Episode 16 Homes Under the Hammer

Hello. Now, if you like getting things done quickly,

then buying property at auction might be right up your street.

Yes, and four weeks after you put your hand up,

-that property could be yours.

-Yep.

That is when the real work begins because you've got to be

prepared for anything when you buy under the hammer.

You'd think between us we'd seen every kind of property,

but there's always a surprise waiting for you around the corner.

Yeah. Do you think there'll be one there today?

Well, let's see what properties were up for auction on today's show.

'In Stepney Green, East London,

'is there hidden value right above my head?

'But remember...'

Check first who owns the loft space.

'No shortage of that valuable loft space in Dartford, Kent.

'And it comes with an illuminating bonus.'

The great thing is there is some natural light coming in over there.

'And in Salford, Manchester,

'there's a lofty issue when it comes to financing

'this one-bed apartment.'

So you might find it hard raising the money for a flat like this.

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.

Well done.

I am in Stepney Green, in London's East End.

Its popularity has increased recently, as property prices are

that little bit lower than in its trendy neighbours

Shoreditch and Bow.

Well, a large part of this area was badly damaged by bombing during

the Second World War, so there is quite a bit of new building.

However, the joy is that the property I am here to see

is on this side of the street,

where you've still got some period properties.

A fantastic first-floor flat is what I am here to see.

The guide price was £380,000-plus.

Let's have a look.

Well, I can already see a little TLC is going to be required

on the outside.

But let's see what the inside has to offer.

So, up the stairs, as is generally the way with a first-floor flat,

to this little landing area. You've got bedroom one there.

It's a good size. Bedroom two, even bigger.

Double windows, that is really nice to see.

I mean, the whole flat is obviously in need of some major

renovations, but I'm not really focusing on that.

I'm just looking at how much space we've got.

A loo there, which definitely needs a bit of money spending on it.

But then into this room here, which is a really good size.

Again, would this be - I don't know - the lounge,

another bedroom?

It's a lot bigger than I thought it was going to be.

And it throws open some really interesting conundrums.

Yes, you could knock through from the kitchen into the lounge

to make it more open-plan or maybe divide one of the large rooms up

to squeeze in a third bedroom.

Decisions, decisions.

# Tell me what to do

# And I will do What you tell me to do

# I'll do it till I'm blue

# I'll do that too. #

Obviously, there is other work to do here.

The floors in the hallway are uneven,

so I'd get that checked out.

But there could be another way to add value.

One thing you're always looking at with flats is ways you could

potentially enhance the value by extending.

And obviously, in a first-floor flat, the option is to go up.

The thing is you've got to check first who owns the loft space.

It could be the freeholder, it could be owned by this flat.

But when it comes to London properties,

London flats in particular,

then the amount of money you're going to spend doing that, I think,

you'd definitely get back in terms of what you would add

to the value and the probably saleability of the flat.

Of course, in cases like this,

you would need to check out not just that you own it but

that there is room up there before you start getting carried away.

And as this is a leasehold flat,

any alterations need the freeholder's permission.

The good news is that there is a new lease on this property,

with 125 years to go.

But the big question is,

should the flat be reconfigured?

We asked a local estate agent to give his opinion.

The temptation is always to separate it to generate more bedrooms.

But I do believe that having

such a large square footage in an area where space is a premium

will make the property present much better in the format that it is now.

# I wouldn't change I wouldn't change. #

Interesting. I must say, it does have nice proportions,

but there are a few niggles.

I am a little bit concerned about some of the bowing in the floors

and in the ceilings.

I think a structural engineer should be advised to come

and look at the property and give it a clean bill of health.

I too don't like the fact that the floor is so wavy.

If this is a big structural issue,

you could end up waving goodbye to large sums of money.

Assuming all is well and this flat was kept in this configuration

but given a face-lift, the agent thinks that the rental

here could be as much as £1,700 per calendar month.

But what could this property, guided at £380,000,

be worth on the open market?

I would expect it to go on the market for somewhere in the region

of £525,000 to achieve offers quite close to that.

And I know he said he would leave the layout as it is,

but you know me, I always want to know all the options.

Dividing the property to add an extra bedroom,

be it the third bedroom, would actually add quite

a substantial amount of value to the potential rental of the property.

I would expect it, in that case,

to rise to somewhere in the region

of £2,000 to £2,200 per calendar month.

But given the fact that we haven't changed the square footage,

the sales value will probably remain quite close to what I have suggested.

Well, it is a desirable area and

period properties like this are always going to be in demand.

So it is really great to find one that needs a bit of work,

that you can really add value to.

So let's see who spotted the opportunity

when it went under the hammer.

Lot number 81.

And we go to London E1, a very popular area.

Up-and-coming.

Nice looking building. Start me at 350.

Thank you, sir. 350 down here. 355 anywhere?

Good. 55, thank you. And 60.

And 60. And five. And five. And 70. And five.

And 80. And five.

No. I have got 380 in the front. Five anywhere else? Five anywhere else?

Against you at the back.

380 in the front row.

Great glasses. 380 in the front row.

85, someone standing. And 90.

And 95. 400. And five.

And ten.

And 15.

420. And 25.

And 30. And 435.

"No," shakes his head firmly.

Your bid, front row, 430.

Five anywhere else? Nope? OK.

First time then at 430.

Second time at 430.

I have got my eye on the guy at the back.

Third and last time at £430,000, front row. Have we all done?

Well done, sir. 430,000, many thanks.

The final bid of 430,000 was made by local London property

developer Jack.

Jack mainly deals in buy-to-lets

and already owns a few rental properties in the area.

