Episode 10 Homes Under the Hammer

Well, Lucy and I are absolutely passionate about property,

which is just as well, cos it's our job.

We love the whole thing, from finding the property

to getting your hands dirty, or even choosing the kitchen.

We've got our own exciting bit of news here

on Homes Under The Hammer, because we're joined by Dion Dublin,

-who loves property as much as we do.

-Hey, Dion.

-Absolutely.

And like you two, I love my property, but I love a bargain even more.

So let's go to the auction and see how we got on.

So if you're looking for a good deal, well,

the auction room is a great place to start,

but make sure you do your research before you go in for that bid.

Yes, and even then, you have to expect the unexpected.

Yeah, let's take a look at the properties

which made our buyers part with their cash on today's show.

On the show today, will a property near Durham

make a big change in this family's life?

Tell us how long you've been looking for.

About 11 years, been looking for a house.

Will the size of these rooms in Derby put off the buyers?

All of the bedrooms...nnngh...

are really, really small.

But if it's room you want,

this property in London won't disappoint.

I am here to see a shop together with two flats on the upper floors.

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.

Here at 27.

This is Terris Novalis. Standing at six metres tall,

this stainless steel sculpture is situated

just outside Consett in County Durham.

It was created by artist Tony Cragg as a monument

to what was once Europe's largest steelworks.

Though the industry has since gone, today Consett

is a thriving commuter town with great links to local cities.

The property I'm here to see is in Moorside.

Now, that's 30 minutes' drive from Newcastle and Durham.

It's a three-bed semidetached with a guide price

of £55,000 to £65,000. Let's take a look.

OK, straight into a porch way area,

and then into the hallway with another door here,

and a third door into the property which will keep the warmth in.

Stairs up to the bedroom with this cool 1940s banister,

and a nice big lounge area here.

It's a good space, with a fireplace there as well.

Through the hallway, even further into the dining room.

A nice, big dining room with downstairs toilet.

Now, I would imagine that would have been part of the extension,

and you get a conservatory as well, so lots of space to play with.

But I'm going to investigate just that little bit further.

OK, into the kitchen, which is a little bit smaller,

and I've spotted a couple of tiles over there

which have bowed and lifted through damp and a bit of leakage.

But my attention's on the size of this kitchen

rather than its condition.

In today's property market, families want family-sized kitchens,

and this is a family house. So what to do?

You could actually knock that wall down,

have the diner and the kitchen all as one.

Great family space, and the parties always end up in the kitchen.

# When it's time to party we will party hard... #

Yes, you can't have a good house party without a good kitchen,

and if you were to get rid of this wall,

there'd be plenty of space for a good kitchen.

But let's be honest - even if left as is,

it's going to take a lot of redecorating

before anyone gets invited round here for a party.

Let's see how upstairs looks.

Here onto a decent-sized landing area.

Small bedroom to my right just over here, and another bedroom

looking at the back of the property which is just that little bit bigger.

And an upstairs bathroom.

And into the master, which is the biggest of the three bedrooms.

I've noticed so much storage space, wardrobe space,

already built into this property, so that could help you with your budget.

And one quirky thing I have noticed is

all the lights in the bedrooms are over the window.

And can you hazard a guess why?

# I know there's an answer... #

Now, never let it be said that we at Hammer leave you hanging.

Apparently, the lights were placed there

so that when occupants were undressing,

they avoided the silhouette being cast on the curtains.

How very modest.

Frankly, I'd be more interested in the view. Take a look at that!

And take a look at that bathroom.

OK, not quite so spectacular - it does feel a little bit cramped,

but outside, it's a different story.

So out into the back garden.

Now, there's your flat roof, and that's where the leaks

and the damp will be coming into the property, but with regard

to extending the property, that could be a perfect space.

This is a good-sized family home as it stands,

but I reckon an extension over there could add some valuable accommodation

in the shape of a fourth bathroom,

and get rid of those tedious flat roof problems at the same time.

At that guide price of £55-£65,000,

the chance to add some value in a big way is a real opportunity,

and you wouldn't be losing much garden space, either.

Does the local estate agent agree?

There's always a demand

more so for a four-bedroomed property in this area,

because families do like to stay in the area,

and because families are growing,

a two-child family now warrants a four-bedroomed house,

so I would definitely say there's demand in the area

for this type of property.

So according to the estate agent, an extra bedroom

would certainly increase the demand for this property.

But would it actually increase the value?

What does she think the property is worth in its current layout?

Once this property has been renovated,

I see the value of this property being

round about £85,000 to £90,000.

I would see the rental value of this property

being round about £450 per calendar month.

And if an extension were to be added above the garage

for the fourth bedroom?

In the current sales market, once this property has been extended,

I would say that this property could then achieve round about £95,000.

The rental figure on this property then would be

round about £550 per calendar month.

This is a good, solid property.

Now, the extension at the back is a little bit dodgy,

and sorting that may eat into your budget, but let's see

who fancied the challenge when it went under the hammer.

So we're onto lot 34.

Property is in need of some modernisation,

but would be ideal for a first-time buyer investment opportunity.

Start me, then, 60, at £60,000.

At £60,000. Am I bid 55, then?

At £50,000, need a bid.

