Episode 35 Homes Under the Hammer

Hello and welcome to the show. There are plenty of reasons

for you to try your hand at property investing.

There's also plenty of things you'll need to get right

so it all goes smoothly.

You've got to make sure you've got an eye for a bargain,

but why not pop down to your local auction house

and see if you can find one.

We always say, "Do your research beforehand,

"read the legal pack and make sure you visit the property if you can."

If doesn't mean there won't be any problems,

but forewarned is forearmed.

So, what tempted our buyers on today's show?

A large freehold detached in Liverpool

keeps this property pro buying.

We have approximately 160 properties now on the books.

A fledgling team take on damp

in this three-bed mid-terrace in Birmingham.

-Is this project number one?

-Our first one, our very first one.

This is really exciting for us, actually.

And this Kent cafe and offices is as far as this developer can go

without his water wings.

Once you get to Ramsgate, you can't go any further,

otherwise you'll end up in the sea.

All of 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.

-Are you all done?

-HAMMER BANGS

MUSIC: Going Down To Liverpool by the Bangles

Liverpool, north-west England - famous for the Beatles, the Mersey,

the docks, the Liver building and, yes, Everton, amongst other things.

# I'm going down to Liverpool to do nothing

# All the days of my life... #

But I'm not going to Goodison Park this time.

I'm heading for Orrell Park,

around three miles from the city centre in the district of Walton.

Just a seven-minute walk away from the train station

is the property I'm here to see - or should I say, properties.

This three-storey building has got six flats in -

five studio flats and one one-bedroom flat.

Now, there's a lot of viewing to do here, so I'd better get started.

At a guide price of £160,000, this large, imposing building

has lots of space for parking at the front,

which is always a big plus.

So, into the first flat.

This is the only one-bed flat, but it is a good start.

Nice hallway here, you've got your double bedroom

at the back of the property there and a bathroom.

A nice lounge area and a really lovely high ceiling.

And you've got a kitchen in here which is a decent size again,

but...for me, it's screaming out getting rid of this wall here

and open up a nice lounge-kitchen area which would be perfect for me.

If you can hear any traffic noise,

it's because you've got this security shutter up here

and there's no glass in the windows as yet.

They are over there, ready to go in.

But get that out, open it up a bit, make it nice and bright.

One down and only five more flats to go.

As I said, the rest are all studio apartments,

meaning they don't have separate bedrooms.

The first studio on the ground floor

has the living room/ bedroom at the front of the house.

There's a small and narrow bathroom,

but the kitchen at the back is surprisingly large,

although it's missing a boiler.

Up on the first floor, there's two more studio flats

and it's a similar story.

In flat three, there's evidence of a leak from upstairs.

A reasonable size lounge/ bedroom

and if you find the kitchen a little disappointing,

wait until you see the bathroom!

It's a shower room. But they are a decent size for a studio flat.

On the same floor, studio flat four has a smaller lounge/ bedroom,

but makes up for it in the kitchen department and with a real bathroom.

MUSIC: Six To Go by The Pogues

# O-we-o-o, six to go

# O-we-o-o... #

So, at the top of the building, another studio flat.

Nice little hallway space here, large lounge, VERY large lounge in there.

Well, for a studio flat, trust me, it's large.

And you have a bathroom in here as well.

Just needs some updating but, again, nice and bright.

Into this large kitchen here.

It's very rare to have this size space in a studio flat.

Now, having done this before myself,

I'd be inclined to maybe think about changing the kitchen into a bedroom

and maybe putting the kitchen in the lounge,

so you've got a bit of a lounge-kitchen area,

bit of a dining area, which is quite cool and trendy nowadays,

and you'd have a one-bed flat rather than a studio.

I'd do the same for the final flat of the six, also on the top floor.

But what does a local property agent think

that the rental values will be if refurbished as they are?

Once they've been refurbished,

the studio apartments will bring in £300 to £350 per calendar month

and the one-bedroom apartments,

you're looking at £400 to £450 per calendar month.

So, that means, if it were possible

to convert the studios into one-bedders,

they'd achieve £100 per calendar month more

than leaving them as they are.

At a guide price of £160,000,

what could you get on the open market after refurbishment?

To sell the whole building as an investment,

you're talking roughly about £300,000.

Not a bad potential profit. But what about selling them individually?

They'd be worth £68,000 for the studio

and I'd say roughly about £72,000 for the one-bedroom flats.

Individual sales are clearly the way to go

because that adds up to a grand total of £412,000.

Three storeys, six flats and, potentially, a lot of rental income.

Now, if you get it for anywhere near the guide price,

I think you've got yourself a bargain.

Let's see who agreed when it went to auction.

We'll move straight on to lot 174.

Start me, if you will, at £150,000.

By the pillar straightaway on my left. 150.

The bids continue in £2,500 steps

until we rejoin with a telephone bid of £175,000.

75 with Ollie. 77.5.

Shake of the head. It's against two of you in the room.

It's on the phone with Ollie at £175,000.

The first time, second time...

Back of the room on the left, fresh place. 177.5.

180. 78.5, why not? Take 1,000.

Round me up to 180. 180. 81.

81. 82.

83. The phone's going down, I think.

It's still with you, this time at £182,000.

First time, second time...

Third and final time.

-The phone's gone down...

-HAMMER BANGS

The top bid of £182,000 came from Adrian.

He's been on the show twice before -

the last time three years ago for this property in Warrington.

Remind me what you do.

We source properties on behalf of clients, on behalf of investors,

so we'll source them, give the package to them,

explain the refurbishment costs and then we do the rental for them,

we manage it, so basically the whole package.