So I met him back in Stepney

to find out his plans for his latest purchase.

-Jack, good to meet you.

-Good to meet you.

-Yeah, congratulations.

Tell me why you wanted to by this flat.

I bought this property because when I saw it online,

I saw a lot of potential in it.

Around here, the prices are really going up, so I thought why not.

So you saw potential.

What particularly did you see in terms of potential?

When I first bought it,

-I assumed I could turn it into a three bedroom.

-OK.

Yeah, but then when I went to auction and I came back with my builders,

the plans sort of changed a little bit.

-I had three builders coming in, and they said it's not advisable.

-OK.

And then they said it, "Keep it as a two-bed because the clientele here

"wouldn't take...want a small living room and a kitchen."

So, how has that changed your sort of plan?

Basically, the profit margin, from 100,000, went down to 40,000.

It was a bad day at the office, then?

It was a bad day at the office.

-THEY LAUGH

-Oh, dear!

Bad day at the office or not, Jack is experienced at this game

and he isn't daunted by a setback of £60,000.

-And was it the area more than anything else?

-More the area.

-Location, location, location.

-Tell me what is happening around here.

Around here, the prices are skyrocketing, as in I've bought

a lot of properties around here since I was younger and we just...

-We double up every two, three years, so...

-Wow.

-You can't go wrong with that.

-Yeah.

You say younger, did you start young?

-I did start young, yeah.

-How old were you?

-I was 19.

-19?!

-When you first bought your house?

-Yeah, a flat.

That's what it is. I just got into it and I can't look back.

# The future is so bright

# I gotta wear shades #

# I gotta wear shades. #

Jack may have been wearing funky shades at the auction,

but they definitely weren't rose-tinted.

He clearly knows the area and how to make the most of this flat.

So, tell me what you plan to do it.

I am planning to just renovate it to a high standard.

This property is a Georgian place,

so the standards are quite high

and the people that would buy it, they are quite well-off.

-So, what kind of things are you going to do?

-I'm going to...

Tile flooring. I'm going to try and do the walls as well, semi-tile.

-Oh, OK.

-Yeah.

And then the bathroom... Well, a top-notch bathroom to go in.

-That's what it is, so...

-And the kitchen as well?

-And the kitchen.

-In the kitchen, I am going to keep some of the units.

-OK.

Because if it was going to be a three-bedroom, I would've done

the kitchen differently. Because I'll keep the two beds, so I'm not going

to spend a lot of money on the kitchen.

Jack is thinking with his business head here.

He wants to maximise the potential profit.

But there are, of course, some things that might need tackling.

So, what about the floor? Because in the corridor there...

The floor is a bit slanted, I know.

So the builders, they told me they're going to put a bit of building...

It's like a mushy-mushy thing. I'm not sure exactly.

-So it will straighten the floor.

-Oh.

So then we'll put... We were supposed to put carpets on,

-but then they said they can put laminate flooring on.

-Oh, brilliant.

So it goes with all the other rooms.

-So a builder's magic mushy-mushy stuff.

-Magic, yeah.

That's why it changed from a three-bedroom to a two-bedroom.

I always take all their advice on board.

Well, I'm not sure about that mushy-mushy stuff.

I'll need to look that one up. I hope his builders are right.

Anyway, for Jack, this is all about the money.

-Remind us what you paid.

-About 430.

-430.

-And planning to spend how much on the work?

-No more than 10,000.

-Ten.

-Yeah.

-OK. So that's 440,000. How much do you think

-you might be able to sell it for?

-515, 520 maximum.

-But you still make quite a lot.

-Yeah.

By the time I sell it... It is going to be about two months

-before I sell it, so...

-Right.

-But in a short period of time, it's reasonable.

-Reasonable profit, yeah.

Good on you. That's brilliant.

-So, what is the sort of timescale for the work?

-Two weeks.

-Two weeks?!

Two weeks from now. The builders are...

From tomorrow, they're going to start coming in and doing it.

They're my cousins, so we do a lot of properties together.

And they're just come here, do it and go. That's it.

-You have a kitchen to do. You got a bathroom to do.

-Yeah. Kitchen...

-Floor, tiling...

-Two weeks is more than enough.

-I've done a lot of them, so I know how it is.

-Really? Wow.

-Is this what you do full-time?

-Not full-time.

-This is a secondary investment.

-OK.

-I've got a full-time job.

-What do you do?

-Real estate agent.

-That's convenient then.

-Well, congratulations. Good luck with that.

-Thank you so much.

I look forward to seeing how you get on.

HE LAUGHS

Well, Jack starting out in the world of properties at a very early age

and carrying on to this day. And who can blame him?

I think he has got a great property here. My only concern is -

can he really get everything done in two weeks?

You can find out later in the show.

This is Dartford, in Kent,

famous for the tunnel under the Thames that bears its name.

Like many parts of the UK, Dartford did face decline

from the loss of some of its heavy industry.

However, nowadays,

this is an area in full multi-million pound regeneration

mode, with 94 million being spent on revamping the town centre.

Well, will all this regeneration rub off on the property

I am here to see?

To be honest, by the look of things on the other side of the street,

there is still a bit of industry round here.

Now, as you can see, it is a bit of a busy main road.

You've got lots of lorries and cars and trucks hurdling past.

Now, the guide price for this house, £150,000 to £160,000.

So let's have a look to see

if this bit of Dartford is also in need of regeneration.

Well, at first glance, the roof looks free of broken tiles.

And apart from the moss, it is in a reasonable state.

And that frontage is good too for visitors.

Certainly enough parking out there for a couple of cars,

which is a real bonus.

