Episode 38 Homes Under the Hammer

You don't have to be a seasoned developer

to bag a property at auction.

No, but whatever your experience be warned,

it pays to expect the unexpected and it won't be without its challenges.

Being prepared is the name of the game but we're here to help you along the way.

Variety is the spice of life

and that's what you'll find at the auction room.

Yes, along with a wide range of property

and many people trying to outbid their rivals.

Yes, so let's see who was successful with what they were after

on today's show.

This two-bedroom bungalow in Shropshire has scores of spores.

Dry rot can be an absolute nightmare

and if you don't get it sorted early enough it can cost a fortune.

Dozens of stairs pack this London semi turned into three flats.

It's tight, you've got a big slope here,

it's all a little bit, you know!

In this two-bed terrace in Derby I learned to be careful

which doors I knock on.

Sorry. Sorry!

Nothing.

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.

Sold.

This is Ashley close to the Staffordshire/Shropshire border.

It's a quiet, quintessential English rural village

with a real laid-back charm.

Perfect for those who want a more relaxed pace of life.

And this street of bungalows feels pretty relaxed.

The village with just a few hundred residents feels like a great place

to downsize or even retire.

The property I'm here to see is this bungalow here,

it's a two-bed and it has a guide price of £108,000.

I'm going to have a look.

Already looking good. A nice garden and plenty of parking space.

So what's inside?

What have we got?

OK, large room at the back there.

Kitchen just alongside it.

Bathroom and a smaller room there which I would imagine

is one of the bedrooms.

Into the main room here, our living room/lounge area here.

This property clearly has an issue with dampness.

Let's hope it's not the dreaded dry rot.

Dry rot can be an absolute nightmare

because the fungus can actually get into the timbers

and if you don't get it sorted early enough it can cost a fortune.

I'm pretty sure that is very unsafe.

It could mean stripping a floor, a wall or even a roof,

step over that, right back to its structural timbers

and completely replacing them.

Or, if caught in time,

there are chemical treatments that can save the wood.

I'm not sure there's any chance of that one to be saved.

# So come on baby And save me

# I'm running for cover Save me... #

Finding the cause of this is really a priority here.

Once you've dealt with that there are plenty of options to consider

when it comes to the layout.

This is a two-bed property but this bedroom here

has clearly been extended judging by this one here.

I know there's going to be builders and property developers thinking,

could this be a three-bed?

Could it add value? Would it add value? I'm not entirely sure.

So into the kitchen which is a bit of a mess.

But it is a good floor space, it is a good start.

You could have a nice kitchen in there.

Through into the extension which is tiled.

I'd imagine that was some kind of utility room to link these two together.

You've got access to the garage there and a door out to the garden.

I think, with the right work, you could possibly gain some

good inside living space from this

because you have got your carport to keep the motor

nice and pristine looking.

But that all depends on the buyer and the lifestyle they lead.

I'm always surprised at how spacious these bungalows are inside.

If you did find yourself short of room

you could extend into the garden.

But if you're like me, you might just prefer to keep the garden as it is.

Sit back, soak up the summer sun, when it comes out!

Let's hear the opinion of a local estate agent.

This is a really good property.

It requires a lot of modernising and renovation work

but has a lot of potential.

There's lots of space to work with and it's in a really good location.

The problems with the flooring in the living room has probably

been caused by the extension that's been added on covering up some of the air bricks

so that would need a closer look at how to alleviate that problem.

Hopefully that is the case but I'd recommend a specialist report.

How about the values?

In my opinion, if the property were to be an open market,

depending on the finish, it would sell for somewhere in the region

of £170-£190,000.

It would rent somewhere around £650-£675 per calendar month.

So this house needs a fair bit of work not least to sort out that damp.

But there's potential to extend as well

and you can maximise your profits if you reconfigure for the re-sale.

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

An extended detached bungalow.

Two bedrooms, UPVC double glazing, oil central heating and a carport.

100,000, start me?

Lot number three. 100,000 bid, Thank you.

At £100,000.

105, going to say now.

105 bid now. At 105.

110? £110,000.

The lot attracted plenty of interest

and soon the guide price was eclipsed.

We rejoin the bidding at £117,000.

117. Another 500?

£117,500.

118. Have I got...? 118,500.

119. 119,500. 120.

120,500.

121. Do you want to go 122, sir? 122.

123.

124? 124.

125.

126?

No? At 125. Still on the back row. £125,000 then, all done.

At £125,000 once then.

£125,000 twice.

Third and final time at £125,000.

You've bought it, sir. Well done.

Neil at the auction with his partner Trisha have paid £125,000

for the property for himself and his business partner, David.

You will have seen the duo on the show before,

most recently renovating this large corner site into eight flats.

What about this place then?

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

-Why did you want to buy it?

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

-OK.

And the huge volume meant savings by buying in bulk.

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

Same with the showers. It was eight of everything.

But economies of scale won't be applicable this time.

David, nice to meet you. Neil, nice to meet you.

-Congratulations.

-Thank you.

You're an old hat at this. You've done this many times before.

Tell us what the auction was like this time.

-Fairly quiet this time.

-Did you go together?

No, I didn't go to this one. Neil went on his own.

-You let him loose?

-I trusted him on his own, yes!

-You let him loose.

Why this property?