Adrian changed career from being an antiques dealer,

so after 12 years in the property business

and after meeting both Martin and Lucy on each of his last appearances,

how's he been getting on?

-Adrian, nice to meet you.

-You too.

I normally start by saying, "How was the auction?",

but you're old hat at this. You've been on the show before.

-I have, yes, two times. This is the third time.

-Third presenter.

-Yes, third presenter, third time, yes.

-How many have you done?

Have you done lots and lots?

-We have approximately 160 properties now on the books.

-Really?

-Yes.

What caught your eye about this property?

It's a great building.

It's a Victorian detached building,

-so it's got great potential for the rental market.

-Mmm-hmm.

-The location is really good as well.

-How are you going to change it?

-Are you going to knock it about a bit?

-Not too much, no. Mainly...

-In this property there's one one-bed flat and five studio units.

-OK.

So, the one-bed, we will knock a wall down there

because the kitchen is enclosed and it's quite cramped.

So, we'll take that down, open it up.

And the other ones, it's a general refresh really -

new kitchens, bathrooms, new boilers, full decoration.

-What's the budget for this property?

-Slightly under £35,000

for the whole property, so £34,750 is the budget on this one.

It's a big property, isn't it?

It's a small budget for a big property like that.

It is, but we've experience behind us,

know exactly what each unit will cost -

the kitchens, the bathrooms, the boilers, everything.

-We keep a close eye on the budget because it's not our money.

-Yes.

It's the client's money, so we keep a close eye on it

and everything's done in the correct order.

And where's the majority of that budget going to go?

On each flat, really.

It's so much per flat, for a new kitchen and bathroom and boiler.

We buy goods in bulk. We have a small warehouse

where we can deliver the goods to the property.

And do you have to get specific colours and designs from the people

that you're buying for to put into the rooms or do they let you just...?

They leave it to us. Because we've got the experience,

we know what colours to use,

what kitchens to use, what worktops to put in.

Sometimes a client will get more involved, which is fine,

but we will put our input in and advise them.

Is it fine though? Do they get under your feet sometimes?

No, mostly it's good. It is, yes.

-OK, so a budget of £35,000 on this one.

-Yes.

And have you got people sitting waiting for this property?

We do have tenants who go on the list

if we haven't got anything suitable at the particular time,

so we have a list in the office.

But we'll market it with the usual websites, the press, so...

It must be quite...not easy, but it must be easier

if you've got people there that are keeping in touch with you,

wanting to rent your property.

-That must be the way forward.

-It is, yes.

We do normally rent them very quickly, yes,

and with it being such a good area

and good links to the city centre with the train station

only 500 yards down the road, this will rent very well.

-And how long do you hope it takes you?

-Approximately 14 to 16 weeks.

-Ready for people to come in?

-Ready for people to rent it, yes.

-Good luck. I wish you all the best.

-Thank you very much. Thank you.

Adrian doesn't seem fazed at all by the size of this project -

six bathrooms, bedrooms, boilers and kitchens.

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

MUSIC: Handsworth Revolution by Steel Pulse

Only a ten-minute drive from Birmingham city centre

is the popular suburb of Handsworth.

You get more property for your money here than in the city

and you have good local amenities,

plus there's great road links and frequent buses.

Also, it's home to the reggae band Steel Pulse.

-# I say the people of Handsworth

-Ooh... #

Well, two minutes' walk from the local shops

is the property I'm here to see.

£58-62,000 was the guide price - for what?

Well, it's that - a three-bedroom mid-terrace.

But just look at it! It's huge!

# Yeah, in this big area of mine... #

Good news.

Wow! Well, as you might have expected, through the front door,

and the first thing that strikes you is the height of the ceilings.

That's terrific. Gives a real good feeling of openness.

Yeah, it's a great start.

Bay window there, so lots of light coming into the front sitting room.

And then through the property, a rear sitting room here.

Again, an open fire.

Obviously, it would be nice to have a fireplace around it

and then that should be really quite pleasant.

Very steep stairs leading up to your bedrooms.

But then, the property, not only is it very tall, it's very, very long -

well, certainly on the ground floor here

because you come through that room into this room which is the kitchen.

My guess is this is an extension.

And then, finally, right at the back of the property there,

is your loo and bathroom.

Now, I know I go on a lot about downstairs bathrooms,

but imagine the scene.

It's a cold winter's night and nature calls,

so it's down the steep staircase, through the back sitting room,

taking care to avoid the furniture,

and through the narrow galley kitchen -

probably, if you're anything like me,

having done all this without putting the lights on.

# Oh... #

When you get there, it's a perfectly fine white suite,

good enough for a rental property and fine for having a bath.

After all...

# What do you do in the bath? #

Well, you could have a shower, I suppose, in this one

and then you'd have to go back upstairs to get dressed.

Phew, those stairs really are terribly, terribly steep.

But good news when you get to the top of them -

a really nice-sized bedroom.

So, could this hold the answer to that bathroom problem?

Well, I don't know.

There's a big cupboard there through to the other side.

Maybe create what they call a Jack and Jill bathroom -

a bathroom there, a door on either side

to be accessed by both these bedrooms.

That would be good. But it depends on what's on that side really.

MUSIC: You're Driving Me Crazy by Perez Prado

That is so weird!

That room there is definitely about six or so feet longer than this one.

Where that cupboard is on the other side is, sort of, behind there,

which completely scuppers my idea of building a dual-access bathroom.

But more than that, what's going on? I need to investigate.

MUSIC: Left Bank Two by the Noveltones

Well, I was going to go into the attic for clues,

but have you seen those stairs up to the top floor? So, I sent the crew.

Anyway, the top bedroom does have a fairly substantial damp problem.