50 here. At 50 I'm bid now.

At £50,000. 51, 52,

53, 54,

55, 56 - not sure? Here at 55.

At £55,000, are we all done?

Back in at 56, 57,

58, 59...

58 and a half. 59.

Half.

60.

Half. 61, half.

62, half.

62½. 63.

Half. You're out.

Here at 63. At £63,000, then.

First time, second time, if you're all done,

selling away, then, at £63,000.

You, sir, congratulations. It's a good buy.

Sealing the deal with a kiss was Scott and his partner, Andrea.

Scott and his family have been living in rental accommodation,

but he's hoping this semi, bought for £63,000,

will be their perfect new home.

I went to meet Scott to find out more.

-Scott, nice to meet you, sir, and congratulations.

-Nice to meet you.

Tell us about your auction experience, first off.

Well, it was my first time at auction,

and I took a little bit of support with me.

I had my partner Andrea and my mother with me, sitting by me.

And it was one of the later lots,

which I think was a benefit for us, cos I think a lot of the investors

had spent their money by the time it got to the end of the auction.

And I've been looking for a house for a long, long time,

so when I eventually won the auction,

-I did get a little bit emotional afterwards.

-And rightly so,

if you actually found somewhere that you've been looking for for how long?

-Tell us how long you've been looking for.

-About 11 years,

been looking for a house, and been searching this area

for four, five years now.

And have never quite found what we've been looking for.

Been renting for those 11 years,

and when this house came up, we saw it as an opportunity,

because it could get us back on the housing ladder,

and hopefully put a little bit of equity in our pockets as well.

Scott and his partner Andrea have two daughters,

and they also have Scott's eldest daughter over to visit.

It hasn't been easy to find a house that fits the bill,

but 11 years? Wow.

# Some people say, why don't you take a chance?

# To linger is a crime

# Why take a chance?

# I'd rather take my time. #

Well, having taken his time finding it,

I hope it's not going to take 11 years to do it up.

What are Scott's plans for the house?

It might be a little bit different to other properties

that we've been living in,

because we've been living in rental properties.

Rental properties tend to have beige carpets, magnolia walls,

that kind of thing, and I think we're sick of looking at them.

So we're going to put a little bit of our own, erm...

-Touch.

-..touch to it, yeah. Apart from the decoration,

we're going to knock through the kitchen area,

which is really small at the minute,

and make a big open kitchen diner area.

Means we're going to have to lose the downstairs bathroom,

but we're looking at options to re-locate that

-somewhere else downstairs.

-OK, and colours. Who's got the eye?

It's been very difficult to agree on a lot of things, I must admit.

So I think what we might do is divvy up the rooms,

and I can choose what I want in certain rooms,

and my partner, she can choose what she wants in certain rooms.

So that says to me you'll get one room,

-and she'll get the rest of the house.

-It could go like that.

-THEY LAUGH

-We'll just have to see how it goes.

I think I might get the hallway and the kitchen. That might be it.

You've done well if you get that much!

-Any other plans for the future, what you'd like to do with the property?

-Yeah, it's not an immediate plan,

again due to budget limitations,

but at the top of the stairs there's the opportunity

to put a door in and go out on top of the garage roof

and put an en-suite bedroom,

a nice big master bedroom,

and that would have the fantastic views over the valley as well.

That'd be amazing.

Budget restraints mean Scott can't build his extension immediately,

but this is going to be his home, so if he wants to,

he can build it whenever it suits.

Speaking of budgets, how much money has Scott set aside for the work?

-I've got £11,000.

-OK.

And I think it may be tight, with the kitchen and stuff.

And there's some other essential works that need to be done -

there are some lintels blown outside on the front of the house,

and there's a little bit of work to make the garage safe

-that needs doing. There's an RSJ needs to go in there.

-OK.

Scott works away a lot, and he's very busy

helping with his family's firework display business.

So unable to be there himself, he's going to be reliant

on a team of local tradesmen who also happen to be friends,

and they're hoping to get it all done in seven weeks.

-A lot of trust. Leave them to do what they've got to do.

-Yeah.

It is, it's a big trust job, but I know these guys,

and I'm sure they'll do a fantastic job.

You seem so happy. I'm pleased for you.

I'm not surprised you were emotional when you got your home at last.

-I hope it's going to be a happy home for you.

-Thank you very much.

-Pleasure.

-Cheers.

So at last, Scott has found his family home,

but he's not going to be here to oversee the work

as he'll be away doing amazing firework displays,

and he's going to have to leave all the work

in the trusty hands of his builders.

Will it be a sparkling success?

You can find out later on in the programme.

Normanton in Derbyshire is split into two parts - Old Normanton

and, you guessed it, New Normanton.

Originally a farming settlement, over the years,

the area has been swallowed up by Derby

as its population increased with industrialisation.

Normanton is now considered a suburb of the city.

Well, it's in New Normanton that I find today's property.

About two miles from Derby's city centre,

a four bedroomed mid-terrace, guide price of £75,000.

Let's get inside.

So, fairly standard layout.

Off the pavement, straight into your front sitting room.

But it looks to be in reasonable condition.

I mean, very standard kind of colour schemes - magnolia walls,

white ceilings, it's pretty much what you want.