And it is nice and quiet once you've closed the door.

The property is in a bit of a state.

And actually, when you look, yeah, there is

a lot going on in here and it needs a whole load of modernisation -

paint, carpet, a big old clean.

But what I do like is the space.

It has already been open-planned,

so you've got a nice L-shaped kitchen there.

(I know it doesn't look great at the moment.)

And a really good area for a family to dine here.

You could make the most of this chimney breast,

like they have done, with a bit of a feature wall.

But not a bad space at all.

And it would certainly work really well for a family.

I am definitely taken with the two good downstairs living areas.

And there is an added bit of space out the back.

Well, if you are like me and you are finding it hectic and noisy

out the front, I am very happy to say, it is so peaceful out here!

Although it is a bit of a mess, I think

hiring a skip would be first on my agenda.

But let's not turn our nose up at this nice family-size garden.

You could even think about having a nice conservatory on the back

of the house here, because there certainly is enough room.

Back inside and on the first floor, you've got a family bathroom,

which needs a bit of work, as does the master bedroom,

the second bedroom and the third.

Now, this space here has been eaten into somewhat by a set

of stairs leading up to the loft space.

Now, in the auction catalogue, it says there are three bedrooms

and a loft room. This certainly wouldn't pass as a bedroom.

And it would be worth applying for planning permission

to be able to convert this properly. But it is a great space.

You could definitely use this for some storage.

You could sit up here and get your laptop and your computer.

The great thing is, there is some natural light coming in over there.

So all in all, I would say, this is a bit of a bonus.

OK, so it all needs a clear out and a bit more work besides,

but you have definitely got all the building blocks

here for a great family home.

What does a local estate agent make of the mid-terrace

and its auction guide price of 150,000 to 160,000?

I think what you need to do to this property

is fit a new bathroom and kitchen. The whole property

needs decorating throughout.

In my opinion, I think you'd be looking at spending at least £20,000

to update this to a good standard.

Fair enough. But once done up,

what might the mid-terrace fetch on the resale market?

Once the property has been updated to a good standard,

I would say the property is worth £235,000.

And on the rental market?

In my opinion, the property would rent for £950 per calendar month.

Well, let's face it,

this little bit of Dartford is definitely in need of regeneration.

But where some people see problems, others, well,

they just see opportunity. It is the name of the game on this programme.

So let's see who grabbed this opportunity at the auction.

So, lot 102,

the three-bedroom house for improvement.

Got a guide of 150 to 160. Start me where you will.

£150,000?

140 to start me.

Thank you very much. 140, sorry, took it there. 142.

142.

At 140... Five. And 47.

147. And 150.

150. 152. Back of the room...

It took a while, but the bidding crept up past the top guide price

of 160,000.

We rejoin the action at £187,000.

187.

At 187,000, gentleman's bid right at the very back of the room.

At 187,000 then...

188. And nine.

189.

190. 191.

191.

192. 193.

192,000 on my right. 193.

192,000 for the first time.

192,000 for the second time.

192,000, third and final time.

At 192,000, all done.

Sold at 192,000.

And that successful bid of 192,000 was placed by Johnny.

Johnny is a qualified plumber

and electrician who runs a family portfolio.

He has been on the show before when he and his uncle Ehsaas

bought two two-bedroom flats in Bexleyheath.

-Did you do much research with these?

-Nn...no.

-Any research?

-Nn...no.

-Did you read the legal pack?

-Nn...no.

Not at all.

-Did you view them?

-Nn...no.

-Did you know you were going to buy them?

-Not at all.

Johnny and moneyman Uncle Ehsaas broke all the rules.

But after buying blind last time, they did get a healthy profit.

With trepidation, I wonder if they've changed their approach.

Now, had you viewed this property prior to auction?

From the outside, yes.

-From the outside? So you didn't look inside the property at all?

-No.

-Did you read the legal pack?

-Nope.

-Did you do any research at all?

-No.

-Did you know you are going to buy this on auction day?

-No.

What?!

So what happened? How come you've ended up with this property?

On auction day, we were looking at a different property,

and we didn't get it.

So rather than go home with nothing, I thought we'd buy this.

So what did you do, just open the catalogue and think,

"I know the area"?

More or less, yeah. We had a look through the catalogue.

We had a dabble on a few others.

They went over what we thought they were worth.

-And we ended up with this one.

-Wow.

So when you bought this property and you opened the door

and you had a look inside, what did you then think?

HE CHUCKLES "We've got some work to do."

But, yeah, that's... If you're going to buy blind,

you've got to take the risks.

'OK, I am getting a distinct feeling of deja vu talking to Johnny.'

But once again, his risk might just pay off.

Although there still may be a nasty or two lurking under all

the stuff in here.

# And get me waking up

# Shaken up, tangled up. #

Top of the to do list -

a couple of skips to deal with this tangled turmoil.

Should keep Johnny's team occupied for a while.

What will you be doing to transform it?

-We gut it back to the bones.

-Yeah.

Rewire it, replumb it, new bathroom, new kitchen.

-A couple of walls might be coming down.

-Really?

-Yes.

So tell me about the walls that you can see coming down,

because I actually think this ground-floor space does

work quite well as it is.

It does work well, but, unfortunately,

the kitchen is rather small.

There is no worktop space,

so we are of separating it - having the kitchen separate

with the wall open, so you have a walk-through

-from the kitchen to the diner.

-No!

-Really?

-Really.

I think the best thing about this property is the fact that it

has got that lovely communal open-plan living space.

And I think that does work really well for families.

You certainly have got quite a run of, you know,

work space along there.