But it's a good size and if you move towards the apex of the roof,

there's plenty of room to stand up.

Anyway, on my way downstairs,

I couldn't help but notice that damp is pretty prevalent in this house.

It's everywhere.

But back to the case of bedroom one's expanded space.

A-ha! At the back of the property, the conundrum is resolved

because you can see, up there,

the bedroom at the back there sticks out a certain distance.

Behind it is the front bedroom and, as you can see,

that extends a further distance above the alleyway there.

Is that an issue? Well, it could be

because that actually creates what's known as a flying freehold.

Basically, your property flies over the top of this alleyway

and, unless it's perfectly clear who owns this alleyway,

it could create a few issues

and some mortgage lenders, well, they don't like it.

MUSIC: Hold Back The River by James Bay

One man who can tell us a bit more is this local estate agent.

We called him in for his opinions.

There does appear to be a flying freehold with this property.

This could cause problems obtaining a mortgage

which would limit the market because less people could afford it.

Well, we concur on that one. How about the damp?

Whether it's penetrating damp or rising damp

or whether it is just condensation, you'd only be able to tell that

once the property's been aired out properly and fully refurbed.

Well, whatever type of damp it is, it's not inconsiderable.

An easy way of testing for damp is with a moisture meter,

available at all good DIY stores.

Now, onto my hot topic - the downstairs bathroom.

Worth moving it?

It would mean losing a bedroom or shortening a bedroom.

I think most people would prefer a three-bedroom property,

even it does mean the bathroom being downstairs.

So, fully refurbished with three bedrooms

and a downstairs bathroom, what would this rent out for?

Once the property is fully renovated, I'd expect to achieve

between £450 and £500 per calendar month as a rental.

And with a guide price range of £58-62,000,

what would the property value be on the open market?

Once renovated, I think this property would achieve

something between £90-95,000.

A few issues to resolve -

the flying freehold, the steep stairs, that damp

and, of course, the bathroom which isn't ideally located.

Still, it is, I think, even with all those things,

a good one to go for.

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

Lot 114.

Start me, if you will.

Where shall we start, folks?

At £40,00, I'm bid.

At £40,000 then.

Just the one bid. Are we all done?

Do I have 50 anywhere? 50, sir? Thank you.

The lot came up at the end of the day

and it was an unconventional start.

But bidding soon got under way and we rejoin at £62,000.

62. 62.

Is it 63? 63. 64?

No? Can I see your number, madam, please?

-Who've we got?

-Striped jumper.

-I can't see him.

-Right there.

-OK, I see him.

Sorry, you're camouflaged in front of me. 64. 65? No?

Killer bid from you at the moment, sir. At £63,000, are we all done?

-64.

-64, even. At 64.

Madam? 65. At 65. And 66?

66. 67?

Are you sure? £66,000.

-One, two, three.

-HAMMER BANGS

£66,000 and it's yours.

The successful bidders were property developing duo Reaz and Sylvester.

I met Reaz back at the house to hear their plans.

MUSIC: Breathing Light by Nitin Sawney

-Reaz, good to meet you.

-Likewise.

-Congratulations.

-Thank you very much.

Tell me why you wanted to buy this interesting house.

Well, interestingly, this wasn't the house we were going for.

My business partner, Sylvester, and I

were actually going for another house after this.

And I thought, "What happens if we fail there?

"I know, I'll just go in and this will be my dress rehearsal."

And so I started to bid and then, to my surprise,

we actually ended up buying this house.

I've never heard of anyone bidding as a sort of dress rehearsal

-because you never know at auctions. You might just get it.

-Yes.

-It has, in fact, happened!

-Exactly. Shock, horror.

-Wow.

But, all in all, I think Sylvester and I are really pleased

with what we actually managed to achieve, I think,

cos the house we were actually going for was actually over our price.

So, you made, in hindsight, the right decision?

Yeah, more by luck than judgement.

Right, so tell me about you and Sylvester.

Sylvester, I've known him for five years or so.

He's a builder, so he then came up with the thought,

"Well, Reaz, why don't we actually...?

"We get on well with each other,

"why don't we just get into a partnership?"

Oh, great. Is this project number one?

Our first one, our very first one.

So, this is really exciting for us, actually.

But we're hoping that... We've got grand plans

that we'll actually buy some land

and then start to build houses from scratch.

So, what do you do when you're not doing this?

-Um, I'm a scientist and an inventor as well.

-Oh, wow, an inventor!

That sounds good. What do you invent?

OK, what I do is actually invent polymer dispersions.

Some of my inventions have been used for the glue in mobile phones,

-laptops...

-Wow.

Others have been used for the coatings

-on the inside of food and beverage cans.

-Right.

-Are you the actual inventor?

-Yeah.

-Your name?

-Name on the patents, yeah.

-Really?

Obviously not all... Some by myself, some with a team, my team.

Wow, that's quite cool, isn't it?

Well, it's been a very interesting job

-and I've really thoroughly enjoyed it as well.

-Right.

And why, at this point,

go from research scientist and inventor into property?

At this moment, I think this is like a stepping stone.

I'm thinking, in the future, of taking early retirement

and so this will then help me to ease my way into retirement.

Tell me what you and Sylvester are going to do to the property.

Oh... I think first thing is a lot of the walls,

we're going to plaster them

and then make them nice and fresh and new in that sense.

The kitchen leaves a lot to be desired.

We're going to strip that out and likewise for the bathroom.

And there's, obviously, a lot of work to be done in the garden as well.

-You've got a three-storey property here.

-Yes.

And you've got the bathroom through the kitchen on the ground floor.

Yeah, that's unusual,

-but this is common for terrace houses in this area.

