK. Well, speaking of numbers, they bought the property for £142,000.

So, how many pieces of eight has the whole development cost them?

From day one,

our total costs were targeted in the £340,000-350,000 area.

That was the project costs from day one and it looks like we're

going to fall within that level with the final cost.

A £340,000 total spend to get eight flats equates to £42,500 a flat,

which seems like a good deal to me.

But what did two local estate agents make of what David

and Neil have achieved here?

I think to achieve eight apartments from the development is very good.

It's probably the most they reasonably could have

achieved from the size of the property.

One downside is the lack of off-road parking, of course.

However, there is on-street parking nearby.

I feel that the developers have done well to fit eight

apartments into this space.

Certainly, the specification and the size of the rooms are all

in proportion with what you'd expect for a one-bedroom apartment.

Parking issues aside, can this stack up as an investment, with David

and Neil looking to sell some flats, as well as rent out others?

In the current resale market,

what values could each individual flat achieve?

In today's market, I'd expect,

again dependent on whereabouts the property is on the development,

resale prices from in the region of £47,500 up to the region of £55,000.

For resale, I would anticipate an average price of around £50,000.

Again, this may vary slightly,

depending on the different sizes of apartments available.

An average price of £50,000 would see a grand total of £400,000,

giving them a potential pre-tax profit of £60,000.

-So, how do they feel about that?

-Yeah, we're comfortable with that

and it's entirely in line with what we'd expected.

But this is a mixed development, with some flats already

rented out, so are they getting their market value?

For rental purposes,

I would anticipate an average of around £400 per calendar month.

Depending on where the apartment is on the development,

I would suggest that the rental value

is in the region of £350 up to £415 per calendar month.

It's roughly about where we allowed for. We've let two out already.

One is at 420.... 430, I think.

And the other one is at 360, which is

one of the smaller ones on the ground-floor.

So, yes, it appears to be what the market's dictating.

Well, that's encouraging because if they couldn't sell any of the flats

and needed to rent all eight out,

then an average of £400 per calendar month would generate

an annual rental yield of around 11%, which is pretty healthy.

So, what's up next for Dave and Neil?

Very short-term, we've recently purchased a bungalow,

which we're going to be working on and then in the longer term,

more projects, probably similar to this one.

Now, if that place was certainly worth the wait,

I'm travelling to a place I can't wait to see.

This is Gunnislake in the Tamar Valley,

now designated an Area of Outstanding Natural Beauty.

It certainly is that.

Of course, the Tamar forms the boundary in-between Devon

and Cornwall. We're just on the Cornish side.

# Is this the place

# We used to love? #

Formerly a quarrying and mining area,

Gunnislake's streets are now lined with plenty of attractive

residential properties and that all-important railway station,

with Plymouth only 45 minutes away.

Well, it's a charming little street, full of lovely looking homes,

but it's not a home I'm here to see -

it's actually one of the strangest retail combinations I've

come across since I last had a key cut in a kebab shop.

It was actually an estate agents come drapery.

That's weird. The guide price, though, 20 to 25,000.

Looks OK from the outside,

let's hope the interior is cut from the same cloth.

Yes, curtains and soft furnishings don't usually sit beside lettings

and sales, but as commercial units go, it's a good size.

But on a quiet street like this, what kind of business would work?

And is a retail outlet really the best use for the space?

So, I guess the first question you've got to think about is - are

we considering this as a potential commercial opportunity,

as in turning it into or back into a shop,

or does it have the potential to be something else, such as residential?

Well, what have we got?

Not a lot! About 30-35 square metres on this side. Um...

Main shop area here.

At the back, just a bit of storage,

what was obviously a little office area.

Good news, you've got a toilet there.

It's in a right state, but at least you know that you do have the

sewerage or whatever connected and water.

And obviously, electricity, which is obviously potentially...

Sorry, got a bit sidetracked by the large puddle thing on the floor.

That's not good. Yeah. As I was saying, the...

Yes, the fact you've got utilities connected is really going to

save you a lot of money, but that really is bad!

That doesn't look too good.

Oop.

Ahem. Right. New ceiling and roof possibly required.

Roof problems can prove costly, so that will need investigating ASAP.