I wonder if this has been rented out, it has that kind of feel to it,

which also is potentially good news if you were looking

to rent it out, you know that there's a ready market for that.

Certainly the close proximity to the city centre would bode well.

Rear sitting room area here. This is, I imagine,

where the kitchen would have originally been, but as has happened in a lot of cases,

somebody's built an extension at some point. But don't you just love this?

They've put this whole extension on, they just couldn't be bothered

to move the radiator so you could get rid of this wall as well.

How daft is that?!

# I like to move it, move it

# I like to move it, move it

# I like to move it, move it

# You like to move it. #

That wall has to go.

Anyway, calming down, the kitchen itself -

really quite pleasant, if you like red.

Bathroom at the end there, again, very traditional layout.

But the interesting thing about this property is the number of bedrooms.

That's what's got me intrigued. So let's go and explore.

Let's be honest - other than the kitchen decor being a little bold

for some people's taste, this house is in good nick.

But back to those bedrooms upstairs.

So walking up to the front of the property,

I was wondering how on earth this could be a four-bedroomed house.

Having wended my way through here,

though, I can now see what they've done.

There's those two bedrooms at the front, there's one in the middle.

There's a bathroom and a toilet here, which is a bonus,

and then the final bedroom here at the back.

But to be fair, all of the bedrooms...nnngh...

are really, really small.

So, yes, there are four bedrooms,

but let's think about inventing a new word -

a semi-bedroom. Yeah, four semi-bedrooms.

Well, that's not fair, either - there are three reasonable bedrooms and one semi-bedroom.

No, back here - two proper bedrooms and two semi-bedrooms. Perfect.

Either way, I'd re-jiggle it if you could.

# Now don't you leave me halfway

# To paradise

# So near

# Yet so far away. #

So near to being a whole bedroom, oh, but so far away.

There's barely enough room to accommodate a cat

in some of these rooms, let alone swing one, poor thing.

To be honest, I think this whole floor needs to be reconfigured,

though I'm still not sure how they managed to squeeze it all in,

even if they are semi-bedrooms.

I'm heading outside to investigate further.

Well, out of the back here, a small courtyard

which leads to a slightly small -

but at least it's a bit of an additional bonus - garden,

which is good to have. But out here, more importantly,

you can see exactly how they've managed to squeeze in four bedrooms

into what, on the face of it, is a fairly smallish property.

It's a double-storey extension. That was a good thing,

but don't you wish they'd built it a little bit wider?

Cos that explains why that particular bedroom

is a little bit small.

Overall, it's a decent house, in my opinion.

So we asked along a local agent

to tell us what work he thinks needs to be done

to make the most of this unusually proportioned property.

I think the work to be done here is quite basic, really.

It just needs a once over, maybe some emulsion,

repair to the door, and some tidying up upstairs.

No more than a couple of thousand pounds.

I would say £2,000 to put things right.

£2,000 is by no means a lot for a redevelopment.

The agent's suggested a rental of £650 per calendar month,

so if the property could be bought at the guide of 75,000,

that would give the owner over a 10% yield.

But what about the sale valuation?

I would say that if this property were brought up to a good standard,

with a reasonable period of time,

it would achieve a price somewhere in the region of £95,000.

Well, apart from a new bit of glass

and a bit of painting here and there, not much needed

to sort this place out, yeah. So for that guide price,

a really good one to go for. Let's see who agreed

when it went under the hammer.

It's a modernised four-bedroomed terraced house,

gas centrally heated, mostly double-glazed.

Start me on that where you will, ladies and gentlemen. 75?

Who's got 72 to start me?

70 to put it into the bidding, then. 70,000.

Thank you. At £70,000.

71 from somewhere else? 71 is bid.

At 71,000. 72?

72 I've got. At £72,000.

73.

At 73. 74.

74 is bid.

At 74. 75 now?

At £74,000.

74½.

At 74½. 75.

75½.

75½. 76.

76½.

And seven. 77.

One more? 77, five. 78?

At £77,500, all done?

For the first time, for the second time, at 77,500.

Third opportunity, finished with it.

Sold at 77½. Thank you.

And the successful bid of £77,500 was made by Mahesh.

Mahesh will be working with his friend Mayur,

and if you recognise them, that's because this London-based pair

have been on the show before, when they renovated

a sprawling six-bed house nearby.

I caught up with them to see what they had planned for this one.

-Mahesh, Mayur. Good to see you again.

-Good to see you again.

-How are you guys?

-Fine, thank you.

-Nice to see you.

-Good.

-Very good.

So, how come you wanted to buy this particular house?

This is a four-bedroom house,

which is quite suitable for a larger family.

So what's attracted you to this part of the world?

-The prices.

-Right, OK.

-The prices in London are so high,

-and this has got great return on investment here as well.

-Right.

Mahesh and Mayur are old friends,

and Mayur, who has property developing experience,

has been advising Mahesh on how best to develop his auction purchases.

So is he providing his educational services for free?

-He is, he's a good friend.

-No, no, no. His wife cooks for me.

-THEY LAUGH

-Brilliant.

Mahesh's wife must be a mean cook.

Seriously, it's great that he has an experienced friend

that he can go to for help. So what's the plan?