-Is it?

If you wanted to, then perhaps you could convert one of the bedrooms

but then you lose a bedroom, so it's swings and roundabouts.

But I think, because it's accepted,

that we're just going to keep the same floor plan.

Stay with that, OK.

-So, top floor.

-Yes.

-Nice additional space but very damp.

Yeah, the drains outside, there's some moss growing and things,

so I think we just need to clear that out

and then we're going to replaster that anyway,

-so we'll be able to take that out.

-So, what's the budget for the work?

Oh, that's a good one.

We... Kind of back of an envelope calculation we did was, say, well,

-probably something like £7-10,000, that sort of thing.

-OK.

I think, because there's a sort of a ceiling,

in terms of the price you could actually attract

and, therefore, we don't want to go too high.

And what timescale?

I think we're trying to aim for about two to three months.

And then is the plan to sell it on or to rent it out?

Sell it on because, as I said, we want to be faithful to our ambition,

which is to actually buy some land and build new houses.

-But your enthusiasm for it is...

-Oh, absolutely! I'm raving to go!

I want to tear down the walls, literally.

MUSIC: Love Me Again by John Newman

I think Reaz should be careful which walls he tears down.

If he tries my failed plan for a Jack and Jill bathroom,

he might get a nasty shock.

Obviously, one issue interesting about the property

is the whole flying freehold

where the back of the property is narrower than the front.

-That's what it's called? OK.

-Do you know about that?

-No.

-OK, well, something to check out probably at some point.

-OK, right.

-Er, the stairs, as you said, very steep.

-Yes.

Um...don't know what you can do about that.

You're stuck with those, unfortunately.

We'll certainly brighten them up, that's...

-so it looks less daunting when you're climbing them.

-Well, congratulations!

-Thank you very much.

-Good luck with it.

-We might need it as well.

-Lovely to meet you.

-Thanks.

-Good to see you.

Hmm, well, there's no doubting Reaz's enthusiasm.

You've got to love him for that. But that whole flying freehold issue?

May not be a problem to him

but could be when he comes to try and sell this place on,

so...fingers crossed the solicitors can get that one sorted.

In terms of sorting it out though,

he's got a good assistant/ business partner, so no problems there.

Probably(!)

You can find out how it all turns out later in the show.

Coming up in a former cafe and offices in Kent,

I'm fighting off hunger pangs.

I can't help looking at

"Two dippy eggs and soldiers" up there - £2.99?!

But for Reaz and Sylvester, it's a battle of a different kind.

The battle we had between us, between our heads and our hearts.

Back now to Orrell Park in the Walton district of Liverpool

where, earlier, I looked around this three-storey Victorian house

which had previously been divided up

into five studio flats and one one-bedroom flat

where I thought there was an obvious alteration needed.

You've got a kitchen in here

but, for me, it's screaming out getting rid of this wall here

and open up a nice lounge-kitchen area.

The property was bought by Adrian for £182,000,

on behalf of a client who was also funding the refurbishment

and relying on Adrian's company

to manage and let the finished properties.

-As to the scale of work...

-It's a general refresh, really.

New kitchens, bathrooms, new boilers, full decoration.

What's the budget for this property?

Slightly under £35,000 for the whole property, so £34.750.

-We keep a close eye on the budget because it's not our money.

-Yes.

It's the client's money, so we keep a close eye on it

and everything's done in the correct order.

-And how long do you hope it takes you?

-Approximately 14 to 16 weeks.

-Ready for people to come in and rent it?

-Ready for people to rent it, yes.

Four and a half months later, we're back.

Let's start in the one-bedroom flat.

MUSIC: Ooh, Baby, I Like It Like That by Alesha Dixon

# Oh, yeah, yeah, yeah... #

We've taken the wall out completely

and now we have a lovely open-plan living room-kitchen.

Nice modern kitchen.

It's all one nice, bright space which works really well.

And the only dedicated bedroom at the rear of the house

looks like you could sleep in it now.

Finally, for the one-bed flat,

the small bathroom is now fitted and tiled

to a much higher specification.

Also on the ground floor is this studio flat

which is now bright and airy,

thanks to the neutral colours and laminate flooring

which Adrian will only fit downstairs.

It's carpets upstairs to keep the noise absorbed.

# Ooh, baby I like it like that... #

Previously, the studio only had a shower

but by moving the bulky radiator and plumbing in the heated towel rail,

there's enough room for a bath now.

On the middle floor, flats three and four have high ceilings,

with pastel decor making the features more prominent.

# Ooh, baby I like it like that... #

One advantage of undertaking a refurbishment on this scale

is the ability to get a discount for bulk buying.

In this way, Adrian is able to pass on a significant saving to his client

for things like kitchen fittings, carpets, doors, handles, boilers etc.

The matching kitchen and bathroom units

give the house a unified kind of appearance.

On the top floor, it's a similar story in the final two studio flats.

Although not as high in the ceiling department as the other flats,

the eves don't seem to encroach on the living space too badly.

The rooms feel much more rentable and fresh.

But when developing a house of multiple occupancy like this,

it's not all about the kitchens, bathrooms and decor.

There are strict regulations which is something Adrian has to keep up with.

We're up to scratch on those, where we would have

a full fire and smoke hardwired system in place for the fire escapes

and there's new regulations come in last year with the stairs,

where you have to have yellow edging

on the bottom and top step for fire escapes.

Change in legislation like this will affect the build cost.

But did something like these recent changes add to the timescale?

The timescale we had on the building was 16 weeks.

We said a maximum of 16 weeks and we were absolutely bang on

because it came in just under. 15 weeks, it was fully finished.

