0:00:02 > 0:00:03Hello and welcome to the show.
0:00:03 > 0:00:06If you're looking at investing in property, especially for the
0:00:06 > 0:00:09first time, you really need to gather all the information you can.
0:00:09 > 0:00:11You can never know too much.
0:00:11 > 0:00:15If you're experienced or a newbie, there's always something you can learn.
0:00:15 > 0:00:20Whether you're a first-timer or an old hand, maybe now is the right time to buy under the hammer.
0:00:45 > 0:00:47There are so many factors which decide
0:00:47 > 0:00:50whether you'll make a profit from your property or not.
0:00:50 > 0:00:53And one or two of those factors might come as a bit of a surprise,
0:00:53 > 0:00:55and not always a nice one.
0:00:55 > 0:00:58So did today's buyers bid wisely? Here's what they bought.
0:01:00 > 0:01:02I smell profit at this massive commercial unit
0:01:02 > 0:01:04and flat in Castle Donington.
0:01:04 > 0:01:06But there's something else in the air.
0:01:06 > 0:01:09It really does pong. Damp!
0:01:09 > 0:01:12In Silverdale you get two terraced houses
0:01:12 > 0:01:14and a chance to build a third.
0:01:14 > 0:01:16However, there is that to consider.
0:01:16 > 0:01:18So stay tuned to find out what "that" is.
0:01:20 > 0:01:23And in Tredegar, South Wales, I'm in a rabbit warren of council offices,
0:01:23 > 0:01:25but there's big potential.
0:01:25 > 0:01:30I think the big money here is to be gained by converting this into flats.
0:01:31 > 0:01:33All these properties were bought at auction.
0:01:33 > 0:01:38We'll find out who got them and how much they paid when these homes went under the hammer.
0:01:38 > 0:01:39It's yours, sir. Well done.
0:01:43 > 0:01:45First up is my first visit
0:01:45 > 0:01:48to the very pretty village of Castle Donington.
0:01:48 > 0:01:50Set on the Leicestershire border
0:01:50 > 0:01:54and only four miles from the M1 motorway, it is nice and accessible,
0:01:54 > 0:01:59which is handy because once a year this quiet little village plays host
0:01:59 > 0:02:03to one of the UK's biggest rock festivals at nearby Donington Park.
0:02:03 > 0:02:05# Singing
0:02:05 > 0:02:08# We will, we will rock you. #
0:02:11 > 0:02:13This might be a rather busy road,
0:02:13 > 0:02:16but it's only a couple of minutes' walk from the local shops,
0:02:16 > 0:02:18which makes it a convenient place to be.
0:02:18 > 0:02:20But what about the property I'm here to see?
0:02:20 > 0:02:26Well, it's steeped in history as it dates back to at least 1710.
0:02:26 > 0:02:28It was once used as a butcher's
0:02:28 > 0:02:32and most recently as a homes and gardens centre on the ground floor
0:02:32 > 0:02:34with a flat above.
0:02:34 > 0:02:38Now, it had a guide price of £95,000.
0:02:39 > 0:02:42I can't get in the front door, so I'm going to head around the back.
0:02:43 > 0:02:49# So, let out your heart Please, please
0:02:49 > 0:02:53# From behind that locked door. #
0:02:53 > 0:02:58Yes, this whole property, for a guide price of just £95,000.
0:02:58 > 0:03:02It's in a conservation area which will mean restrictions to changes,
0:03:02 > 0:03:03but it's not listed,
0:03:03 > 0:03:07which allows you a little bit more freedom internally.
0:03:07 > 0:03:11Through the large gate and into this great-sized courtyard.
0:03:11 > 0:03:14I'm heading into the commercial premises on the ground floor.
0:03:15 > 0:03:18It already has an A1 business classification,
0:03:18 > 0:03:22which if you so desire means you could turn it into anything
0:03:22 > 0:03:24from a hairdresser's to a locksmith's.
0:03:26 > 0:03:28Hmm. Lucy's Locks! I like the sound of that!
0:03:30 > 0:03:31Wow.
0:03:31 > 0:03:33Whoa!
0:03:35 > 0:03:37Excuse me.
0:03:37 > 0:03:41Honestly, it really does pong.
0:03:41 > 0:03:44Damp, damp, damp, damp, damp.
0:03:44 > 0:03:47It stinks and we'll get back to that in a moment.
0:03:47 > 0:03:51Now, character is in abundance with this property.
0:03:51 > 0:03:53Look at that lovely old fireplace there.
0:03:53 > 0:03:55You've got these beams up here
0:03:55 > 0:03:58but with the strip lighting on top of them!
0:03:58 > 0:04:01Walking through here, well, you can just smell the history.
0:04:01 > 0:04:05But again I'm going to mention it, you can smell the damp.
0:04:05 > 0:04:06Look over here!
0:04:06 > 0:04:08My goodness!
0:04:08 > 0:04:12Obviously the timbers have been taken away and you're just left with
0:04:12 > 0:04:15what's been growing upwards from the bottom.