Anyway, moving on,

through to what I imagine was the drapers side of the shop.

Much bigger space. Probably about 40, 45 square metres in this side.

A lot less in here too. It is good.

Again, the ceiling looks a bit dodgy.

But what strikes me much more when you come in here is,

as you enter the rear part of the shop, the lack of light.

There is only one window. You don't know what it overlooks.

But if you wanted to put a bedroom back here, or a kitchen,

or a loo, you're going to need more light and more ventilation,

so that's something to consider,

cos you don't know what's behind this wall. Is this a party wall?

Is it part of somebody else's house?

Does it overlook somebody who would object to whatever you might

consider? So, lots of things to think about, but you know what?

It's worth some thought.

If you did decide to turn this into a residential property,

you would need to apply for change of use

permission from the planning department,

but with lots of properties in this street already residential,

it shouldn't pose too much of a problem.

However, how would it be done and would it be cost effective?

So, I think you're really starting to get an idea

for the potential of this place when you come outside and just look.

Look at that roof. That is really interesting.

One option would be to put roof lights in there, I suppose.

But it looks to me to be in a pretty poor state,

so my thoughts would be to talk to the planners about

whether or not you could do some double-storey kind of thing.

That suddenly opens up all sorts of potential cos rather than

just maybe a one-bedroom flat, yeah,

something much more exciting is potentially on the cards.

Yes, at a guide price of £20,000 to £25,000,

it does offer potential, subject, of course, to planning permission.

So, what does a local property expert think of it?

As you come up the street, although it's kind of two units,

you come in one door. It used to be an estate agents,

while his wife ran the drapery from this side. It was so quaint.

Almost Victorian in its way.

Its destiny now is going to be commercial

if someone fancies a go, or I think more likely residential.

As I thought, it looks like residential could be the best

option. But what kind of property could be created here?

You could make a bungalow out of the floor space.

I think the highest value in retail and rental terms is two parallel

modest kind of studio/one-bed flatlet apartments.

So, one large bungalow or two one-bed studio flats.

What kind of numbers are we looking at for each?

As a two-bedroom bungalow, you'd be looking at about £135,000.

On a rental basis,

it feels like about a £500 to £550 per calendar month property.

If the building was split down the middle and two studio/one-bed flatlet

apartments were created,

I'd see the value of each of those

being around £80-85,000

and the rental value of each being

£425, maybe £450 per calendar month.

Well, this really is a tale of two cities,

or rather a shop of two halves.

If you can't find the yin and yang of the estate agents

and a drapery, then you're going to have to do something else

with it, although I think that's the right thing to do.

Interesting opportunities, but I'm sure it perplexed a few

potential buyers when it went under the hammer.

OK, so lot 72. Was two shops.

We've been talking to people, it could be one or two units, perhaps.

Won't go any lower than 15.

At 15,000, do I see? 15, I'm away. At 15. At 15.

18, right behind you. At 18. At 18.

At 18. And 20. 21 on the phone. We have a telephone bidder on my left.

21.

With the bids flying in, via the internet, the phone, not to

mention bidders in the room, we'll leave there and go back at £30,000.

At 30. At £30,000.

There he goes 30,500.

At 30,500... There we go. Fresh face. 31.

31. So, completely against the pair of you now. 31 is in, by the pillar.

31,500.

32, I'll take, sir.

32, he goes. At 32.

And for the nice chap bidding in his home, 32,500, I'm taking.

Yes, and there he goes. 32,500. At 32,500. At 33, do I see?

At 33, do I see anywhere?

At 32,500, on the internet, has it for the first time.

At 32,500 for the second.

At 32,500, third and final time. Selling at 32,500.

Sold.

The mystery internet bidder was in fact Alicia.

Originally from China, Alicia has lived in the UK for some time and

currently works in the financial services industry in London.

She already has a couple of rental properties to her name,

but this will be her first attempt at renovating commercial premises.

I met her back at the property to find out more.

-Alicia, great to meet you.

-Nice to meet you too.

-Congratulations.

-Thank you.

-So, tell me why you wanted to buy this place?

Initially, I thought it was a bargain and also, it's a

-great investment opportunity.

-Right.

-I have a look then, on the internet.