To have a nice table with, you know, your kids having dinner...

-I think it works.

-It might do.

But as I said, the lounge is very small,

so we're still on the drawing board. We haven't decided yet.

Once we clean it out and see what actual space we do have -

cos, obviously, there is a lot of rubbish everywhere -

then we'll go from there and see what works.

Now, what about that loft space?

Because I know it is currently a three-bedroom property with a loft.

There's certainly not building regs up there.

No, no building regs up there.

We could convert it to a four-bedroom,

but, you know, then we'd have to do an extension to make it bigger.

So what we'll probably do - revert back to a three-bedroom,

put a loft ladder and still have a room up there, a usable room.

But keep it a three-bedroom with a big loft space.

So, what sort of budget are you looking at to do the work here?

Probably 10,000 to 15,000.

So you think you can do this place top to bottom on £10,000 to £15,000?

Yes.

How long do think it is going to take you?

Normally, it takes us about a month.

In this case, it will take us two months,

just because we have work elsewhere.

So we'll be using it as an infill.

But, yeah, in about two months, this will be up and running, hopefully.

I like Johnny's no-nonsense attitude.

He and his family are clearly used to projects like this.

And it sounds like the whole thing may be something of a walk in the,

eh, kitchen?

How did you get into property developing?

A family member bought one house.

Then we converted that into three flats.

We liked it, you know, not being told what to do.

You know, and it just progressed from there.

Bought another one, and it just all kind of escalated.

And you are very busy. I mean, have you got time to buy any more?

Not at the moment.

And you've certainly not got time to look through that auction catalogue!

-It is a waste of time.

-Yeah, but you've not got time to do

-the viewings, that is the problem.

-That is the problem, yes.

We haven't got time for the viewings.

Would you ever buy blind again?

Would you advocate anybody watching to do what you've done?

No. But I would do it again.

This is what we do. At the end of the day, we can put it...

Like this place here, it's quite run down, but within eight weeks,

we'll have it back up on the market.

But it is not very easy if you don't have the contacts and the know-how.

The contacts, the know-how and the confidence.

Let's be honest, you didn't look inside it,

you didn't know you were going to buy it,

you didn't read the legal pack and you didn't view it.

We had the money in place, that's the only thing.

-You did have the money in place.

-Yes.

-And are you looking to rent this out?

-We are looking to sell it.

But again, depending on what the market says.

The market will decide.

Do you think you bought this for a bargain price on auction day

-because of how it is inside?

-Definitely.

Do you think it would have put a lot of people off coming in?

Because it is just surface debris and a bit of a smell.

A lot of people are put off by the smell and stuff like that,

where you have to look through that.

A couple of skips and it's gone, and you're back to the bare-bones.

But a lot of people get put off by that.

Johnny certainly knows what he is doing

and is willing to tackle whatever is behind the front door here.

And he also knows the local market.

We have to stand above the rest on the market.

So depending on what is going on, we kind of fit into that scale.

Don't forget, it has to stand the test of time,

-especially if you're renting it out.

-Of course. At the end of the day,

there's no point putting too cheap in if you'll rent it -

you'll be forever coming back.

If I keep coming back, I can't go to the auction.

We don't want to stop you from going to the auction,

-do we, Johnny?

-No, of course not.

It has been lovely meeting you today. I am so excited.

Congratulations. But try and slow down a bit,

-and maybe have a little look through the letterbox next time?

-Maybe.

-All right.

-Thank you.

-Thank you.

-Thank you.

Well, Johnny certainly has a laid-back attitude

to property development.

Bid for anything that takes your fancy on the day,

just have a flick through the catalogue.

And as long as you know the area, that's all right.

Don't worry about legal packs or even budgets. Nah!

Join me later in the programme to find out if his philosophy pays off.

Coming up, high-rise money worries in Salford, Manchester.

I'm going to try getting a mortgage on this place.

If not, I may have to sell it.

And is Johnny having second thoughts about selling in Dartford?

We have to bear into mind that we might also have to

rent for a few years or just leave it in the portfolio.

EARLY-20TH-CENTURY PIANO MUSIC

Back now to the up-and-coming area of Stepney Green, East London,

to see this first-floor, two-bedroom flat which was

purchased by estate agent and part-time property developer

Jack for £430,000 with a view to selling it on.

I've bought a lot of properties around here, since I was younger.

-We double up every two, three years, so...

-Wow.

You can't go wrong with that.

-So, when you say younger, how old were you?

-I was 19.

-19?!

-When you first bought your house?

-Yeah, a flat. That's what it is.

I just got into it and I can't look back.

Jack planned to sort out the uneven hall floor,

redo the entire flat floor covering, refurbish the bathroom

and brighten up the existing kitchen

and redecorate, all for a very tight £10,000 budget,

with an even tighter timescale.

-YELLS:

-OK, lose the blippity-blunk music!

Thanks.

-What is the sort of timescale for the work?

-Two weeks.

-Two weeks?!

Two weeks from now. The builders are...

From tomorrow, they're going to start coming in and do it.

They're my cousins, so we do a lot of properties together.

And they're just not come here, do it and go. And that's it.

Well, we are back one month later to find out what Jack has achieved.

And you can see for yourself.

# Don't believe me, just watch Come on

# Do-do-do, do-do-do... #

New kitchen units on that budget?

# Don't believe me, just watch

# Do-do-do, do-do-do... #

Is the luxury bathroom possible here?

# Don't believe me, just watch! #

You bet.

# Don't believe me just watch

# Hey, hey, hey, oh! #

Quality fittings, tiles and flooring really do funk up this flat.