I think the idea was to move away from some of the properties

we've done recently. We wanted to do something different.

This is a bungalow in a nice area for retirement,

ideal for downsizers and it came in at the right price.

As soon as I came into this property I could smell...

You can smell the damp and the rot.

How are you going to fix that?

We've got the damp person coming in. He's been in, had a quick look at it.

A lot of it, we think, is just ventilation.

The smell that you could smell, the place has been locked up for two, three years.

Hopefully with a bit of airing,

ventilation bricks under the floor, it will clear a lot of it.

Yeah, we've got to look at the timbers.

Some of the timbers are rotted, perished away

so we're going to have to replace those.

We will probably put a new damp-proof course in just to

make sure it's all dry under there.

The assumption was the whole of the floor would need to be replaced,

maybe some adjoining timbers will have to go.

After that it's a relatively straightforward refurbishment.

New kitchen, new bathroom, couple of walls have got to be knocked down.

It's relatively straight after that.

So what are you actually going to do to the property?

Give me a little bit more detail.

Well, the idea is to move, what is currently the back bedroom into the front.

I think we all like our lounges to look out on the garden.

We're going to split the front lounge up into two bedrooms.

The kitchen will be left basically where it is,

we'll knock through into the back room to make it a breakfast area, dining area

but it'll have an island unit in the middle of the kitchen.

New boiler and hopefully just refurb up the garden.

That's a long list and their ability to do it all hinges on what's caused the damage.

If it is dry rot throughout

those holes could make a huge hole in the budget.

# I'm walking the floor over you

# I can't sleep a wink that is true... #

I hope they've got a contingency.

The figure we've allowed for is about £30,000.

The floor is the biggest factor that we can't really quantify

at this point in time, so there's some flexibility there

but we think 30,000 should cover everything.

But the important thing to do at this moment in time is to get

the job done properly because there's no point doing the job

and then having to rip all the things out to go back

and do the job again at a later date.

And with David and Neil's experience and their building team's skills,

I've no doubt it will all be done first time.

They plan to have it all finished and ready to sell in three to four months.

They're not 100% sure of timescales as it all depends on the floor.

What they are sure about is the role they each play.

Why did you go into property together?

-This could be a long discussion. We think we're brothers-in-law by marriage.

-Ooh!

-He's married to my wife's sister.

-OK, yeah.

David had got the practical skills to deal with the property,

my area has always been finance.

And we got talking one Christmas.

We were looking to invest in property,

David was looking to change his career, what he was doing,

an it seemed a good idea to start from there.

-Do the partners get involved?

-Yeah.

I mean that's why she came to the auction with me

to keep me in check really.

Neil, I wish you all the best. I hope it goes well.

-Make sure you listen to your partner.

-I will.

-She'll put you right.

-David...

-Thank you very much.

-Make sure it works. Take care.

David and Neil have bought in a good area.

As we all know, that's half the battle.

There is a fair degree of uncertainty on what needs doing

in this property regards the damp and the layout

and that may impinge on the £30,000 budget they've given themselves.

Join us later to find out what happens to this little slice of rural England.

What I love about East Dulwich is its villagey, suburban feel

and all its pretty green leafiness.

It also has a selection of independent shops, restaurants

as well as plenty of cafes selling home-made cakes and pastries.

So what can I do while you look around this leafy area?

Lovely.

Now where do I start?

Property isn't cheap here

but East Dulwich is more affordable than neighbouring Dulwich Village.

There's plenty of good bus routes...

SPEAKS WITH MOUTH FULL

..and you can get to London Bridge train line from the nearby station

in just 12 minutes.

Time really flies when you're having fun!

I've got some work to do now.

The cake definitely gets a tick in the box

but what about the property I'm here to see?

I'm on a fairly busy road but it's pretty, it's tree-lined

and the shops are literally just a 10-minute walk away.

No surprise then that this is a desirable place to be.

But what about the guide price of the property?

Well, it was a fairly hefty £620,000-£650,000.

But for that, you do get this.

A lovely semidetached property, it's spread over four floors

and it's been divided into three flats.

Sounds like there's a lot to look around so I'm going to head in and make a start.

'There's a flat on the ground floor, another on the lower ground

'and the third flat is split across the two top floors.'

Oh! The postman's been.

So, inside.

It's not as huge as I would have expected.

The hallway is just, look, a little bit tight.

You can literally bounce off the walls.

You've got some stairs leading to the upper flat

and through here, again, you know, tight spaces.

You've got a kitchen here, a little bathroom here,

a bedroom with textured wallpaper.

Now, let me just tell you, my first ever flat I bought

had this wallpaper and it is a nightmare to get off

especially if there is layer, upon layer, upon layer

which there probably is in here.

Down this little step, this is interesting. Look.

It's tight, you've got a big slope here, it's all a little bit,

you know, to get ground.

Not an ideal place for the fridge so I would relocate that.

But you have got a really nice spacious lounge through there.

It could be quite a nice little flat.

Let's check out the upstairs one.

The top floor flat is split over two levels.

On the first landing there is a kitchen which is a reasonable size

though I'm not keen on those water pipes

running all round the room at ceiling height.

Opposite the kitchen is a decent sized reception room.

Next to that, a small bathroom.

And finally, bedroom one is on the other side of the kitchen.

Onwards and upwards to the room at the top.