What about the predicted and precise £34,750 budget forecast?

All the kitchens, bathrooms, central heating, everything,

the exterior, the roof, everything was just under £34,000,

so it was a really good result.

Valuations on large properties like this can be significantly affected

by things like location and rental demand.

So, we called in two local estate agents for their opinions -

starting with the one who saw the property before renovation.

The work that's been carried out is to very high standards.

Looks really, really good.

They've made fabulous use of the space.

They've provided every facility that the new tenants would want.

I think it's faultless, really.

The agents' average sale value for the whole house

is between £380,000 and £450,00.

After a total spend of £216,000, that could mean a top profit

of around £234,000 before taxes and fees -

if Adrian's client decided to sell, that is.

But he isn't planning to sell, so what about those rental figures?

The one-bedroom apartment,

I would expect a rental of £600 per calendar month.

In between £550 and £600 per calendar month.

And the studios?

I'd expect them to achieve £500 to £550 per calendar month.

I would say, comfortably,

£525 per calendar month would be very realistic.

We've already actually let four of the apartments here.

We've let three studios at £425 and we've let the one-bed at £475.

That is bringing in a total income for my client of just under £32,000

which brings in a gross rental yield of 14%

which is absolutely really good rental return

and my client is over the moon with that.

And Adrian has good reason to be over the moon himself.

In between our filming dates,

his wife, Rebecca, had a little baby boy and they've called him Lucas.

So, as well as organising a refurbishment,

Adrian had paternity to deal with

and he still brought the project in on time.

Not bad for an ex-antique dealer!

Welcome to Ramsgate, east Kent,

one of the great English seaside towns of the 19th century.

It's the only royal harbour in the country

and is a member of the ancient Confederation of Cinque Ports.

Ramsgate's main industries are still tourism and fishing.

It's got one of the largest marinas on the English south coast

and a bustling harbour, also a busy high street

with lots of shops and cafes scattered around.

Now, that is exactly what I'm here to see today -

a cafe, and it's just up there.

Being so close to a busy high street area

with lots of passing customers has got to be a bonus for a cafe.

MUSIC: A Good Cafe On George Street by The Rosie Taylor Project

It's not actually just a cafe I'm here to see.

It's this whole building. It's three storeys, it's a mid-terrace

and the substantial property went to auction

with a guide price of £140 to £150,000.

I'm going to go inside and take a look around.

Now, inside, a really big space.

It's in reasonable condition which is good news.

You can really imagine lots of seasidey Ramsgate people

sitting in here eating their sandwiches and muffins.

The cafe only closed, sadly, for business about five months ago.

We've even got a lift over here, look. I don't think it works though.

You've got the serving counter over there,

the kitchen out the back here, empty of equipment completely.

That's been cleaned out.

So, you can see, it all needs a bit of work, a new refit,

but so far, so good and I can't helping looking at

"Two dippy eggs and soldiers" up there - £2.99?!

Also on this floor is a customer toilet

and there's access out the back into a small backyard

which is rather taken up with this fire escape

which services the two upper floors.

There's a large, dry basement which is perfect for storage.

However, there is a downside to this property -

the only way to access the upstairs space is through the cafe.

Ideally, you'd want to create a separate entrance.

Well, the upper two floors above the cafe

were previously used as office space.

On the first floor here, there's a bit of an odd layout

with this internal room with this rather strange window.

And then you've got two rooms in here to the front.

Again, you can see it's all in reasonable condition.

The only major thing is you might need some new windows.

Come and look at these.

But don't forget this is a conservation area,

so you will need to get permission to change these

and you may be restricted with what you can do

and it might be a costly exercise.

As well as those large offices,

there's countless corridors and a spacious ladies' loo on this level,

so plenty of space to play with.

And then more stairs up to the second floor and yet more rooms.

This place really is mammoth. It goes on and on.

Up here on the top floor, there are five more rooms all around.

You've got lots of space here. What could you use it all for?

You'll probably have to keep the ground floor as a commercial unit

because of its location within the shopping area.

But recent planning changes mean it is so much easier to get permission

to convert former office space like this into residential flats.

You will have to sort separate access

to get in down the bottom into the front.

You've got to bear in mind

the additional cost of converting the property,

including the fixtures and the fittings

and, of course, fire and soundproofing,

but if you do get permission,

I think creating flats up here would be financially worthwhile.

So, this property has a lot of potential.

But what does a local estate agent make of it?

The options at the moment, I feel,

would be to convert the building into flats.

I think the first and second floor would be for conversion.

If the council allow you to, it would be nice to get

the ground floor of the shop converted as well,

but if not, it would just be commercial ground floor,

residential first and second.

But how likely are the local council to grant permission to convert this?

I think they've recently relaxed a few rules and regulations

which means that, potentially,

they'll let you convert office space no problem.

They'd rather have a building occupied and let out

and council tax in than have it standing empty.

So, what values are we talking about here for a one or two-bed flat?

A two-bedroom flat, I personally feel

would go for anywhere between £90,000

all the way up to £110,000, depending on spec.

The sale value, I think, for a one-bedroom flat

would be anywhere between £75,000 up to £85,000.

And what about the rental for a two-bedroom flat?

On average, we get between about £550 per calendar month

-to £650 per calendar month.

-And a one-bed?

For a one-bedroom conversion,

I think you'd get anywhere between £450

all the way up to £500 per calendar month.

Commercial rental values for a ground floor cafe

would be around £7,200 per annum

and just the cafe and basement could sell for around £110,000,

so there is room to make some money with this one.

This really is a huge property,

right in the heart of Ramsgate town centre,

which offers plenty of options for business use

or possible conversion into flats.