# Uptown Funk you up

# Uptown Funk you up. #

As it was, the lounge wasn't conducive to lounging in.

Now...

# Don't believe me, just watch Come on!

# Do-do-do... #

Seeing is believing with the biggest bedroom.

# Don't believe me, just watch. #

Contemporary lighting completes the picture,

not forgetting the smaller, now much funkier, bedroom.

Hard to believe all this was done in two weeks. Or was it?

It has been three weeks. But it is not much of a big deal, to be honest.

So it is only a week. It's not another...

In the kitchen, I changed most of the...

Well, everything, to be honest -

the units, the hob, the oven, the extractor fan and the sink.

The most expensive thing was the marble worktop here,

which cost quite a bit,

which delayed the project as well.

Waiting for the delivery of the high quality worktop caused

most of the delay.

Originally, Jack was planning on spending £10,000 on the whole

flat, but this is a high-spec finish, so why the change of plan?

At first, I wanted a three-bed.

But after buying the place and getting advice from other people,

they suggested this was going to be too small have a three-bed.

Then I just went away to a higher standard as a two-bed.

So the profit probably has gone down a bit, but it is still profit.

The higher-spec fittings impacted on the budget too by £1,500,

taking it to 11,500.

Added to the purchase price of 430,000,

that takes Jack's total investment to £441,500.

We invited two local estate agents around to establish

if Jack will turn a profit with his plan to sell on

and get their opinions on the work and finish of the property,

starting with the agent who saw the flat just after it was purchased.

The property has undertaken

a lot of renovation

and quite a little bit of work has been done.

It is presenting

very neutral at the moment, and I think that is a good thing.

My first thoughts were that it was a well-proportioned,

two-double bedroom flat. And I'd say in terms of

the refurbishment, it was done to a high standard.

Very bright and airy and well located.

And although Jack isn't planning on renting, it is

always worth having a fallback position.

So, what would a flat like this in a condition like this

command on the rental market?

It is a very buoyant rental area for professionals looking to

relocate into the city, commute-wise.

In terms of a rental valuation,

I'd expect to achieve a figure of £1,900 per calendar month.

I think we are looking probably

between £1,700 to £1,800 per calendar month.

I believe at the top end, the property should be furnished,

because that again will attract a better quality of tenant.

That's an average of £1,800 per calendar month.

Yeah, that is what I was expecting. If I was going to rent it out,

that is the price I would market it for.

That is a yield of just under 5%, not fantastic.

But this was renovated with a resale in mind, not to rent,

so how will Jack's £441,500 investment fair on the open market?

I would expect to sell the property in the region of £500,000.

And what about the agent who predicted a resale of £525,000

when he saw it in its original state?

I still believe the property should go on the market for £525,000 to

achieve offers quite close to that.

525, that was my ideal initial thought. 525.

That is what I am going to market it for.

And if I market it for that...

If I wait a month later, I can market it for a bit more.

Because as spring comes up and the price always goes up.

Jack knows his business. He has been doing it since he was 19.

For three weeks' work, he has the potential profit of just

under £84,000, less the usual taxes and expenses.

So, sticking with the two-bedroom configuration

and going for a high-end finish

doesn't seem to have harmed his profit margin from what I can see.

And it looks like it is not just high-speed makeovers he does,

selling is high-speed too.

I did speak to a few of my friends who are agents,

and they said they can sell it within a month or so.

So that should be fine.

I think you can guess the answer to this next one.

Will you be back at the auction someday soon, Jack?

To be honest, actually, we are going to the auction

and bidding with other people.

I mean, I go to auctions with my dad and he gets excited, I get excited.

And that if something comes up, we snatch it up as we can.

It could be argued that Manchester is becoming

the rock and roll capital of the North.

With a heritage of bands like The Happy Mondays, Oasis

and The Hacienda Club, the foundations are clear.

# We built this city

# We built this city on rock and roll

# We built this city

# We built this city on rock and roll. #

The property I'm here to see is technically in Salford, but I know

Manchester reasonably well and you are more or less in the town centre.

Anyway, it is a one-bed flat.

And it's on the 17th floor...

of that.

The flat was guided at £60,000.

And the block began construction in the '60s.

# Don't you remember that

# Remember, remember... #

It is one of the tallest buildings in Salford

and was once a tax office.

Now the first 11 floors are a hotel.

But above that level, the space is given over

to one- and two-bed apartments.

The communal areas throughout, although a little bit dated,

have been maintained well.

OK, what have we got?

OK, bathroom here which looks in good condition.

Slightly dated, but if you could tidy that up. Depending on what you

wanted to do with this flat, leave it or change it.

What have we got in here?

OK, water in there. Water storage tank in there.

You've got a bedroom here, which is of a decent size.

You've got a double bed in there, two singles quite easily.

Nice big window. And then it is through into the main area here.

Your lounge, your diner and your kitchen area as well.

So you've got a bit of floor space here.

It is a one-bed flat, so you get what you see, really, more or less.

But the selling point for me is that huge window there, which looks

over the whole of Salford and Manchester.

But high-rise city living may not be all it appears to be,

especially if you don't look out for pitfalls like parking.

There isn't any in this block.

And the service charge of nearly £1,600 per annum.

And there's more.

So you like the property and you love the location, but there

are a few issues you may have to overcome with a property like this.

High-street lenders are not very keen on giving out mortgages

to properties that are above five floors

and properties that are above commercial buildings.

This is above a hotel.

So you might find it hard raising the money for a flat like this.

In these cases, there is no substitute for local knowledge.