So another flight of stairs

but it is incredibly bright up here.

Disappointing space though, don't you agree?

Look, you've got all the sloping ceiling business going on again.

Not much you can do about that.

But I did see a little doorway through here. I'm just wondering...

Yes, you could potentially knock through here,

apply for planning permission,

you could put a nice dormer window there.

Really open up the space up so you've got a great master bedroom.

You could put a ensuite shower room in the corner.

I really think that would work well

and this would be a fantastic master bedroom.

Back down now to the lower ground floor, one-bedroom flat

which has the security shutters.

It does have its own entrance at the side of the house

which takes you into a large hallway.

There's the bathroom on your left as you enter.

Opposite that is the kitchen.

Next to which is the lounge.

And on the opposite side of the hall, is the bedroom.

The basement flat might be very dark and dingy at the moment

but actually it does have some positives as well.

First of all, it has its own front door

which actually makes it a maisonette.

Secondly, it has direct access out into this garden.

Yes, it might be hard to imagine now but once you get rid of these

and the garden's all tidied up you'll have lovely views

and I think it could even become the nicest flat out of all of them.

We called in a local estate agent for his opinions and valuations.

Would it be an idea to make it one big house?

Having a look round this property,

I would keep this as three flats rather than one house.

I think it would cost too much to put it back into a house and I think

it would be financially beneficial to keep it as three flats.

Is parking going to be an issue with the three dwellings?

It is possible to create off-street parking here

and with such a busy road I would recommend doing that.

OK, flats it is then.

What might the values of those flats be, and given the guide price

of £620,000-£650,000, is there any room for profit?

The basement flat would achieve an approximate figure of £325,000.

With the ground floor flat, that would achieve a region of £375,000.

And the top floor flat would achieve anywhere

from £425-£450,000.

If you increase the size of the bedroom in the top floor flat,

you would look to achieve somewhere in the region of £465,000-475,000.

The agent thinks as a semidetached house

this would be worth a maximum of £1 million.

So with the top total for three flats coming in at £1,175,000,

that looks like the better option.

So, there are a few little tweaks I would make here and at the moment

some of the rooms are a little treacherous for tall people.

This is a substantial property that works well as flats

and once renovated, there could be some serious money to be made here.

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

96. We're moving into East Dulwich.

A semidetached building, three flats subject to addendum.

I know I've got phone bidding. Starting at 600,000.

A bid of six please? 600,000 straight away, gentleman there.

610, anywhere? 600, I'm bid.

So the bids build slowly and steadily.

We rejoin just at the point it's about to meet the £1 million mark.

That guide is a distant memory.

995. Your pleasure. A million at the back, sir.

£1 million I'm bid, and five.

Passing the £1 million mark, we rejoin again at £1,030,000.

One million and thirty. Is that right? I think that's right.

So one million and forty from...

That's 35 is it, sir? 35. And 40, sir.

And forty. And five? 45. And...

..50?

And 50. 55? No. So I've got one million and fifty.

55.

60, sir, I'm bid. 65? No.

£1,060,000, first time.

Second time, third and last time at £1,060,000.

All done. I have...

yours in front of me, £1,060,000. Thank you.

The successful bidder was Edgar, a professional pianist and violinist.

His bid of £1,060,000 was on behalf of a property and music company

owned by him, his business partner, Pavel, and Edgar's father, Slava.

I met Edgar and Pavel back at the house.

It's their company's fifth purchase in its first year of trading.

Guys, lovely to meet you both. Edgar, Pavel, lovely to meet you.

What I want to know is, why did you want to buy this property?

Oh, my dad is involved in the property development business

for the last 15 years.

We've done some research, spoke to Pavel, showed him this property.

I went to the auction

and won this lot.

Had you set a limit for this building?

-Oh, that's something that was actually £1 million.

-Ah!

So we paid 60,000 more.

We overpaid a bit,

however, it was a strategic decision

because this house has a lot of potential

and even if the prices will down, and bubble will explode,

people will still have to find a place to live.

Lots of potential and lots of choices.

The agent's choice was to keep it as three flats,

but what have the chaps decided?

We might be able to change it into one unit,

because there is a massive garden.

And then it adds more value.

People from abroad are dreaming about buying a house in London.

We have a 50/50 scenario, now.

We haven't decided.

But both ways is going to be a good project.

And what about any extension potential?

Because you have a flat downstairs. How about extending that flat?

Our architect is already making some decisions.

We are planning to have the biggest extension possible.

So whatever happens here, guys,

you are going to maximise the potential of this building?

Be it a house, be it three flats?

Yes, we are going to do some loft conversion, as well, in the rear garden outside.

Well, that'll be fantastic. There's a lot of spare space in the roof,

if you can extend through into that space.

The boys are estimating a seven-month timescale for the work,

but haven't yet decided what they're going to do.

Structural work in the loft

and extensions will add to the internal work,

like the awkward shapes in the ground-floor flat

caused by the stairs,

which Edgar bumped his head on earlier!

That is why we are going to move the stairs somewhere else.

We are going to take them into this room.

It's a rather unusual place to put stairs, anyway, isn't it?

Correct, yes. We will be thinking about

-moving the stairs somewhere. Here, probably this room.

-OK.

We haven't made any decision yet.