But it's a lot of building to take on,

so let's find out who bid for this one at the auction.

We move now to lot 62 which is a ground-floor former cafe.

You've got the basement,

the first and second floors as well.

Lots of potential here. Lot 62.

We've got a guide of 140 to 150.

Start me at the bottom end of the guide. 140.

140, straight in. Thank you very much.

At £140,000, I'm bid.

142, do I see? 142.

145, sir.

Was that one bid and finish? 142, I have.

At £142,000, I'm bid.

You're out, on my right. At £142,000.

145, do I see anywhere else? Can I tempt you again with another £1,000?

He says, "No." 143, do I see?

Well, then, for the first time, if there's no further bids,

at £142,000, the gentleman's bid on my left.

For the second time at £142,000.

For the third and final time, £142,000, then. Are you all done?

HAMMER BANGS Sold at £142,000. One bid.

Or two bids.

Regular viewers of the show

may just recognise the successful bidder of the Ramsgate cafe.

It's Adrian, who's appeared on Homes Under The Hammer before.

Last time we saw Adrian,

he bought a former travel agent's with rooms above

which he then converted into an Indian deli and cafe

with a two-bedroom flat above.

Adrian likes the mix of commercial and residential properties.

I met up with him and his son, William,

back at his latest purchase to hear his plans.

Guys, congratulations. Lovely to see you again, Adrian.

-It's been almost a year since we met last?

-That's right, yes.

-Saw you in Ashford.

-Yes, in that huge travel agency you bought.

-That's right.

-And you brought your son, William, with you today.

-Yeah.

So, now, guys, I want to know the story.

Why did you want to buy this at auction

and what are you going to do with it?

Well, I think it's got a lot of potential.

-I was quite surprised at the price I paid for it at auction.

-Which was?

-It was £142,000.

-How much would you have paid for this?

I was willing to go up to about £170,000.

But it was previously on the market for £235,000,

so I think I got quite a good deal on it.

So, tell me about your purchases

and tell me what you've been up to in the last year.

I've been continuing to buy and sell and rent property,

continually going to the auctions.

Sometimes I've been lucky, sometimes not so lucky.

William, is this the first time you've seen it today?

-Yeah, I just came along.

-So, be honest.

What do you think when your dad drags you around places like this?

It's OK.

I'm not too fond of going to auctions as that can take quite a while,

especially if you don't pick up something.

But when we go to the properties, I find them quite interesting.

Do you like to see the finished result

because, in a state like this, it's not that exciting?

Yeah, I prefer to come once at the start

and then see it at the end, not too much in between.

MUSIC: Theme from The Office

Well, that's obviously the ideal situation.

Come at the start, visit at the end and then leave the rest to dad.

But property developing usually involves

quite a bit more hard graft than that.

Shall we start off by talking about what you're going to be doing,

because it's a commercial premises, obviously?

Yes, it is at the moment.

Obviously, it's an existing restaurant use,

so we're going to continue to keep it as a commercial premises,

-either a shop or a restaurant.

-Mmm-hmm.

But we need to subdivide it,

so that we can create some separate access

from the ground floor up to the upper parts.

And then the plan with the upper parts is then, hopefully,

to convert them into residential use.

So, how many units do you hope to squeeze from upstairs?

I think we can get two two-bedroom apartments upstairs,

based on the existing layout.

OK, and you think that'll be better than lots of one-bedroom apartments?

-Have you worked out the finances?

-Yeah, I think so.

Because of the way the stairs are laid out,

it's probably going to be easier to try and keep the existing layout

as much as we can, without knocking too many walls around.

What would happen if you didn't get planning permission

to convert the upstairs into flats?

I think plan B would be to keep the shop unit as it is

and then just let out the existing offices as serviced offices.

Mmm-hmm. So, what sort of budget have you got to do the work?

We've got £60,000, so ideally, we want to keep the whole project,

including purchase price, within about £200,000.

I remember you had a rule of thumb

that you wouldn't travel further than, was it 60 miles

-or 60 minutes or...?

-Yeah.

-Something like that,

because I know you're based in Surrey in Guildford.

Yeah, this is slightly beyond my normal territory.

I was going to say, this a bit further out for you.

Once you get to Ramsgate, you can't go any further

or else you'll end up in the sea,

so this is as far as I'm prepared to go.

Adrian hopes the whole project will take just six to nine months,

depending on planning.

He will project manage himself, making frequent visits to the site,

so he'll definitely be clocking up the miles

between his home in Surrey and here.

So, Adrian, are you keen for your son to follow in your footsteps?

Yeah, I'd like William to take over the family business one day.

But this hasn't always been the family business, has it?

No, I've only been doing property for about seven years.

Before that I was in financial services but...

I used to work for other people then, now I just work for myself.

So, how does property compare with financial services?

Oh, I much prefer it. I wish I'd done it earlier, actually.

What is it you love about property developing?

I just like all the variety, really -

viewing different properties,

working out solutions to problems, meeting different people.

It's an interesting business to be in.

William, you've been to the auctions. Does dad ever let you bid?

No, he doesn't trust me with putting his hand up.

He only ever bids once or twice on his houses anyway, so...

Maybe in a few years to come he'll let you. Can you imagine?

-I make sure he keeps his hands in his pockets.

-Yeah!

Guys, congratulations. It's been really lovely seeing you again.

-Well done.

-Thanks very much.

-Thank you.

-Thanks, William.

Adrian has been in property for quite a few years now

and this isn't the first time he's bought a shop

and converted the floors above into flats.

Changing this former cafe should be a piece of cake

for this experienced developer,

but will Adrian be able to persuade William to follow in his footsteps?

Will this property inspire him?