0:04:15 > 0:04:17I mean, look at it!
0:04:17 > 0:04:20It's almost like a little grassy, mossy patch over there.
0:04:20 > 0:04:23But it certainly is an interesting property.
0:04:23 > 0:04:26Where would one start? I don't know.
0:04:30 > 0:04:34In this part of the building it does feel a bit like a rabbit run
0:04:34 > 0:04:38with rooms coming off rooms and even a basement.
0:04:38 > 0:04:41But that smell of damp is pretty overpowering.
0:04:44 > 0:04:46Plenty of work is obviously needed here
0:04:46 > 0:04:51and I feel it will need someone with a lot of know-how and experience to take it on
0:04:51 > 0:04:55and hopefully they'll retain all these great character features.
0:04:57 > 0:04:59Heading back into the yard,
0:04:59 > 0:05:02there are a couple of old stables as well as an outhouse.
0:05:02 > 0:05:04Rather you than me!
0:05:07 > 0:05:10An external staircase heads up to the three-bedroom flat
0:05:10 > 0:05:14which I am happy to say is in much better condition
0:05:14 > 0:05:15and feels rather homely.
0:05:17 > 0:05:20A bathroom is to the right of the front door.
0:05:20 > 0:05:24The large kitchen-diner leads into a spacious lounge
0:05:24 > 0:05:26and three double bedrooms.
0:05:27 > 0:05:30It's bright and airy and with a little bit of TLC,
0:05:30 > 0:05:35not to mention elbow grease, well, I think it could be absolutely lovely.
0:05:37 > 0:05:39And then you've got this.
0:05:39 > 0:05:43Now, I would love to see a glass box bolted on the end of this building,
0:05:43 > 0:05:47but something a little more contemporary and juxtapositioned
0:05:47 > 0:05:50because I don't think this old thing really works,
0:05:50 > 0:05:53and even if it complies with today's building regulation standards.
0:05:53 > 0:05:55Wow!
0:05:55 > 0:05:58What have we got out here?
0:05:58 > 0:06:00I was not expecting this.
0:06:00 > 0:06:05It's like a little secret untouched garden on a raised level
0:06:05 > 0:06:07and it is so pretty.
0:06:07 > 0:06:10You've got loads of planting, a little secret pathway.
0:06:11 > 0:06:13It's quite magical up here.
0:06:14 > 0:06:17I'm even more excited. I'm going to explore.
0:06:21 > 0:06:25So I think we've established this is a pretty special
0:06:25 > 0:06:27and unique auction lot.
0:06:27 > 0:06:29But let's think about the bigger picture.
0:06:29 > 0:06:32What could you actually do with it?
0:06:32 > 0:06:35We've asked along a local estate agent for his opinion
0:06:35 > 0:06:39of the property, which is guided at £95,000.
0:06:39 > 0:06:43With regard to what needs to be done here, if we were to just use
0:06:43 > 0:06:46the word "everything" we probably wouldn't be far wrong.
0:06:46 > 0:06:49If this were my property I would renovate this
0:06:49 > 0:06:54to offer as many of the features as possible as one single dwelling.
0:06:54 > 0:06:56I think this would make a wonderful home.
0:06:56 > 0:06:59I couldn't agree more, but if we are thinking more with our heads
0:06:59 > 0:07:03than our hearts, what would make most sense financially?
0:07:03 > 0:07:08If I wanted to maximise my return I would probably look to divide it
0:07:08 > 0:07:10into two or possibly three units.
0:07:10 > 0:07:12If this were converted into two dwellings
0:07:12 > 0:07:15I would anticipate each property being on the market
0:07:15 > 0:07:18for somewhere in the region of £190,000 to £200,000.
0:07:18 > 0:07:20If this property were offered for sale as one property
0:07:20 > 0:07:24and offered for sale, but brought to the market in a good standard,
0:07:24 > 0:07:27I would anticipate to achieve somewhere in the region of £370,000.
0:07:29 > 0:07:32It's not often I get to see properties
0:07:32 > 0:07:34with quite so much character as this one.
0:07:34 > 0:07:36And this garden is so special.
0:07:36 > 0:07:38It's hard to think with your head
0:07:38 > 0:07:41and not your heart with something like this.
0:07:41 > 0:07:43But whether it be one house or two flats,
0:07:43 > 0:07:46I think residential is the way to go here.
0:07:46 > 0:07:49Let's see who wanted their own little piece
0:07:49 > 0:07:51of Castle Donington history when we went to the auction.
0:07:55 > 0:07:59Unique property, very historic indeed, ladies and gentlemen.
0:07:59 > 0:08:02Start me on this one if you will. Let's say 120 for it.
0:08:02 > 0:08:04110?
0:08:04 > 0:08:10£100,000? Thank you. In the corner at 100. At £100,000 the opening bid.
0:08:10 > 0:08:16101, I've got. 102. 103. 104.
0:08:16 > 0:08:19104. 105.
0:08:19 > 0:08:23After a hesitant start, the bidding soon picks up.
0:08:23 > 0:08:26We rejoin at £161,000.