OK, so upstairs, we just need to adjust the second bedroom.

If we can readjust the corridor,

it is possible that we can actually create that second room

-in much bigger and better shape.

-Oh, OK.

-So that's one thing.

And then downstairs, any plans for the kitchen or the loo or whatever?

What would be nice is to just block it off with a door,

to just make it a little bit more fireproof

-in respect to whoever is living here...

-Oh, OK.

..would be safer for them. So that we probably just put a large window

and a door space between this room and the kitchen behind us.

Oh, well, that's interesting, cos I was thinking about taking down

the little bit of wall that's there and moving the radiator.

But you were in fact thinking about blocking that up more.

We were suggested this by the housing association,

who will be taking this property on a three-year lease from us.

Ah, that's very interesting.

The guys have come to some sort of leasing arrangement

with the local housing association.

So it looks like that little wall has been saved.

So was it a requirement of the housing association

that you did some of these works?

OK, so housing association, they came round to inspect the property,

and they suggested a few things.

They talked about the insulation on the loft,

which we have not seen as yet,

so we probably need to just re-insulate the loft.

So, just explain the process, then.

Did you just decide you wanted to rent to the housing association?

You approach them and say, "I've got a house you might be interested in." Is that how it works?

That's exactly what it is, yes. So we've been in touch with them,

and they are interested, and this is particularly

because it's a four-bedroom house,

they are a lot more interested in that.

And once they've taken it on, if they do,

what would your involvement from that point be?

OK, so to start, we have to just make sure that

all the safety aspects of the house are up-to-date,

and when it comes to just ongoing,

then if there is anything structural or anything major,

then the housing association would phone me.

Otherwise, just smaller things, it will be their responsibility.

Anything internal, anything they damage

would be their responsibility.

-And do they find tenants for you?

-That's right.

So they actually guarantee the rent to us,

and whether they have a tenant or not, it's their responsibility.

Mahesh and Mayur have a budget of between £2,000 and £3,000,

and are intending using it to build that door between the dining room

and the kitchen and generally renovate the house.

If the deal with the housing association then goes through,

they'll be looking at a rental of just under £650 per calendar month.

So what's the timescale for getting it rented out?

-Well, to finish the work, about three weeks.

-OK.

-Having it rented out, maybe four.

-Well, great to see you both again. Good luck with it.

-Thank you very much.

-And probably see you again at some point in the future!

-HE LAUGHS

-Look forward to that. Thank you, bye.

Well, it looks like it looks like Mahesh and Mayur

have got things well sorted with this place.

Over 10% yield, very low amount of money going into renovating it.

Too good to be true? Well, there's only one way to find out,

and that's to join us later in the show and see how they get on.

Still to come - it's all about the money,

and it sounds like they're giving away properties in London.

The shop's sort of come in for free,

so yes, I can take my time and do what I want.

And in Derby, will a clever idea yield a greater return?

We realised that we can get something like £30-£40 a month more for that.

Time to return to Moorside to see this three-bed semi.

# Be in a position to make me

# Feel so damn unpretty... #

OK, so it wasn't much of a looker, and it needed a bit of TLC

to bring it up-to-date, but it also presented some good opportunities.

OK, into the kitchen, which is a little bit small,

but you could actually knock that wall down,

have the diner and the kitchen all as one.

Great family space.

And that's exactly what Scott was thinking

when he paid £63,000 at auction.

He thought this could make a great family home, and he should know -

he'd been looking for a while.

About 11 years been looking for a house,

and been renting for those 11 years,

and when this house came up we saw it as an opportunity,

because it could get us back on the housing ladder

and hopefully put a little bit of equity in our pockets as well.

So when I eventually won the auction,

I did get a little bit emotional afterwards.

What are you going to do to make it your home?

How are you going to change it?

Because we've been living in rental properties,

rental properties tend to have beige carpets, magnolia walls,

that kind of thing, and I think we're sick of looking at them.

So were going to put a little bit of our own, erm...

-Touch.

-..touch to it, yeah.

# Now that we found love

-# What are we gonna do

-What are we gonna do

-# With it?

-With it?

-Now... #

Well, now he'd found it, what was Scott going to do

to turn it into a family home he could love?

He'd given himself £11,000 and seven weeks for the work.

How did he get on?

Well, after three months, we return to Consett

to see what happened to Scott and his partner Andrea's new home.

Well, this is far from the dated decor we saw last time,

and it's not just superficial.

Scott fixed the garage roof to stop the damp getting in,

allowing him to completely remodel the kitchen, and it looks great.

Well, in this space we used to have three separate rooms.

We used to have a very small, pokey kitchen,

and then there was a toilet, which we've taken out.

We've opened it completely up.

We've fitted a new kitchen, we have new laminate flooring,

made a built-in fridge and larder storage.

And this end of the room where they've been opened up

has made a great family dining area.

In the hallway, Scott's replaced the old banister

with reclaimed spindles, which is safer for the children,

and along with the new flooring, helps the hall feel spacious.

Well, they've kept the decor neutral here. I do seem to recall

that Scott and Andrea planned to put some colour into this property.

We've lived in rented property for a number of years,

so we decided that we were going to do something a little bit different.