So if I ask you what is your budget, can you answer that question?

Yes, we can.

We are looking around £40,000 for each flat.

And if you convert it into a house?

-Into a family home?

-£140,000.

If you renovate the ground floor flat and you get an extension,

how much do you think a flat downstairs like that

would be worth on the open market?

I think it'll be worth about 500,000.

-Really?

-Yes. So this is our target, ideally.

You're hoping £500,000 for the flat downstairs?

I think this flat, we are looking for £450,000.

OK, £450,000.

And what about the upstairs flat with lots of stairs?

We are thinking about 550,000.

So really you do hope to have a decent profit at the end of it?

Yes, we are looking, ideally, for £300,000.

But the agent valuations are £330,000 lower than theirs.

I know their company targets

international Russian-speaking clients for their London properties,

I just hope they are right about their market in this case.

So how much involvement are you two actually going to have

in this property?

Well, a lot.

Most of the project management work

will be done by Ed's father.

Me and Ed, we negotiate with the client,

we also negotiate with the architects and designers.

All the financing issues would be on my side.

My job is to go to the auction, to place correct price,

to do all the investigation before placing a bid

and to call Pavel.

Guys, I'm really looking forward to seeing the outcome,

be it three flats or a family house.

-Congratulations.

-Thank you.

-Thank you very much.

Edgar and Pavel have smashed through the £1 million barrier

to secure this property.

Did they pay too much?

Well, I think they're overestimating what they could achieve here.

Will this project bring music to their ears?

Join me later in the show and you can find out what happens.

Still to come - more surprises in the Derby mid-terrace.

Er... Oh!

Right...

Well, this is where the kitchen should be.

The boys at the flat conversion in East Dulwich strike gold

at the bottom of the garden.

Obviously, that will get much more value.

We return now to Ashley,

the quaint and quiet Shropshire village

where I saw this two-bed detached bungalow with problems afoot.

Let's hope it's not the dreaded dry rot.

Now, I don't want to go too close to this.

I'm pretty... Yes, there you go.

Paying £125,000 for the privilege of taking on the problem

were brothers-in-law David, on the left, and Neil.

Their plan - to refurbish and resell.

A lot of it, we think, is just ventilation.

Hopefully, with a bit of airing, ventilation bricks...

under the floor,

it will clear a lot of it, though some of the timbers are rotted...

We don't quite know how much it's going to cost us,

but, after that, it's a relatively straightforward refurbishment.

New kitchen, new bathroom,

a couple of walls have got to be knocked down,

but it's relatively straight after that.

And there was a planned reshuffle of the rooms.

The idea is to move what is currently the back bedroom

into the front.

We're going to split the front lounge up

into two bedrooms.

The kitchen will be left basically where it is.

We'll knock through into the back room,

but it will have an island unit in the middle of the kitchen.

New boiler and hopefully just refurb up the garden.

To see if all this shuffling came up trumps,

we're back just over three months later.

Let's take a look.

MUSIC: Stronger by Clean Bandit

# I wanted to be stronger!

# I wanted to be everything for you

# If I could be stronger

# Would you believe that I could love you like you want me to? #

The neutral colour scheme creates a spacious and contemporary feel

and really brightens up the place.

As for the spore-ridden floor I jumped on...

# I want it to be stronger

# I want it to be everything for you

# If I could be stronger

# Would you believe that I could love you like you want me to? #

Reorganising the internal space has certainly paid dividends.

There's a lovely big lounge with patio doors out to the garden.

And they did create that third bedroom.

Well, there's no denying that things look a lot better than they used to.

So did they get to the source of those rotting floorboards?

We found out that it had been caused by a leaking central heating system.

There was a pipe there that was just dripping away constantly

and with it being concrete underneath,

it had just run right the way across the floor, underneath.

There was also various leaks in the roof which allowed water to come in.

And then the whole place was just sealed up tighter than a drum.

We took the roof off,

replaced the felt, the batons,

put the roof back on,

renewed the flat roof at the back, which was also leaking slightly.

We've installed trickle vents,

we've renewed all the floors,

we've renewed the whole central heating system,

renewed the electrics.

We've also replastered throughout.

It's had new kitchen, new bathroom,

done a tremendous amount of work in the garden -

patios, levelling things out.

That's about it, really.

You make it sound so easy, David.

How was the division of labour worked out, though?

The work was allocated on the basis that he did 98% of it

and I tried not to do the other 2%!

I have very few practical skills,

so I keep out of the way.

My background is in finance,

so I sort that out

and leave David to do the jobs that he can get on with.

OK, Neill, you mention the thorny issue of money.

How did that side of the job work out?

The budget was 30,

but we'd allowed a contingency of up to 40,

purely and simply because we didn't really know

what we were going to find with the floorboards.

We had to have quite a variation.

The budget... We've stayed within that, but we're at the upper end.

We're close to the 40,000 mark.

And it all went pretty smoothly.

There wasn't a time when we didn't have anybody on site.

Everybody virtually fell in, knitted in pretty well.

Judging by the list of works,

I think that's as good a result as you can get.

And now it's finished...

The property will be going for sale almost immediately.

We never had any intentions of renting it out.

It was always going to be a property that was going to be put back onto the market,

because the rental values wouldn't be strong enough for us

to keep it for our own portfolio.