And what better way to get it than to invite a local property expert

from the auction house who sold the flat to give his thoughts

and valuations on this property?

So that is precisely what we did.

# You take me up

# So high

# Now I never want to come back down. #

We are near all the high-end department stores,

good restaurants, good bars.

It is a really good location and great transport links.

This will be popular with buy-to-let investors.

However, the property isn't currently mortgageable.

There are a number of reasons why lenders have an

embargo on lending on these flats.

As well as being above five floors and a commercial property,

there is a history of repossessions

and the reinforced concrete construction

and the general oversaturation of buy-to-let mortgages in the block

are all factors.

It is great for a buy-to-let investor that has got the cash

and wants a good return

because it is a very popular location and the rents are quite

healthy on this building.

But what does a "quite healthy rental" translate to

in the rent book?

If this property is tidied up a little bit,

you could put it on the market at 750 per calendar month.

Yes, I would say that is better than healthy.

If you got it for the guide price of 60 grand,

that would mean a 15% yield.

Too good to be true?

Well, it could be a hard property if you have to sell on.

With that in mind, what about the resale value?

If this was to go back out on the market,

to a buy-to-let investor, you would be looking at

between £70,000 and £75,000.

So this is a great flat with great views as well, but who is going

to raise the cash to buy this place when it goes under the hammer?

One-bedroom apartment.

Service charge arrears

payable by the buyer.

Two telephone bids. Anybody else here for this one?

Start me off at £50,000. 50 here.

At 50, I'm bid. I have £50,000 there.

In ones, nice and easy for you.

51. 52.

53. 54.

55.

56. 57. 58.

The bidding quickly reaches the guide price,

and we rejoin at £62,000.

62.

63. 64.

Going in £1,000 bids, we rejoin again at £73,000.

73. 73, I'm bid. 74, can you?

74, I'm bid. 75.

You, sir? 75? 76, can you?

77. You are very close together, you lot. 77.

78, behind you, with the waistcoat.

No? 78, seated, original better.

78. 79.

Back in at 79 in the third row.

Original bidder, 80.

At £80,000 then.

First time. On the fifth row.

Second time. Selling it.

Well done, sir. Can I have your paddle number, please? Yes, it's you.

And the successful bid of £80,000, 20,000 over the guide price,

came from Mark, who lives in Manchester.

I met him to find out more.

-Nice to meet you, Mark, and congratulations.

-Thank you.

Tell me firstly about the auction experience.

It was quite terrifying.

First time being at an auction.

And, yeah, when I was sat down waiting for it,

a group of people sat behind me

that were talking about bidding on the property that I was there for.

-Scary, isn't it?

-Very scary.

-Was this your first choice?

-Well, I was only looking for that property.

-Did you go on your own?

Did you have anybody to support you there?

-I was on my own.

-On your own for the first time?

-I know. I didn't...

-Yeah. Left alone.

-You've now got the property that you wanted.

-Yep.

Now, what are you going to do with it?

How are you going to turn it around?

Well, luckily, it is in really good condition.

Um...

Probably, it would have been a good idea to view it

before auctioning on it, but, uh...

You broke one of the Hammer rules. You didn't view the property.

-Oh, no. Oh, no. Tell me you read the legal pack.

-I read the legal pack.

That's good. That's good.

Well, a lot of the apartments in this block, I think

there are quite a few repossessions because of the history

of the building.

They first sold quite low and then sold for too much and then...

everyone lost quite a lot of money.

Yes, you can get your fingers burned in property, as we all know.

And you can never take anything for granted,

as Mark has discovered since the auction.

I haven't been able to get a mortgage.

But what you can do is get a short-term, 12-month loan...

-Yes.

-..to sort of cover the rest of it.

And so I need to see whether or not a mortgage is possible.

It has a lot to do with the apartments being above the hotel

and it being quite high up.

And it has to do with also a lot of these properties being

held by the bank as repossessions.

OK, and that will hinder what your end goal is?

Well, ideally, the end goal is to sort of keep it to rent

and everything.

All the one-beds in this block are all the same.

But I probably should have... Yeah.

As well as finance problems,

Mark has had a bill to settle in addition to his £80,000 bid.

The clue was there at the auction.

Service charge arrears payable by the buyer.

This was disclosed in the legal pack which Mark read.

So he was aware there was £3,500 to pay in service charge arrears.

That's in addition to the £500 buyer's premium that can arise

when properties is sold on behalf of a bank or builder society

who can only agree to pay some of the auctioneer's fee.

The buyer has to pay the rest.

Another thing to watch out for at the auction

is any administration fee.

And remember, when the hammer falls on your bid, you will need to pay

10% right away and balance within 28 days.

So you need to do your homework.

Read the legal pack, check out the auction house's terms

and conditions and factor in your legal and surveying costs.

Property developing isn't all about picking kitchens

and deciding on what shade of magnolia to have.

Talking of which, what are Mark's plans?

Definitely going to give it a new lick of paint.

The...

I may look to sort of redoing the flooring.

The kitchen is not in too much of a bad state, but it's...

Possibly modernise it.

Bathroom - everything, it's in good state.

-If you just tidy up, spruce up, a bit of TLC...

-Yeah. A lot of TLC.

There is a bit of rust on all the windowsills.

And in regards to your budget now, a little paint, tidy things up...

-A lick of paint. I mean, I've put aside a few thousand just to...

-OK.

But to be honest with you, I can say this very easily,

I'm just going to furnish the place.

-It is a simple turnaround, isn't it, really?

-Yeah.

It is just cleaning, isn't it? From what we can see.

And I know from before and looking at the rental values,

they actually do very well cos the location...