So it was kind of a joint decision between me and my partner.

She made some decisions, especially about the children's room

and our bedroom, but the rest of the house was kind of a joint decision.

# Yes, we all need a room of our own... #

I'm glad Scott and his family have really made it their own,

and you can see it in a lot of details - from the safer staircase

to the sturdy floor in the hall, this has been developed

with a view to the family staying here for the long haul.

Scott even decided to invest in solar panels.

Well, I had done a little bit of research before we took

the property, and realised that the back of the property

was south-facing. So once I did the sums,

it made sense as a long-term investment.

# He's going the distance

# He's going for speed

# She's going the distance... #

I think that's some good thinking.

Solar panels, or photovoltaic cells as they can be known,

reduce energy bills, and in some areas,

electricity generated can even be sold back to the National Grid.

The initial cost will have affected Scott's budget, though.

So how did he get on?

I think the original budget was 11.

I was a little bit nervous about that.

The budget, or the amount we've actually spent, is 16,000,

but that does include an investment we've made in solar panels,

which accounted for about 4,000 of that.

That £16,000 spent also includes the cost of double glazing,

which Scott has ordered, but still has to be installed.

He's done a thorough job,

but will two estate agents be impressed

with his modernised family home?

This has been done to a good standard inside.

My favourite bit is the kitchen. The open-plan living area

at the back of the property downstairs is much brighter,

much more of an open feel.

I think the family have done a great job with the renovations.

The kitchen is absolutely great,

and I could see that room now being very well used.

So it's a good addition to the property.

So far, this house has cost £16,000 to renovate

on top of the 63 grand purchase price.

So the family have spent a grand total of £79,000.

Now, this is very much a family home.

They aren't looking for an immediate return.

But just for nosiness, what could the house make in rental?

For the rental market, I would give it a valuation

of £500-£525 per calendar month.

Rental-wise, this property could achieve £500 per calendar month.

That would mean a yield of around 7.5%.

Now, they're definitely not going be selling,

but hey, let's keep being nosy.

In the sale market as it currently stands,

I would give it a valuation of £85-£90,000.

I do believe that in the current market,

this property would achieve £85,000.

Well, it's a property to live in

and we've got no intention of selling, so I guess

the valuations are a little bit meaningless,

apart from the fact that it has put a little bit of equity.

Given us a little bit of equity in the property,

which kind of makes up for the rental -

the time we've been renting.

So Scott has potentially 11 grand of equity in his home,

but more importantly, after an 11-year wait,

his family have a home to call their own.

And there are so many more important aspects to this

than any potential profit.

It's a perfect location for us.

We've got all our family within about five minutes radius of us.

We've got the school just a short walk down the road,

and it's not far for me to go to work.

So for us, it's the perfect property.

Well, a perfect property is exactly what it's all about.

So am I about to find one here in Beckenham,

a suburb of south-east London?

It has good links to the city centre,

and today I've come to its high street.

Now, this really is a rather busy road,

but if you're one of the shop owners along this parade here,

well, it's not necessarily a bad thing.

Lots of potential customers passing by.

And the good news is, I am here to see a shop -

a former barber's, to be precise -

together with two flats on the upper floors.

Now, it had a guide price of £440,000,

which is rather interesting, as last year,

the two flats alone were on the market

for a combined value of just under £475,000.

This could be a rather trim guide price, don't you think?

Well, my first impressions are -

it's smaller than it looked from the outside.

Quite a lot of glass work needs to be done in here.

Things like a new shop frontage can be quite costly,

so you know, that's something I'd be getting quotes on straight away,

cos glass can be expensive.

And it does tend to narrow down into the end here.

Now, I know this was a barber's - I can see here,

there's that shop awning, "Barber's" across the front.

Whatever you put in here, bear in mind it could impact

on the value of the flats above,

so you've got to be really careful what you decide to do.

Because the space isn't ideal, you've got a very wide frontage

down one end and it certainly pinch points at the back.

I suppose you could use this as a nail salon, an office, perhaps.

So whoever takes this on has got to remember

to think about all those things.

Yes, there are decisions to be made and work to do

before this place is ready to trade.

But on the positive side, the shop does have toilet facilities.

Now, what about those flats? Which, as I mentioned,

together have been valued at not too much more

than the guide price for this whole lot.

So snap this up for anything like that guide price,

and you could have a shop for free. Let's take a look.

So into the first-floor flat, and I will mention,

good security here, because you've got your own entrance downstairs

and your flat entrance here, which is a real bonus.

So, two bedrooms here. Not a bad-size double,

another one down the end of the corridor, and the bathroom.

And, well, it's incredibly spacious in here.

I wasn't expecting this - a really, really nice,

sunny, bright room with a massive window.

Now, luckily - let's just check - yes, that's all double-glazed.

You will have to think about some really nice blinds or curtains,

cos you can see straight down there onto that very busy main road.

But another feature I really like is this open-plan kitchen space,

although it doesn't look like it's been fitted terribly well,

so I'd have a little rejiggle with this space.

There are things you need to do in this property,

like the flooring - it's all starting to come up here,

so you're probably going to have to have new carpets, new flooring.

All the skirting boards are chipped, it needs a paint job.