Why don't we call in two estate agents

to give us some opinions and valuations?

Being local, they'll have a handle on the market around here.

Let's start with the agent who saw it before its refurbishment...

Changes are great.

The new layout works really well

with the living accommodation at the back of the property,

rather than a mismatch of bedrooms

and living accommodation.

The finish is fantastic.

It's nice and neutral, modern.

The fact that the bungalow's been turned

from a two to a three-bedroom bungalow

is a very good idea.

There are a few two-bedroom bungalows down here,

third bedrooms a lot of people do like,

as they can have that third bedroom as a dining room or a study.

No matter what it's intended for,

when downsizing, extra space can be invaluable.

Neil and David have an extensive portfolio of rental properties,

but they have no intention of renting this one out.

So what sort of profit are they likely to make by selling?

The guys would need to exceed £165,000

they've spent so far.

If the property were to be on the open market,

I would expect it to achieve somewhere in the region

of £180,000-£190,000.

To go on the market anywhere between

£185,000-£195,000.

Which means, if we take the higher valuations,

a potential profit of between £25,000-£30,000

minus the usual taxes and expenses.

We'd always banked on a final value

of a round about the 185-190

and that falls bang in line with what we were expecting

and what we budgeted on.

Their first bungalow refurbishment looks like it should return a profit.

So would they do it again?

Yes, if you can get a bungalow in the right area,

they always seem to be popular.

But, yes, we've been looking another couple for a forthcoming auction.

So, yes, could form part of the future plans.

And it suits me cos you don't have to take bathrooms upstairs

and plasterboard upstairs and plaster

and leave your tools upstairs and have to walk back downstairs.

Suits me.

Well, good luck, chaps.

And here's hoping you don't have to take off and

RE-BUNG-A-LOW roof back on the next one!

BLOCKBUSTERS THEME TUNE

A quick quiz now.

My house today is in the East Midlands,

where there's a large variety of housing stock.

From 1930s semis...

..to new townhouses...

..conversions from past to present...

..tightly packed semis...

and more humble terraces...

Which city am I close to?

Yes! It's Derby!

And I'm in the Normanton suburb.

Well, about a mile and a half from the city centre

is the property I'm here to see.

And it is a traditional two-bedroomed mid-terrace.

Now, these kinds of places make great potential investment.

So, let's have a look.

£38,000 plus was the guide price.

So of the myriad possible layouts of a terrace,

what has this one got?

Well, I like this design.

You come through the door NOT into your living room,

but into a little corridor, so that's really good.

Also it gives me the idea that this is a slightly wider terrace than some,

which again is good news.

Front room there, looks to be in...

well, it's work in progress kind of condition, isn't it?

At least somebody's stripped off all the wallpaper for you,

though, obviously, looks like the walls

are all going to have to be skimmed with plaster.

Now there's an interesting thing...

That's an adjoining door to next door.

What's that all about?

I think I just knocked and I think somebody might be coming!

Better move on quick.

Sorry, sorry!

Nothing!

Clearly you're going to have to block that up.

It's not really ideal, is it?

And also, more seriously, it's a bit of a fire issue -

if there's a fire next door and you haven't got a wall between you,

then that's obviously going to spread through quite quickly.

As you were!

Anyway, through to the rear lounge.

It's a nice size, high ceilings, big open fireplace.

You could have some fun with that.

Oh...

Right...

Well, this is where the kitchen should be.

This is where the kitchen isn't.

That's not good.

Money to be spent here, then, and obviously,

if you're looking at mortgaging this place,

that, oh, yes, and that adjoining door...

need to be sorted out!

For the majority of lenders to grant a mortgage, a property has to be habitable.

MUSIC: The Good, The Bad And The Ugly by Ennio Morricone

Things that would deem it uninhabitable

include not having a functioning kitchen, bathroom and toilet.

However, some specialist lenders may grant a self build mortgage.

Otherwise, it's cash only buyers.

So upstairs and bathroom - total refurb required,

but at least it's in the right place at the top of the stairs.

It's a nice size.

And then, two bedrooms, just two, but they are at least a good size.

One at the back, there...

Watch out for the floorboards!

.. and another one at the front.

So you've got a reasonable amount of space and I like the proportions.

Obviously, major refurb required.

And...

A few bits of very, very curious damage...

Looks like fire-damaged bit of wood, there,

but I can't see any other major signs of fire damage,

so I do not know at all what's going on there.

I am, for once, at a loss...

MUSIC RESUMES

..especially as the corresponding fireplace and chimney stack in the front room

shows no sign of a chimney fire.

But I wouldn't be lighting a fire here

until the property's chimneys were checked out.

Coming through the kitchen that isn't a kitchen,

takes you out the back.

Well, when you step out the back of these kind of terraced properties,

you never know quite what you're going to find.

Sometimes it is just a little courtyard area like this.

Sometimes there's a rear alley,

but the good news in this case,

a really nice sized family garden.

A little outbuilding which you could renovate, I guess,

get rid of some of the rubbish. But that is a real bonus.

The other thing, when you come out here, though,

you do see a few signs of some fairly simple and basic maintenance

that needs to be done,

particularly with the guttering and things like this, this soil downpipe here.

You should definitely get those sorted.

But I like what I'm seeing here very much.

But a big garden and the accompanying maintenance

are not necessarily good news for a landlord.