On the picture, it looks pretty and the financial is affordable for me.

You said on the internet - did you come

-and visit it before you bought it?

-No.

-No?

-No.

-Why?

-Because I live in London, so it was a short time to the auction date.

-So, it wasn't enough time for me to come down.

-Wow!

But I made a few phone calls to check out. I have done some homework.

So, who did you call?

I have called the auction house and builders and estate agent.

OK, so what is the plan? Tell me what you're going to do, ideally.

OK, I'm going to turn it into two flats

and the total square metres is about 70 square metres.

So, probably one for 30 square metres

and other for 40 square metres.

For each one, I'm planning to do en-suite one-bedroom flats.

Now, in order to get to that point, clearly,

the first step is planning, isn't it?

-Yes.

-Have you spoken to anyone from the planning department yet?

-Yes.

I have called the local council.

They need me to start from pre-application.

I have talked to architects and they are planning to do it,

so we are starting to prepare it from next week.

Did they give any idea as to sort of

whether or not kind of they might allow it?

Yeah, there is a chance they will decline it,

but I don't see why they should because on this street, they have

many previous cases of people turning their shops into residential places.

-And this shop has been empty for five years, from what I heard.

-Right.

So, I think the council would love to see any affordable residential

places in this town.

Right, OK. So, do you have an idea of a budget?

Yes. I have set up a slightly tight budget for £20,000.

-Per flat, or for both?

-For both.

-OK.

-Yeah.

Alicia is obviously confident she will get permission

and if she does, she plans on renting the properties out,

once they're complete, which she expects to take six months.

Two months for the planning application process

and the remaining time to convert and renovate the property.

How much hands-on are you going to be?

What involvement are you going to have in the project?

I think I will pay and watch!

I like your honesty!

That's great! Pay and watch!

Because I'm not good at the building work,

so I will leave it to the professionals to do their job.

I love that. That's charming.

But you're an accountant, so you're about maximising the profit

and stuff.

You could get your hands dirty, come in here and do a bit of painting.

-Yeah.

-You might be able to keep the costs down a bit.

-Yes.

I did offer to paint the walls, if they need.

-OK. Well, congratulations.

-Thank you very much.

-Good luck with it.

And we look forward to seeing how you get on.

OK, thank you very much.

So, Alicia, hedging her bets with this space.

It's a long way from home, but I love her concept of pay

and watch as a renovation and restoration technique.

Actually, though, I think she's going to do very well here.

It all depends on planning, though. Will she get it?

You can find out later in the show.

Well, we've seen one property, but what about the other two?

Weeks and months have passed.

Do you think that's been enough time to get everything done?

It was in the southeast London suburb of Bexleyheath

where we first saw not one, but two flats up for auction,

separated in two different lots.

And they were sold one after the other. Are you keeping up?

Now both these two-bedroom flats were in remarkably good nick.

They also came with the bonus of a garage each and security gates.

Not that trained electrician and plumber Johnny and his uncle Isis

knew that when they managed to buy both of them at auction.

Sold at 160. And your bidder's number is...

Sold at 170,000 and that's the same buyer A790.

MUSIC: It Takes Two by Marvin Gaye and Kim Weston

# It takes two, baby It takes two, baby

# To make a dream come true

# Just takes two. #

-Did you do much research with these?

-No.

-Any research?

-No.

-Did you read the legal pack?

-No. Not at all.

-Did you view them?

-No.

-Did you know you were going to buy them?

-Not at all.

As you can see, quite a few "no, no"s in this purchase.

And Johnny and his uncle really got lucky here.

So lucky in fact, that they felt to rent or sell the flats,

they needed to spend, well, a big fat zero on them.

MUSIC: Pompeii by Bastille

And now, just a month later, we're back to catch up with Johnny,

to find out what did, or more likely, what didn't happen.

Firstly, in the ground floor flat...

# If you close your eyes

# Does it almost feel like nothing changed at all

# And if you close your eyes

# Does it almost feel like you've been here before

# How am I gonna be an optimist about this?

# How am I gonna be an optimist about this? #

Well, yes, you've guessed it. Not much has changed here.

# Oh, where do we begin...? #

Let's start in the first-floor flat.

So, what work, if any, has been done?