But you know, this could be quite quickly ready to go,

and I imagine this would rent out really, really quickly.

Up into the top-floor flat - well, it gets even better.

Another two-bed, this one, but it's spick and span,

and you wouldn't need to do anything at all.

Surprisingly spacious as well,

considering it's on the top floor in the eaves of the building.

All in all, this is looking pretty good,

and I haven't even finished yet.

Out the back of the property,

there's a sizeable car-parking space that could offer opportunity

for expansion to the shop - subject to planning, of course.

On the whole, I reckon this is an interesting lot,

but what does the local estate agent think?

The guide price of 440,000 for this property is very good,

given that the two flats above

could potentially generate even more than that.

Let's talk valuations.

Assuming these flats get a little TLC,

what kind of rental income could they achieve?

The first-floor flat, we could ask for a rental figure

of £1,150 per calendar month,

and on the top-floor flat, we would ask for £1,100 per calendar month.

And to sell on?

We would market the first-floor flat at £250,000

and the top-floor flat at £240,000.

As for the shop, our agent believes he could achieve

£1,000 per calendar month in its current configuration

or up to £1,250 per calendar month

if you were to extend into the car park.

He thinks the shop's current sale value would be £220,000,

but again, could rise as high as £250,000

were you to extend into the car park.

Well, there's not too much work to do here,

and you do get a lot of property for your money.

In fact, it could even be three for the price of two!

Who thought this former barber's and its flats were a cut above the rest?

Let's find out when it went to auction.

Mid-terrace building arranged as a ground-floor shop

and residential upper parts. Well located.

Who'd like to start me on this?

400 anywhere?

400 I've got.

On the phone, 405 anywhere?

405, thank you. 410?

410. 415?

415. 420...

This lot was the subject of telephone interest

as well as in the room. We rejoin the bidding at 446,000.

446.

New competition, 446.

447.

448, sir. 448.

449.

450, sir? 450.

451.

OK, have a think. It's with the gentleman here

at the end of the row on my right. Anybody else?

If not, 450 for the first,

450 for the second,

450 for the third and final time, all done?

Sold, 450.

And the successful bidder, paying 450,000, was Jag.

Former accountant Jag has been a property investor

for ten years now, and he lives just around the corner

from his new purchase, so it was easy to meet up for a chat.

-Congratulations, well done!

-Thank you.

-So you've bought a shop and two flats.

-Yeah.

Did you expect to get this on the day?

Not really, because I was looking at other properties,

but I thought there would be a lot more competition for this property.

How do you feel about the price you paid?

That was the exact price I was budgeting for,

but I didn't think I was going to get it at that price,

because the auction price was starting at 440.

So, you know, I was very lucky to pull it in at 450.

So really, just £10,000 over the guide price

-for all this property.

-Definitely.

-Actually not bad.

-No.

However, it's not quite as cut and dried as that.

Because the windows were damaged during the buying process,

his loan became very complicated.

So a bridging loan has cost him 25 grand - ouch!

Jag does have a portfolio, and was an accountant,

so it's reasonable to assume he's done the maths

and still thinks it's all going to be OK.

Now, Jag, I know you've got a background in accountancy.

Is that what sort of led you into property in the first place?

It was quite difficult to be in employment

and try to buy properties and do them up,

but I'm very pleased to move into property,

because it gives me more time to spend with the family.

I get to do get to do my school run for my son.

So for me, it gives me a lot more spare time or free time

to be with the family. I decide how to spend my time,

whereas previously, somebody else was deciding that.

So that's lovely for you. And do you feel much happier as a result?

Definitely. Definitely more happy.

# Oh, I gotta spend just a little more time with you

# Yeah, yeah

# That's why... #

That's lovely - with property,

sometimes there's more than just simple profit to be considered.

So now that Jag is master of his own time,

what does he intend to do with the property?

What are you going to use the shop for?

Something for yourself, or are you going to let it out?

No, I will use it for myself. The plan is to move into an office,

because I've been doing my work from home

and my home is a mess with paperwork and files everywhere.

So I'm hoping to move into the office and set up a letting agent.

-Is this a new venture?

-I've done all my lettings myself in the past.

I've done it for over ten years,

and I feel I can go down that route as a side business.

-And do you feel confident?

-Erm, not 100%,

because I'm not sure how it's going to turn out to be.

I mean, in my head I sort of know what I want,

but whether it will work out that way or not, I'm not 100% sure yet.

So what about the car park out the back?

-Have you thought about extending?

-I have looked at the space.

There is great potential to do a double-storey extension

if I get planning permission, or even a single storey extension,

but I wouldn't touch that for now.

I would just concentrate on the shop, get it up and ready,

and then I'll think about the space at the back.

Jag is being sensible, taking it in bite-sized chunks.

He already has a tenant for the top-floor flat,

so that's a cracking start. And he has a budget of £5,000

to renovate the first-floor flat, and another five grand for the shop.

He's feeling his way with the lettings business,

but he has put himself in an ideal position.

Do you feel, in a way, that you've got the shop for free

with what you've done here?

You know, you've got the chance to experiment with that business,

almost, because you've got a free premises.