Let's hear what a local property expert makes

of this two-bed Normanton Terrace.

I would say the positives of a property like this

are it truly is a blank canvas.

You are able to put your mark on it and make of it what you will.

It's a good solid house, somebody has ripped all the fixtures and fittings out,

so they've taken care of some of that work for you.

It's got a good sized rear garden

so there is a nice outside space to enjoy.

And it's got a lot going for it.

So much for the good

and we've seen the ugly.

So what about the bad?

I would say the negative of a property like this

is that there is no off-road parking,

so you would have to park in adjoining neighbouring streets.

He's right.

This street and a number of adjoining streets

have the indelible stamp of parking peril.

But, given the guide price of £38,000 plus,

what it's worth when done up?

I would say that once renovated to a good standard this property -

on the current market -

would achieve somewhere in the region of £75,000.

So... Taking everything into account, what about rental?

I would say that if this property were offered to the rental market

in a good condition,

it would achieve £480 per calendar month.

Well, being right on the main road is a bit of an issue for this property.

But apart from that,

what you've got here is a pretty solid Derby terraced house.

And, with a bit of effort,

could make someone a really nice home

or a good rental opportunity.

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

Lot number one, here in Derby.

It's a two-bedroom traditional terraced house

that needs a full scheme of modernisation and improvement.

It's on a guide of 38 plus.

Who's got 35 to start me?

35? Thank you. I've taken your bid, sir, at 35,000.

36 is bid on the aisle. 37 here.

38. 38, 39. I've two of you together.

40,000.

41 behind you. So 41.

42? 42.

Well, there's plenty of interest in this first lot of the day

with new bidders springing up all round the room.

We rejoin the bidding at £55,000.

At 55... 56.

56, I've got a new bidder. 56, 500?

He shakes his head.

At £56,000 then. All done?

56,500. 57. 57,500?

Sure?

At £57,000, once.

Twice, third opportunity.

Sold at 57,000, thank you.

And if the successful bidder looks familiar

it's because we've met Bobby twice before.

The first time was donkey's years ago

at this Grade II-listed Elizabethan manor house.

Then again when advising his friend

on this two-up, two-down terrace in Derby.

We've come down a peg here slightly. It's not quite Elizabethan, is it?

No, no.

The terrace required a different skills set

than the Grade II-listed manor.

But nevertheless it was a profitable exercise,

partly down to Bobby's spending philosophy.

I'm a bit of a Scrooge.

I don't think a lot of money should be spent on this particular project.

I met Bobby to find out if he is still a thrifty spender

at his latest portfolio addition which he secured for 57,000.

-Bobby, good to see you.

-And you.

-In fact, to see you again.

What attracted you to this house?

Well, there were a number of properties in the auction

we were interested in.

This was lot number one so, wanted something where we needed to

get quite a bit of work done to it. This obviously fits the bill.

And bought it, simple as that.

With a view to doing it up to selling it on or...?

-To rent it out.

-OK.

-No plans to sell it.

First thing, it doesn't have a kitchen which probably makes it unmortgageable.

That put you in a reasonable position if you are a cash buyer.

I suppose so, I didn't really think of it at the time,

but you are right.

The bathroom isn't that fantastic either nor is the rest of the house.

At least Bobby's realistic.

What is he planning for this place?

We'll introduce a kitchen. The room is there but not the kitchen.

We'll do that.

We'll renovate the rest of the property in terms of

change the bathroom, introduce a central heating system.

There was one originally but it has been ripped apart.

-New flooring, redecorate, replaster.

-OK.

You keep on talking about "we", who is "we"?

I don't like to say it is just me.

-So you're getting builders in to do it, basically?

-Yes.

-What budget?

-I think...

7,000 8,000. That should do it.

-Right. Quite tight.

-It is tight but it is doable.

What about timescale?

-Hopefully about four weeks.

-Wow.

-Maybe a little less if we're lucky.

Wow! A lot of work to do in four weeks.

-Have you got people starting this afternoon?

-Tomorrow.

And how hands-on will you be?

I will bring the materials here and then pay the bills.

-It benefits from a huge garden.

-Yes.

-Plans for that?

It would be nice to make it look more of a garden rather than an open space.

'Yes, it's presently a very brown open-space devoid of plant life.'

# I beg your pardon

# I never promised you a rose garden

# Along with the sunshine

# There's got to be a little rain sometime. #

-Roof and everything like that OK?

-Roof is sound.

The windows are sound, the front door, backdoor, they are all OK as well.

What about flooring? It is... It needs to be redone.

What are you planning to put on the floors?

Laminate flooring downstairs,

probably the same upstairs apart from the bathroom.

The floor in the kitchen is tiled, I think it may be OK to stay as it is.

The room that we are in now, may bring the floor up, may not.

We'll have to see.

What's going on with the door in the hallway, do you think?

There is a connecting door to the property next-door.

I'm not sure what the set-up was.

I would've thought at some stage there was joint ownership

between this property and next door.

We will just brick that up and let the neighbours know

when they hear the noise what is happening.

Ah, yes, best do that.

I had a narrow escape earlier with my soft tap.

# I hear you knocking

# But you can't come in... #

-Going back to the auction?

-Yes, yes, in a few weeks' time again.

-Oh, really?

-Yes.