You can find out how father and son get on later in the programme.

We've seen how our first buyer got on but what about the others?

-Yes, did everything go to plan?

-It's time to find out.

Back now to Handsworth, Birmingham,

where Carl Palmer, drummer from Emerson, Lake and Palmer was born.

MUSIC: Hoedown by Emerson, Lake and Palmer

It's also where, earlier, I examined

this three-storey, three-bedroom mid-terrace

with a potential flying freehold over this alleyway.

The house, bathroom and kitchen extension were bought for £66,000

by scientist and inventor Reaz and builder Sylvester,

who had just got into business together.

-Is this project number one?

-Our first one, our very first one.

-Wow.

So, yeah, this is really exciting for us, actually.

But they didn't intend to buy it at the auction.

We were actually going for another house

and I thought, "What happens if we fail there?

"I know, I'll just go in and this will be my dress rehearsal."

I've never heard of anyone bidding as a dress rehearsal

because you never know at auction, you might just get it!

-It has, in fact, happened!

-Exactly. Shock, horror.

The "dress rehearsal" was scheduled to take two to three months,

but there was a substantial damp problem.

It was almost like it had been built on a river bed

and there was what looked like penetrating damp in the attic.

But Reaz thought he knew the root cause.

The drains outside, there's some moss growing and things,

-so I think we just need to clear that out.

-OK.

I doubted it would be that simple with this much damp,

so how does it look six months later?

# Hold back the river Let me look in your eyes

# Hold back the river so I... #

Well, the damp's been banished and it looks great.

And what a lovely surprise - an upstairs bathroom,

which Reaz and Sylvester have created

in the previously unreachable loft space.

# Stop for a minute and see where you hide

# Hold back the river... #

Modern units and two-tone, clean tile lines are a striking addition

and, what's more, it's upstairs.

Down one floor.

Now, remember the first floor front bedroom

had the benefit of flying over the alleyway?

Like most of the house, it was replastered.

New carpets and colour scheme in neutral shades

lift the room immensely.

And Reaz's plan to distract your mind from the climb upstairs

with bright colours... Well, he's certainly done that!

The back bedroom on this floor is more muted

and the downstairs rooms speak for themselves.

# Hold back the river Let me look in your eyes

# Hold back the river so I... #

Apart from a few finishing touches,

the new kitchen units and tiled floor

make the most of the narrow galley style.

# Lonely water

# Lonely water... #

The bathrooms have been retiled,

keeping the two-tone style of the new en suite.

That and the newly tiled floor

form the perfect backdrop for the new fixtures.

New, that is, apart from the bath which you may recognise from before

because it was deemed good enough to keep.

Who better to tell us about the refurbishment

than Reaz and Sylvester?

The biggest problem we had was actually the roof.

There was a lot of leaking which had occurred

and some of the tiles were broken.

They'd allowed the water to seep in onto the walls, sort of thing,

and so we had to rectify the problem there.

Sylvester's originally from Slovakia

and has been a builder for over 20 years.

But the roof here was one of the worst he'd encountered.

We needed to make new insulation of the roof

because it was leaking inside. It was big problem.

It was very bad condition.

The roof repair was a necessity,

but can you say the same about rendering rear and front elevations?

The battle we had between us, between our heads and our hearts,

because we wanted to do so much,

but there was always this ceiling price for the area

and we were quite mindful of that.

It was a difficult task at times.

A difficult task that's taken them three months longer than scheduled.

So, what happened?

We actually spent three months actually refurbishing MY house

and there was an extension which Sylvester and his team put up

and so we, kind of, effectively lost three months.

Well, that's one way of getting a builder, I suppose -

go into business with one.

Were there any unexpected things to come out of this project?

As it's changed and evolved, you think,

"Well, actually, this is our first baby, as it were."

Well, let's see if this baby's worth all the labour

that's gone into it, not to mention cost.

They paid £66,000 at auction

and Reaz calculates a further £19,000 on refurbishment and fees,

making a grand total of £85,000.

We invited two estate agents along

to give us their estimates and opinions.

I especially like the en suite upstairs

and the rendering of the front elevation

has made a huge difference.

I particularly like the loft conversion with the en suite

and the kitchen and bathroom are presented

-to a good standard as well.

-What about the flying freehold issue?

The flying freehold over the tunnel entry I don't think is an issue.

It's quite common.

Flying freeholds generally aren't too much of an issue.

They're quite common in this location.

Well, that's lucky, but as I've said, they can be tricky

when it comes to selling on, so always worth checking out.

Now, Reaz and Sylvester were planning to sell on

but, out of interest, what rental values would they achieve?

Anything between £500 and £550 per calendar month.

A rental in the region of £500 to £550 per calendar month.

Nearly an 8% yield. Are you tempted, guys?

-It's potentially a possibility for us, yes.

-Yeah, I think is good idea.

We still, we see which one is the best way.

Le's check out the market price.

I would put the property on the market at offers around £100,000.

I would market this property at £100,000.

It's not a million miles away where we'd expect it to be.

Potentially, a £15,000 profit. Could it be money towards that new build?

We're going to the auction in a couple of days' time.

We've got an eye on...on a plot of land which is quite near here,

about a mile from here.

And, if we're successful, that dream will come true.

And until that time,

Reaz is going to fill his hours by studying for yet another PhD.

Me? I think I'll stick to flying freeholds, thanks.

Earlier, I was in Ramsgate, in the district of Thanet, east Kent,

where I looked around this three-storey commercial unit

which was formerly a cafe with offices above.

The main problem I found

was that you can only access the offices through the cafe.

Even so, there was plenty of square footage.