In the upper flat, we haven't done nothing.

We were looking to change the storage heaters

to gas central heating...

But lucky enough, a tenant's come along and they're in a hurry to

move in, so they're quite prepared to live with the storage heaters.

Which all work, we've all had them tested, so they're all fine.

So we'll do that at a later date.

And in fact, they haven't just rented the first-floor flat -

he's got a tenant for downstairs, too! Don't be fooled.

Johnny hasn't been totally idle.

He hunted high and low,

and he did find one area that needed his attention.

Erm... I've just changed this light here. It took me 20 minutes.

Very straightforward, very easy, just like everything here.

It's been very straightforward.

Wow. 20 minutes of blood, sweat and tears? Careful, Johnny.

Don't go overdoing it. But he is a skilled tradesman.

Now, how does he feel not to actually have to get so stuck in?

I like it, but I also like getting stuck in and doing some work.

We will still have to do some repairs to the roof.

The roof will have to be repaired at a later date.

But when it's a bit more warmer. It's a bit cold at the moment.

MUSIC: Let The Sun Shine by Labrinth

# Let the sun shine Let the sun shine, baby

# Let it all go Let it all go... #

So when there's better weather, we might catch him on the roof,

keeping on top of things.

And he also has that upstairs central heating to do at some point.

So, he thinks he might spend around £10,000 at a later date.

What about his costs for now?

Well, I've spent here, in total about £36 on two lights.

Ha-ha, well, with the total purchase price for the two flats

being 330,000, that massive no-expense-spared £36 spend

takes his total expenses to £330,036 to be precise.

All sounds like a bargain to me,

but what do two local estate agents think?

Having come back and had a look around,

I see nothing's changed since a month ago when I was last here.

Erm...

Yes. Same as it was before.

Well, location to start with is a very, sort of, good location.

Very convenient for the shops, train station's not too far away.

In terms of size of the properties,

Both, yeah...both good properties, both a good size.

In my opinion, I think he should have fitted central heating

and also just maybe touched up the painting here and there.

Just to maximise the rental potential and clientele.

Johnny has, of course, already rented the flats out.

But if he and his uncle were offered the right price, well,

they may sell them on.

So what could they fetch in their current condition?

Right, the ground-floor flat, in the condition it's in at the moment,

I would recommend £210,000 to £215,000

would be an achievable selling price.

With the first-floor flat as it is at the moment,

you're looking at around £220,000 to £225,000.

Ground-floor flat, £195-£200,000.

The first-floor flat, which is the better flat out of the two,

I would suggest marketing it at £220,000.

That's a total of 415-440,000 for the two flats.

-So what does Johnny make of those values?

-Very happy. Yeah, fine.

Yeah, I'd sell them tomorrow, at that price.

If he did sell them on almost immediately,

they could see an eye-watering potential pre-tax profit

of 85-110,000. Minus the usual taxes and expenses, of course.

But what about rental values? Is he getting the current market rate?

The ground-floor flat, for rental purposes, would be

looking to achieve £850 per calendar month, to £875 per calendar month.

The first-floor flat, in its current condition,

you'd be looking around £900 per calendar month to £950.

Ground-floor flat, I would probably say about £850 per calendar month.

And the first-floor flat, I would probably say...950, at the moment.

£950 per calendar month.

If he was to spruce it up a little bit,

in terms of cleaning the carpet, a little bit of redecoration,

he could probably even ask £995 per calendar month.

Right on the money. Quite happy with that.

We're getting 850 for downstairs and 950 for upstairs.

With a total rental income of £1,800 per calendar month,

he's currently getting an annual rental yield of around 6.5%.

So, boy, this has been a real winner all-round.

But he broke every single rule in the book.

Buying blind, not reading the legal pack, doing no research...

Not really a recommended approach, Johnny.

I'm very lucky, yeah. If this would be, sort of, 1 in 10

that we've bought before where we haven't looked.

I wouldn't recommend it at all. We've just been very lucky.

Makes up for the ones that are not so nice.

MUSIC: Break The Rules by Status Quo

# But everybody has to sometimes break the rules

# Well, everybody has to sometimes break the rules... #

I completely agree.

Be warned - that this property is the exception, not the rule.