-Did you enjoy it? How was the auction for this one?

It's been good. We've bought three properties from this auction.

-So we were successful, I think.

-Congratulations.

-And good luck with it.

-Thank you very much.

-We look forward to seeing how you get on.

-Thanks.

So Bobby embarking on another property renovation project.

He is experienced so I hope he's right about that £7,000 budget

because it doesn't sound like a lot.

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

Well, we've given our new owners some time

-and we know how one of them got on.

-But what about the others?

Did they have a smooth sail or did they end up in troubled waters?

I'd like to find out so let's have a look.

Back now to East Dulwich, London,

where earlier I saw this Victorian semi-detached house which had

been converted into three flats, each with their own challenges.

# One, two, three... #

The ground floor flat had very narrow corridors

with a stairwell at head height.

# One, two, three... #

A huge corridor and small rooms characterised

the lower ground floor flat.

And the split-level top flat...

# One, two, three... #

..had a bedroom with a low ceiling and unused loft space

right for conversion, therefore adding value.

-# It's easy

-It's so easy

# Like taking candy from a baby. #

It was bought by Pavel, in the blue shirt, and Edgar,

as their fifth purchase for their property and music company

they run with Edgar's dad, who's a seasoned property developer.

The company paid £1,060,000, £410,000 more than the top

of the guide price range and more than they wanted to pay.

Our top limit was actually one million so we paid 60,000 more.

We overpaid a bit.

However, it was a strategic decision

because this house has a lot of potential

and even if the prices will go down and the bubble will explode,

people will still have to find a place to live.

The plan was to renovate and resell but they were not sure

whether to keep it as three flats or restore it back to one dwelling.

We have a 50/50 scenario now.

We haven't decided. Both ways, it is going to be a good project.

What about any extension potential?

You have a flat downstairs, how about extending that flat?

Our architect is already making some decisions.

We are planning to have the biggest extension possible.

So whatever happens here, guys, you are going to maximise

the potential of this building, be it a house, be it three flats.

Yeah, we're going to do some loft conversion as well

in the rear garden side.

Their work schedule was seven months but the company's

other properties took priority for the first four months of that.

So we're back 11 months later.

And the house is looking much brighter

with all the brickwork cleaned and repointed.

But the option of off-street parking at the front hasn't been pursued.

The old entrance hall and way into the ground floor flat

was very constricting.

Now, it's more spacious.

The stairs to the top flat created headroom issues

but that space too has been opened up.

Looks like the decision was for flats rather than converting

back to a house.

The bathroom, like much of the flat, is a work in progress

as is the now open space which will become the combined kitchen and living room.

The lower ground floor flat is also undergoing changes.

# Baby, baby, baby

# I'm coming home... #

What was the lounge will become the biggest bedroom.

# You're my one and only woman... #

And the two outside cupboards have been bricked up and the space will

add to the new kitchen/living room and extension into the garden.

But a recent change of plan

might make a huge difference to this project.

As you can see we have quite a large garden so we have several options.

The initial option was to split the garden in three parts.

Each flat would have a separate garden.

But obviously that would get much more value

if we would be able to develop a house at the back.

It turns out they may be able to negotiate access to the back garden

from the road behind the rear neighbours,

so the use of the garden hinges on this.

We continued with the works and meanwhile we were investigating

and researching and negotiating with the council what we can do.

Now it looks like we can get a green light

and then if we are unable to obtain access and build another house

at the back, this will obviously bring added value into the project.

So everything feels a bit half finished.

Well, not quite everything.

Planning was granted for the ground floor extension

and for the rear loft conversion of the split-level flat

turning it into a three-bedroom property.

Let's have a look.

# We built our own house

# Own house

# With our hands over our hearts... #

Not only have they got an extra bedroom up there,

they've squeezed in a laundry room.

# Never fall apart

# Apart

# Never fall apa-apart

# With our hands over our hearts... #

Altering the window size and rearranging the fittings

makes the bathroom seem much bigger.

By combining what was bedroom one with the kitchen,

they've created a spacious lounge kitchen.

Two rather gloomy rooms have become one large,

bright room with two windows.

# You give the light I need

# Like water to a seed... #

The finish is to the highest of standards.

The old reception room is now freed up to be the master bedroom

with ensuite facilities.

The property sold at auction for £1,060,000.

We invited two agents along

to give us their thoughts on the work so far,

starting with the finished flat and the agent who saw the house before work began.

For this three-bedroom property in its current condition,

I estimate it to be worth £599,999.

A property of this size in this area, I'd expect to sell

for around the £600,000 mark.

We're looking to get 700,000.

Irrespective of some other lower forecasts,

we are quite ambitious about this flat.

You can't say much about the properties downstairs

as they are still being done, and once they are done

we can predict more specifically what we expect from them.

The agents, however, were happy to predict

and the average of their valuations for the other two flats

is 950,000.

Making a grand sales total of £1,550,000.

Taking away £40,000 per flat refurbishment and the purchase price

would leave a potential profit before tax and expenses of £370,000.

So how's the experience been?

I've enjoyed very much seeing this building going from very old

to a flat with a high standard such as this one.

Plus there's a possible extra bonus of an entire house

the agents feel would be worth in the region of 875,000.

Less what they cost to build.

Most important for us is to stick to the same standard

and keep learning.