Well, this is the great advantage - I'm under no pressure or obligation,

finance costs, whatever, because the shop's sort of come in for free.

So yes, I can take my time and do what I want,

and if it doesn't work, I can always rent it out.

-Jag, I'm really excited for you, congratulations. Well done.

-Thank you very much.

-Thank you.

So, Jag choosing property over accountancy

so he has a better lifestyle and more time with his son -

that sounds like as good a reason as any to me.

So he's got plenty of property experience,

but he's never run his own lettings agency before. How will he get on?

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

Well, that's one property done and dusted,

-but what about the other two?

-Yeah, there's been enough time,

-but have THEY had enough time?

-Let's find out.

Time to return to New Normanton in Derby,

where I was looking around this house guided at £75,000.

It was a classic terrace layout, though it did have a surprise for me

- and I don't mean the bright red kitchen.

No, this terrace had four bedrooms.

But to be fair, all of the bedrooms...nnngh...

are really, really small.

Yes, I thought there were too many bedrooms

and that the house would be better off with three larger ones.

However, Mahesh, who successfully bought the property

for £77,500, had an alternative plan,

as his friend, and experienced developer, Mayur explained.

We were suggested this by the housing association

who will be taking this property on a three-year lease from us.

So did you just decide you wanted to rent to the housing association?

-You approach them and say, "I've got a house you might be interested in."

-That's exactly what it is, yes.

So we've been in touch with them,

and they are interested, and this is particularly

because it's a four-bedroom house,

they are a lot more interested in that.

Mahesh had a budget of £2-3,000,

and a timescale of three to four weeks

to update the house and make sure it complied

with all of the housing association's safety regulations.

There didn't seem much to do, but then, four weeks isn't a long time.

Five weeks later, and we've returned to see

if it has become a fabulous four-bed family home.

Can you spot the difference?

Because, let's be honest, it's quite difficult to tell.

But then, not much needed changing.

We caught up with Mahesh and Mayur to find out what's going on.

We've had the carpet guys putting in the carpets and the underlay.

We've also had the double glazing guys

putting in four windows at the back, a door at the back,

double glazing door at the front and one in bathroom upstairs.

And finally, we had a carpenter guy

who's made good the cupboard upstairs in the smaller bedroom.

We still have some outstanding work on the kitchen,

which is probably going to take another week or so.

We need to put one or two new units in there.

And once that's done, then the house will be ready.

The new carpets make a world of difference,

and you can bet when the winter comes, that double glazing will too.

As Mahesh says, they still have work to do in the kitchen,

but apparently adding a door isn't on the cards any more.

Initially we were thinking of separating the dining area

from the kitchen, just for the safety aspects,

but then we came to realise that by doing that

we're obviously going to just make the dining room look a bit smaller,

so we just left it as a kind of kitchen diner, as one thing.

And that also kind of saved us some money as well.

Well, that's interesting.

The door had been suggested initially

by the housing association, with whom the guys wanted to work.

Has the plan changed?

We did plan to lease it out to a housing association

on a three year lease. Having said that,

what we're planning now is to lease it out directly.

We realised that we can get something like £30-£40 a month more for that,

and if you total that up, if it's £40 a month, that's nearly £500 a year.

So rather than leasing out to a housing association,

we're going to be getting a lot more money going directly.

# You can go your own way

# Go your own way... #

Well, I can certainly see the advantages.

The housing association take a monthly administration fee,

so Mahesh and Mayur will gain that by dealing directly with clients -

and that's about £500 per year.

However, the deal with the housing association also guaranteed tenancy,

so without that deal, all it will take is the house being vacant

for a month and that profit of £500 is gone.

Still, as they both say, it did help keep the costs down.

So, what have they spent?

Altogether so far we have spent something like £2,800.

We are likely to spend another £200, maybe £300.

So the budget overall, the spend is going to be £3,100.

Added to the £77,500 that Mahesh paid at auction,

that brings his total spent to £80,600.

We've asked along two local property experts

to find out what they think of his investment.

You've got a standard terraced house, but it's four bedrooms,

and that's a fairly unusual animal. Not only is it four bedrooms,

but you've actually got two shower or bathrooms as well.

I think if this property's put on the market,

I think it'd be popular with a buy-to-let investor.

The amount of bedrooms would make it easy to rent

to maybe somebody that couldn't quite afford

your traditional four-bedroom property.

It sounds like there's a good demand in this area

for a reasonably priced house with four bedrooms.

Our experts recommended a sale value of between £80,000 and £84,000,

but Mahesh has always intended on letting it.

So what are those crucial rental valuations?

It's got a rental income upwards of £600 a calendar month.

You might even get £625 a calendar month.

If this property was on the open market,

I would look at between £500 and £550 per calendar month.

I think we probably are going to get something like 650,

maybe £660, around that sort of mark.

But can't really tell.

Mahesh and Mayur are hopeful of getting that figure

of £650 per calendar month,

giving them a yield of over 9%.

So what's next for this property team?

-Next auction, I guess.

-Yeah, definitely.

I think we also keep an eye on all the auctions.

And once we are free with this property -

and there are one or two other projects which Mayur

is currently working on - once they are over,

then we'll definitely be out again.

We're back in Beckenham, south-east London,

where there was one lot with a guide price of 440,000 -

but three properties within that lot.