# Yes, everybody has to sometimes break the rules. #

Ten miles north of Plymouth in Devon is the village of Gunnislake.

And it was here, just off the high street,

we found a commercial property that seemed to have

a double existence, with one half previously being an estate agents,

and the other half, a drapery.

Perfect for those who like a well-dressed house.

MUSIC: Shop Around by Smokey Robinson

# You better shop around, whoa, yeah You better shop around... #

But its double life was at an end. So what was it now cut out to be?

London-based accountant Alicia bought it for £32,500 at auction,

and had clear ideas.

I'm going to turn it into two flats.

For each one, I'm planning to do en-suite, one-bedroom flats.

How much hands-on are you going to be?

I mean, what...what involvement are you going to have in the project?

I think I will pay and watch. THEY LAUGH

I like your honesty.

That's great. Pay and watch.

MUSIC: Every Breath You Take by the Police

# Every breath you take Every move you make

# Every bond you break Every step you take

# I'll be watching you... #

And provided she got planning permission,

her watching brief was going to be done by providing

a local builder with £20,000 and hoping to get her two flats

ready to rent out in six months' time.

And now, 19 months later,

we're back with Alicia to see what eventually she managed to achieve.

I have divided it into studio flats. The two flats are almost identical.

And there is open-plan living space, with the bathroom space and

the bathroom, of course, a brand-new kitchen, in the living area.

So, where once was a split shop, there are now two

not-quite-identical one-bed studio flats.

Phew, that's a relief.

I was beginning to worry that this was going to still be an empty shop.

But why has it taken so long?

The majority of time has been spent on

application of planning permission,

which has taken 14 months.

Yes, poor old Alicia had a tough time with planning,

having to renegotiate the terms of the consent on several occasions,

until eventually she got it passed with no strings attached.

Phew. And she also ran into

contractual problems with her builder

that delayed the project further.

And if that wasn't enough to contend with,

the work hasn't been straightforward either.

The roof was quite damaged, so spent about £10,000 to repair the roof.

Another big cost is to change the front window.

I was not allowed to change the looks outside,

so I have to...tailor-made, this double-glazing window,

which cost me a lot.

She also had high costs on insulating the building,

both thermally and for soundproofing,

all of which hit her budget hard.

At the end of the day, I spent

about three times of money than the original budget.

So in total, perhaps I have spent £67,000.

Well, a £60,000 spend on top of a £32,500 purchase price

has meant her total costs are £92,500.

So, can this still be a worthwhile investment?

What do two local estate agents think?

My first impressions of the two properties is,

"This lady's got the Midas touch. I want her to buy

"my lottery ticket on Saturday."

It's perfect.

I think the lady has really maximised the space

and I can imagine that it would be great for a young couple

or first-time buyers, cos it's such a convenient little village to live in.

There's a train station up the road

and you've got everything that you need in the village.

The conversion and the finish, I think, are...are on the money.

No need to be too flashy, but equally, don't be too plain.

Alicia intends to rent out the two studio flats, but having spent

£92,500 on them, would they generate any return if she sold them on?

If I was to market these properties in the current property market,

I would be looking to market each property in the region of £75,000.

They are both essentially the same

and I'd see them on the open market at £82,500 each.

£75,000 and £82,500,

I think are a slight bit low.

But if I can achieve it, I'm still happy.

Well, she should be reasonably happy because those valuations

would see a pre-tax profit of between £57,500 and £72,500.

Less taxes and expenses, of course.

So, how will they fare on the all-important rental market?

In the rental market, I believe these properties would achieve

something in the region of £475 per calendar month.

On the rental market, I can see £500 per calendar month, each.

I think 500, perhaps, is possible. 475 is a little bit low.

Actually, this property is already on the market for 525.

Even the lower £475 per calendar month would generate

a healthy annual rental yield of 12%.

So perhaps it was worth the wait, after all.

What's next for Alicia?

I will continue to do next property development.

That's my purpose. I want to be involved in property business.

And I'm happy I have finished this property. I want to continue.

Well, that's all Martin and I have time for, today.

Yes, but join us next time

for more stories from the property auctions,

here on Homes Under The Hammer.

-See you then.

-Goodbye.

-Goodbye.