It's a great location.

-Right in the centre of Manchester-Salford.

-Yeah.

We are above all the shops and restaurants.

And how long would you like to have all this work done?

Well, hopefully about four weeks or so. So...

At the end of the day, it is just a paint job.

Mark's certainly clued-up about this location and rentals.

He is aiming to turn this around in four weeks, which seems fair enough.

Given there is not much to do and despite all the financial hassles,

Mark knows he has got a good flat here.

The view's amazing. The sense of space and the light as well.

-I wish you all the best.

-Thank you.

-I hope it works out for you.

-Thank you very much.

-Good luck.

So Mark has had a bit of a nightmare trying to get

a mortgage on this property.

So will it become the perfect buy-to-let or will it be

a financial nightmare for him?

You can find out how he gets on later on in the programme.

Well, it is really fascinating to see how people renovate

their properties.

-Yeah, we've seen one. How have the other two done?

-Let's find out.

Back now to Dartford, in Kent, where earlier, I met Johnny,

who together with his uncle Ehsaas bought this mid-terrace for 192,000.

But he broke the Hammer rule by purchasing before seeing inside.

When you bought this property and you opened the door

and had a look inside, what did you then think?

HE CHUCKLES "We've got some work to do."

But, yeah, it's...

If you are going to buy blind, you have got to take the risks.

Amongst the risks Johnny was taking on

were the unconventional construction techniques for a loft

conversion which wouldn't pass building regulations.

A few skips worth of personal possessions,

and not to mention a rather putrid stench.

-And are you looking to rent this out?

-We are looking to sell it.

But again, depending on what the market says. The market will decide.

Do you think you bought this for a bargain price on auction day

-because of how it is inside?

-Definitely.

Do you think it would've put a lot of people off coming in?

Because it is just surface debris and a bit of a smell.

A lot of people are put off by the smell and stuff like that,

where you have to look through that. A couple of skips and it is gone.

You're back to the bare-bones.

But a lot of people get put off by that.

Johnny has had a busy time renovating other properties

and managing the family's portfolio of rentals,

so we are back six months later.

The work was spread out,

but Johnny and the team totalled up two months, bang on schedule.

Good going.

# Go, go

# Go, Johnny, go, go

# Go, go, Johnny, go, go

# Go, Johnny, go, go

# Go, Johnny, go, go. #

Remember the lounge? Well, it is different now.

Johnny has put in new windows and, throughout

the rest of the house, there is new central heating and new wiring.

But there were some unexpected jobs to tackle upstairs.

We replaced all the walls.

Cos when we took the door frames out, they were shaking.

Obviously now, pretty solid. We can't move it.

We replaced some insulation inside the walls for noise,

from room to room.

A lot of the floors were uneven, so we lifted a lot of the flooring

areas upstairs and just re-jigged it all basically to...

Strengthened it up as well because, obviously, we put in new walls.

But, yeah, very much happy with the walls now. All nice and solid.

Upstairs not only has new walls, it has got a new bathroom.

The master bedroom is unrecognizable.

You could hardly get into the second bedroom with a makeshift stairway

to the attic room.

Now it is usable space, as is the small bedroom.

Proof, if it were needed, that when it comes to refurbishment,

he is no Johnny-come-lately.

And there is good news outside.

# Maybe some day your name will be in lights

# Saying Johnny B Goode tonight

# Go, go Go, Johnny, go, go

# Johnny B Goode. #

But what has happened to the plans to change the downstairs layout?

I actually changed my mind.

I thought we'd just put it back as is because we are not sure

if we're going to sell the property or rent it.

If we are going to rent it, it is all nice and small and basic.

If we are going to sell it, you know,

they can have that option to adjust there afterwards.

I thought best to leave it as is.

And making the attic bedroom inhabitable?

We decided to take the loft room away,

as it just wasn't cost viable. OK, we'd add another bedroom,

but we'd have to get the necessary consent and the cost...

The value that we paid,

there wouldn't be enough profit left for us, basically, in the long run.

Johnny and Uncle Ehsaas have other properties across London.

With the work that has been done, have the plans changed

for the Dartford house?

We will probably sell this one and reinvest somewhere else.

But at the same time, when we do these projects,

we have to bear into mind that we might also have to rent for a few

years or just leave it in the portfolio.

If we rent it out and the tenant stays here

and we have no issues, we'll just leave it as is.

But obviously, it is a bit farther out from our other projects,

so ideally, we'd like to sell it.

Does being qualified in skills of the trade help

when it comes to estimating for jobs like these?

Unexpectedly removing walls couldn't have been helpful.

I think, with my background - obviously, electrics and plumbing -

it makes a big difference.

We can come in and get it done. I know...

If someone says to me, "It'll take three days,"

I know it is going to take two days.

So I could push them a little bit more to get it done.

Cos I physically know myself what it involves.

And if need be, I come down and get involved.

There has been a significant amount of work done here.

Has that affected the original £10,000 to £15,000 budget?

We spent just under 25,000.

We've done new windows, new central heating system, the wiring.

Basically, everything new from the beginnings.

I'd have liked to have come in at 10,000, 15,000, but, you know,

sometimes you just have to spend a little bit more to gain a bit more.

Because there are a lot of properties on the market on the in the area,

so we need to shine a little bit better than them.

So we put a little bit more money in to hopefully get more money out.

To find out if Johnny's hopes might come true,

we invited

two local estate agents round

to give us their thoughts on the revamped property.

I like the property.

I think what works well is the separate lounge

and the kitchen diner.

I think it will appeal

to a lot of families.