Back now to Derby where, earlier in the Normanton district,

I took a tour of this two-bedroom mid-terrace with one distinctive feature.

That's an adjoining door to next-door!

What's that about? They just knocked and there might be someone coming.

Better move on quick. Sorry, sorry!

Erm...Nothing!

Clearly, you're going to have to block that up.

It's not really ideal, is it?

And also, more seriously, it's a bit of a fire issue.

If there's a fire next door and you haven't got a wall between you

then that's going to spread through quite quickly. As you were!

'Ideal if you needed to borrow a cup of sugar from next door,

'not that you can do that much with it because the property

'didn't have a kitchen, just a room where there used to be one.'

It did have a bathroom of sorts and the rooms had good proportions.

It was bought by a regular contributor to Homes Under The Hammer, Bobby,

who now has a couple of dozen rental properties.

This one cost him £57,000.

I asked him what his intentions were for the property.

We'll introduce a kitchen. The room is there but not the kitchen.

So, we'll do that.

We'll renovate the rest of the property in terms of

change the bathroom, introduce a central heating system.

There was one originally but it's just been ripped apart.

New flooring, redecorate, replaster.

A lot of work in four weeks.

-Have you got people starting this afternoon?

-Tomorrow.

Well, it took six weeks in the end

and Bobby has already got tenants in.

With his and their permission we're back to see what's been achieved.

And guess what? There's a kitchen in the kitchen!

It may be basic and compact but it does the job.

It does put a tick in the box of things needed to be mortgageable.

Once family meals have been cooked in it, the dining room adjacent

which used to look like this...

..now has a dining table.

And the tiled floor has come up a treat.

The lounge has a new floor, a laminate one,

making it much brighter.

And remember the fire hazard short cut to next-door?

# Knock, knock

# Who that there at my door?

# I hear a knock, knock... #

Gone too are the holes in the floor at the top of the stairs

and the complete lack of spindles is no longer a health and safety issue.

The laminate flooring and neutrally painted replastered walls

are omnipresent.

# Knock, knock, knock, knocking

# Knock, knock, knock... #

The bathroom at the rear of the house

was best described as user hostile.

Now the tiled floor and partially tiled walls

along with the new fittings make you feel like you could actually have a bath.

# I would love to

# Next time I hear a knock, knock

# Who that there at my door?

The back bedroom continues with the unifying theme.

# Next time I hear a knock, knock.

# Who that there at my door?

# I hear a knock, knock... #

It's been home to the new tenants for just three days

and new plumbing and heating make for a much more homely home.

Bobby did overrun his original timescale of four weeks

by two weeks, so all can't have been plain sailing.

Unfortunately, the electrics needed required more work

so that ate into the budget and it took a little longer.

The plasterer was having to slow down on his work

waiting for the electrician.

It's not as if he didn't have much to do either.

Four rooms, hallway and landing were all replastered.

Did that affect the budget?

We were hoping to spend between £7-£8,000

and we've come in sort of spot on, about 7,500.

-And the garden?

-The garden is still as it is.

It needs clearing even more than before now.

Even so, to do all the rest

and be in budget with unforeseen extra work is a good thing.

I'm pleased in the way it's turned out.

It's become a nice, neat home and the family seem to be happy that are living here.

Well, let's see if the fiscal policy has paid off in real estate terms.

We called in two local property experts to give us their views

and valuations, starting with the valuer who saw it before work began.

Coming back to the property, I would say

it's been done to a reasonable standard.

It's certainly not the best but it's ideal for the market it's going to appeal to.

I think it would be more suitable to the rental market.

From a sales point of view, it might not be quite good enough

for a family looking to buy a property

although an investor might be interested to buy it as a property to let out.

Is there anything about the property you would have done differently?

I would have left the layout of the property exactly as it is.

There's only so much you can do with the space that's on offer.

They spent money on the basics, on the important things

like the windows and the electrics so I'm sure

it's up to standard legally, and the rest is just cosmetic.

A good reminder that all electrical works must be certified.

Bobby's spent £64,500 so what would he get back if he wanted to sell?

If we were to put this property on the market for sale,

I would look at offers in the region of £75,000.

I would say that if this property were offered on the resale market,

it would achieve somewhere in the region of £75,000.

A potential profit of £10,500 minus the usual taxes and expenses.

But for Bobby it's all about the rent.

How does his £57,000 purchase

and £7,500-worth of refurbishment stack up then?

If we were to put this property up for rent,

I think it would achieve £450 per calendar month.

I would say that if offered in its current state to the rental market

it would achieve a rental of £450 per calendar month.

I'm pleased, we're getting over 500!

In fact, Bobby's getting £540 per calendar month

which equates to a yield of just over 10%.

At that rate would Bobby repeat the process?

Since buying this property, bought two more.

They're in Normanton and they were through the auction as well.

Well, that answers that one.

Would you give some advice to someone wanting

to get into the buy-to-let market?

Anybody interested in going into this market,

just work your costings out and please allow a little bit extra.

And finally, can we all guess what your future plans are?

My future plans are to carry on buying property

and carry on working.

On Homes Under The Hammer we visit auction rooms all around Britain.

Yes, join us next time to find out what we have in store.

-You won't want to miss it. See you, then.

-Goodbye.

-Goodbye.