You've got the serving counter over there,

the kitchen out the back here, empty of equipment completely.

That's been cleaned out.

So, you can see it all needs a bit of work, a new refit,

but so far, so good.

Here I met Adrian who had brought along his son, William,

to talk about what he sees as a snip of a purchase at £142,000.

-What are you going to do with it?

-I think it's got a lot of potential.

It was previously on the market for £235,000,

-so I think I got quite a good deal on it.

-That IS a good deal.

So, we're going to continue to keep it as a commercial premises,

-either a shop or a restaurant.

-Mmm-hmm.

But we need to subdivide it,

so that we can create some separate access

from the ground floor up to the upper parts.

And then the plan with the upper parts is then, hopefully,

to convert them into residential use.

And, William, is this the first time you've seen it today?

-Yeah, I just came along.

-What do you think of it?

Do you think it's a good one?

I don't really give much of an opinion on his purchases,

but I guess I just go along with them.

Well, they've proved themselves profitable in the past,

so maybe that's the best way. Now, one thing's for sure -

to turn this around will require an egg-cellent strategy.

And certainly not one but two dippy.

Adrian was working on a timescale of six to nine months.

We're back one year later.

-# Love cats

-Ba-ba-ba-ba-ba-ba-ba-ba

-# We miss you hissed the love cats

-Ba-ba-ba-ba-ba-ba-ba-ba... #

And it looks like the cats in Thanet will be loving the change

at the former greasy spoon.

MUSIC: Love Cats by The Cure

# I love you, let's go

# Ooh, solid gold... #

And the storage area that had old desks and drawers scattered around,

now, well, it's got plenty of reserve stock for future sale.

In fact, there's plenty of reserve stock

everywhere on the ground floor!

MUSIC: Love Cats by The Cure

So, what happened and what about the plans for the flats?

The council were fine.

They were quite pleased to see

the upper parts converted to residential.

Their main criteria was that they wanted to ensure

that there was continued employment in the shop,

so we've kept that as the commercial premises

with the residential upstairs.

It was soon after buying the property

that this local charity were looking for larger premises.

-# Cool for cats

-Cool for cats... #

Adrian offered them a tenancy at will.

That's where a tenant takes occupation

without an agreement that specifies a definite rental period

or even rental schedule, just in case you didn't know.

But it would appear that Adrian had been a victim of the shop's success.

Well, the shop tenants have been really pleased with the shop

and trading has gone really well.

So, they don't really want to move out.

But we need them to move out in order to do the development work.

So, at the moment,

we're waiting for them to find temporary accommodation,

then we'll start the development and then, hopefully,

they'll move back in once the development is finished.

But there have been other benefits of having a tenant.

Obviously, we've been receiving rent for the property

and also we haven't had to pay business rates.

And how are the plans for the upper levels going?

Well, Adrian's finally got them passed for further development.

Here on the ground floor,

we've got a separate entrance into the flats above

with a separate door to the shop's.

And then, up on the first floor,

there's a two-bedroom apartment and the same up on the second floor.

We've used the space which was the old men's and ladies' toilet

and created a separate laundry room and utility area.

Externally, we've got to keep the same windows

as we have at the moment.

Adrian was hoping to replace the metal frame windows

which can be prone to rusting

but the building is in a conservation area

and so its character may have to be retained.

Surprisingly, though, metal windows like these

are still being manufactured after over 150 years,

so it's possible to get units that look similar

with added benefits like polyester powder coating and double glazing.

So, with all this going on,

how was the commute from Adrian's home in Surrey to Ramsgate?

Living away from the property hasn't been a great problem.

Once we set up the shop tenancy, I haven't had to do a great deal

and they just keep on paying the rent

and we've left it at that so far.

And have there been any unforeseen twists and turns

whilst renovating the property?

Well, we found some cooking oil in the basement

and I approached a local fish and chip shop owner over the road

and he was very pleased to come and take that away for us,

so that saved on our site clearance budget.

Adrian's business model is to buy to let premises

of, principally, mixed commercial and residential use.

So, we called in two property experts -

first, the chap who'd seen the property a year ago.

How has the development delay affected things?

The market's had time to improve over time,

prices have gone up a little bit as well.

Rental values have increased and the election is out the way,

so now things are just simmering down and getting back to normal.

Having waited 12 months, the market really has improved of late

and I think it's going to be...

He will be able to maximise his investment.

Adrian's refurbishment budget has risen

from his original £60,000 to £80,000.

This is mainly due to the costs associated with removing the lift.

This will take his total spend to £222,000.

So, what kind of return is he looking at?

As far as the rental's concerned for the flats,

because demand is so high at the moment,

I could be imagining around about £550 per calendar month.

I think between anywhere from £550 to £650 per calendar month,

depending on spec.

Yeah, that's quite a big range.

I would say probably about £600 a month for the flats.

I think the potential for the shop

would be probably between £7,500 per annum to £10,000 per annum.

I think, obviously, having a lease on the shop,

you're going to be looking at around about £7,500 per annum.

Well, we're currently renting the shop for £9,600 a year.

I think, once it's done up,

we should be able to push that up to about £11,000-£12,000 a year.

Assuming Adrian gets that top rental of £12,000

and his estimated rental for the flats of £600 per calendar month,

that would give him a yield of nearly 12%.

So, is this the sort of business

that Adrian's son, William, would be happy to continue?

I'm hoping to get him involved, in terms of managing the budget

and looking after the figures, as he's quite good at maths,

so, hopefully, that will be a nice job for him to do.

We'll see you next time with more stories from the auction rooms.

Yes, so make sure you join us for more Homes Under The Hammer.

-We hope to see you very soon. ALL:

-Goodbye.