The standard of finish is fairly good.

I can see that it has recently been done. Everything is new - carpets,

kitchen, bathroom.

Johnny did spend £25,000 refurbishing the house.

And although he is not planning on renting just yet,

let's find out what he could expect if he had to.

On the current rental market, I would expect this property to

achieve between £1,000 and £1,100 per calendar month.

For rental, I feel this property would achieve in the region

between 1,100 and 1,150 per calendar month.

Taking the top figure,

that would achieve a yield of just over 6%.

But Johnny's preferred option is to sell.

He paid 192,000 at auction,

plus 25,000 to refurbish.

So his total spend so far is £217,000.

So, guys, what is it worth?

In the current market, I believe it would achieve

somewhere in the region of £250,000.

In the current market,

I would expect this property to achieve around £250,000.

A unanimous verdict and a potential profit of £33,000,

minus the usual taxes and expenses.

But is that the level of profit Johnny was hoping for?

If we sell for 250, we make a profit.

It's not the best profit, but it is profit.

So hopefully, we'll put it on the market for a little while,

see how the market reacts and go from there.

Well, that just leaves one question unanswered.

Did you manage to track down the source of that horrendous smell?

What we found is a few nappies were actually downstairs,

under the stairs. So once we got them out, we aired the building a bit.

Yeah, we got rid of that smell quite quickly.

Ugh! Don't you just love a story with a NAPPY ending?

Welcome back to Salford, where for a guide price of £60,000,

you could buy a one-bed flat...here.

# Eight miles high. #

OK, so it is not quite eight miles high,

but it was all the way up to the 17th floor.

But with height comes certain advantages.

The selling point for me is that huge window there,

which looks over the whole of Salford and Manchester.

Yes, with some good-sized rooms and its central location,

it certainly had some great points.

But it also had some potential problems.

The lack of parking, £1,600 a year in service charges,

but most importantly - its mortgageability,

or rather lack of it -

because this block was blacklisted by lenders,

so realistically, only an option to cash buyers.

Guided at £60,000, a flat here went at £80,000 at auction to Mark.

But the bad news was he wasn't really a cash buyer.

I haven't been able to get a mortgage, but what you can do

is get a short-term, 12-month loan, to sort of cover the rest of it.

So I need to see whether or not a mortgage is possible.

# The best things in life are free

# But you could give them to the birds and bees

# I want the money

# That's what I want. #

Mark had a budget of £2,000 and a timescale of three to four weeks

to make the flat rentable.

But apart from the odd bits of maintenance,

this flat wasn't in bad nick at all,

which was lucky as he hadn't seen it at all before he bought it.

But everything paled into insignificance in the face

of that mortgage question.

Just under three months later,

and we have returned to see how Mark's got on.

With bright sunshine coming from those windows

and some furniture in, it really is beginning to look like home.

We've given the whole place a new lick of paint, put laminate flooring

throughout the living room, changed the lighting and the radiators.

I was going to redo the kitchen,

but because of the problems we had with getting the mortgage

and not knowing the big plan in the future, yeah,

I've decided just to leave everything as is.

Uh-oh. That doesn't sound good.

Getting a mortgage on this property was Mark's big worry.

Where does he stand at the moment?

Well, basically, at the start, I took out a short-term loan to cover

the rest of the debt, which has to be paid off within, well, 12 months.

With doing that, you can't get a mortgage the first six months

of buying it outright. So after six months, I'm going

to try getting a mortgage on this place.

If not, I may have to sell it, which would be a big shame.

It would be a shame because Mark has even more at stake now.

To complicate matters, Mark

and his girlfriend have accepted an offer on their current home.

And because he can't get a buy-to-let mortgage on the flat,

they decided to move in here in the short-term.

Mark's confident that he can find a specialist loan company

and that eventually he will be able to rent out the flat.

With all this in mind, we have asked two local estate agents along.

Being local, they'll know these properties

and their problems better than most.

The layout of the property, I would see owner-occupiers and renters.

It is a very good size.

Both main rooms, the bedroom and the living room, very practical shapes.

And it would suit the majority of homeowners and renters.

There is no question that these are great apartments, but there is that

big issue - you can't change their position above a commercial unit.

The main issue with some lenders is, what happens

if that commercial premises is no longer in existence?

Who's going to be responsible for the maintenance of the building?

It is possible to get buy-to-let mortgages

on properties like these, but some lenders don't like a high

concentration of them in one block, so there may be hope for the future.

Mark spent £80,000 purchasing this place.

He had service charge arrears to pay of £3,500

and he spent £2,000 refurbishing it,

bringing his total investment to £85,500,

not including expenses like the auction,

legal fees or taxes like VAT.

Has this rather rocky road into property development put him

in the red or black?

If we were to bring this to market, we'd be looking to achieve

£80,000 to £85,000.

If this was on the market today,

I would suggest a marketing price between 80,000 and 85,000.

Rental wise, this apartment should perform well.

I'd anticipate we'd bring it to market at around about

£650 per calendar month.

If this property was on the rental market today,

we would suggest a figure up to £650 per calendar month.

Well, it's only been three months since Mark bought this property

and there was not a lot of room to add value in such a short time,

so it is currently not in profit.

However, those rental figures would offer potentially just over

a 9% yield.

Do your research. Definitely read the packs. View the property.

But, yeah, check everything before.

I hope we've given you something to think about

if you are considering visiting a property auction.

Yeah, so even if you are not contemplating going to the auction,

there is another way for you to get in on the auction action.

Yeah, make sure you join us

next time for more Homes Under The Hammer.

-BOTH: See you then.

-Bye.