# 1-2-3

# 1-2-3

-# It's easy

-It's so easy... #

Yes, on sale was a shop and the two two-bedroom flats above.

There was also parking at the back, giving room for a future extension.

The successful purchaser was Jag, with a bid of 450,000.

Jag was a former accountant who had moved into property investment

in order to allow greater flexibility in his working hours.

It gives me more time to spend with the family.

I get to do get to do my school run for my son.

So for me, it gives me a lot more spare time or free time

to be with the family.

The shop offered Jag a new opportunity

to start a property letting business,

and the two flats he intended to rent out.

The top flat was ready to go, and Jag had secured a tenant.

But the other needed some work,

and the office needed a complete overhaul.

He had a budget of £5,000 for each of them,

and a timescale of a month to get the business up and running.

Four weeks later, and we've returned to see how Jag got on.

Jag already had an offer to rent the upper flat

when we first visited, and true enough,

a family have moved in and made it their home.

On the first floor, having checked the gas and the electrics,

Jag gave the flat a coat of paint, and it now also has its own tenants.

But it's downstairs in the shop where the biggest changes have come.

There'll be no more short back and sides in here - instead,

Jag has a refurbished office and loo,

and - I'm glad to say - some new windows.

Yeah, this is the front of the shop,

which was smashed when we first bought the property.

We've had the new shop front put in,

and we've put the grill also for added security.

Jag's two-week timescale has just passed.

The flats are rented, and he just has to move furniture

into the office and it should be ready to go.

Things are looking good.

The letting agent will be up and running in a week's time,

and I've already had one enquiry with a landlord passer-by

who asked when I would open,

and he's got a house for me to rent for him already.

So I'm hoping to pick up that business next week.

Well, that all sounds promising.

But Jag left his full-time job in accountancy

not just for the financial benefits of property,

but also to improve his family life.

I have had a lot of time to spend with my family,

doing the school run and spending more time with my son.

With all the paperwork lying in my house at the moment,

once the office is finished next week,

I can move everything over to the office, and my wife will be

very happy to not have paperwork everywhere in the house.

# And I've been taking care of business

# It's all mine

# Taking care of business and working overtime

# Work out... #

Jag has never developed a commercial property,

so was unsure about costs. Did he manage to stick to his budget?

We spent £2,500 on the first-floor flat.

That was mainly to do the painting and the decoration.

The original budget for the shop was £5,000.

We went over it by 50%,

because I couldn't anticipate the cost of the shop front.

I've managed to spend 7,500 to refurbish the shop.

Overall, the budget is still 10,000,

so I've managed to keep the overall budget the same.

Jag spent £450,000 on the property at auction,

and only ten grand on the development.

However, he also had to get a bridging loan,

and that cost him £25,000.

We've asked along two local estate agents

to see if they think it's all been worth it.

The shop's really nicely done.

It's been well painted, good hard floor down.

So wear and tear will be good in the shop,

so it's a good investment.

In terms of the flats, I was very, very impressed.

They're nice flats, very nicely done.

At the moment, there seems to be a shortage of commercial properties

in the locality, so you know,

that's a strength when it comes to selling.

If there's not much around then you can push the boat out on price.

Including the bridging loan, Jag has spent a total of £485,000.

Both agents thought the shop would rent for £1,000 per calendar month.

So what do they think the flats could rent for?

We would ask for around £1,100 per calendar month per unit.

In terms of the rentals for the flats, for each of them separately

they'd get £1,100 per calendar month.

Those valuations mean that Jag will get a yield

of nearly 5.5% on the flats alone,

and he still has a shop to run his business from.

As for the resale valuations, one agent

thought the flats were worth 250,000 each,

while the other pitched them a little lower at £225,000.

That upper valuation would mean a potential resale totalling £500,000.

So if you take away his £485,000 spend, he has a shop for free.

If you throw the top valuations in for the shop,

he could sell the lot for 750 grand.

I'm very excited with the valuation given.

It's a lot more than I expected,

so buying it for 450,000

and potentially could sell at 750 -

it's very good news, all the way round.

That upper total of £750,000

would give Jag a total profit of 275,000.

Now, this is where we always say,

"Minus the usual taxes and expenses,"

and you probably don't think too much about it.

But you should always remember that it's there, and here's why.

Yeah, the legal fees for a semicommercial

is quite different from a residential.

It's a lot more expensive. For example,

I had a quote of £500 originally.

The minute I mentioned semicommercial,

the price went up to £1,500.

The total legal costs is in the region of about 20,000,

which includes stamp duty of about 15,000.

Now, while commercial property has some differences,

there are all sorts of fees in residential

to keep your eyes peeled for too -

stamp duty, legal fees, planning fees,

and of course personal tax, to name but a few.

Remember to do your homework

and make sure they're in your calculations.

Anyway, onwards with the new business for Jag,

and it sounds like he might be at the auctions again soon.

Auction is the way forward for me, purely because I go there

and I get the property I want on that day.

We'll see you next time when we've got more auction stories.

-Yes, more properties to inspire you.

-Yes, here on Homes Under The Hammer.

-Goodbye.

-Goodbye.

-Goodbye.