0:08:27 > 0:08:31£161,000. Coming in at the back?
0:08:31 > 0:08:33£161,000.
0:08:33 > 0:08:36The bid is way over on my right.
0:08:36 > 0:08:38161,000 once.
0:08:39 > 0:08:4462. 162. 163? No?
0:08:44 > 0:08:46£162,000 once.
0:08:46 > 0:08:48Twice. Third time.
0:08:52 > 0:08:54162,000. Sold.
0:08:55 > 0:08:59That successful bidder, paying £67,000 over the guide price,
0:08:59 > 0:09:02was experienced property developer John.
0:09:03 > 0:09:07Now, if you recognise his face, that's because, along with his wife,
0:09:07 > 0:09:11Penny, he previously met Martin way back in 2005
0:09:11 > 0:09:14when he bought a three-bedroom townhouse.
0:09:14 > 0:09:16This time, it's my turn to meet John
0:09:16 > 0:09:20and we met back at his latest acquisition to discuss his plans.
0:09:21 > 0:09:23- John, congratulations.- Thank you.
0:09:23 > 0:09:26You did pay quite a bit over the guide price on auction day.
0:09:26 > 0:09:27What happened there?
0:09:27 > 0:09:31There was a bit of competition for the property, I must admit,
0:09:31 > 0:09:35and I kept trying to outbid them early on, but it wasn't working.
0:09:35 > 0:09:39We had a budget of 160,000 on the property.
0:09:39 > 0:09:42That was sort of our top bid.
0:09:42 > 0:09:45We went over 2,000, so it wasn't too bad.
0:09:45 > 0:09:48I know you are a property developer and this is what you do.
0:09:48 > 0:09:52So why have you decided to take on something more unusual this time
0:09:52 > 0:09:54because it will be a challenge.
0:09:54 > 0:09:57It is, Lucy, but the thing is we have been doing this
0:09:57 > 0:10:02for 15 or 20 years and obviously we are looking for challenges now.
0:10:02 > 0:10:05This is something that I feel is a challenge
0:10:05 > 0:10:07and it will be nice when it's done.
0:10:07 > 0:10:09What are you going to do with it?
0:10:09 > 0:10:14- I would like to do a four- or five- bedroom individual house.- Really?
0:10:14 > 0:10:17- You would like to make this a nice family home?- Yes.
0:10:17 > 0:10:20Because you can incorporate the garden.
0:10:20 > 0:10:22We can maintain it as one unit.
0:10:22 > 0:10:26I think, once we start building more than one, then we're going to split the garden
0:10:26 > 0:10:29and it's going to be a challenge, I think, in terms of how we do that.
0:10:29 > 0:10:34And it would allow us probably to do a better job overall.
0:10:34 > 0:10:37So what about the commercial unit on the side here?
0:10:37 > 0:10:40Would you like to incorporate that into one family house?
0:10:40 > 0:10:42Yes, it will all be converted into one unit.
0:10:42 > 0:10:46At the moment, it's commercial but we will look for change of use on that,
0:10:46 > 0:10:49which will be submitted in the next couple of weeks
0:10:49 > 0:10:53- and then we will see what the architect comes up with.- Wow!
0:10:53 > 0:10:56- Then we will move forward from there.- I just see pound signs.
0:10:56 > 0:10:59I see a lot of money going into something,
0:10:59 > 0:11:02and you as a developer should know, are you going to get it back
0:11:02 > 0:11:05by turning this into one family house?
0:11:06 > 0:11:10Probably not as great as if I split it.
0:11:10 > 0:11:13At the end of the day, I generally think it would spoil it
0:11:13 > 0:11:17to split it and whilst we would get less of a return on it,
0:11:17 > 0:11:21I feel I would be happier going down that route.
0:11:21 > 0:11:25Because to split it into potentially two semi-detached houses or even
0:11:25 > 0:11:29just apartments, you could probably thick and fast get your cash back.
0:11:29 > 0:11:31- Yes.- Why don't you want to do that?
0:11:31 > 0:11:36- I don't know. You'll have to ask me that...- Is it something in your heart that you...
0:11:36 > 0:11:38You're going to have to ask me that in nine months' time!
0:11:38 > 0:11:42Because when you come back, you may see three units or you may see one!
0:11:42 > 0:11:47But generally, I follow my heart, and on this particular one, to justify the building,
0:11:47 > 0:11:50I generally think I'm going to keep it as one unit.
0:11:53 > 0:11:56How refreshing to hear a property developer considering
0:11:56 > 0:11:59the building itself rather than their own profit margins.
0:11:59 > 0:12:01Bravo, John.
0:12:02 > 0:12:06He's hoping to convert this property with a budget of £60,000
0:12:06 > 0:12:10and predicts a valuation of around £350,000 once complete.
0:12:10 > 0:12:13And he's hoping that the renovation work here
0:12:13 > 0:12:15will take around nine months.
0:12:15 > 0:12:19So, John, tell me, how are you going to retain the character here?
0:12:19 > 0:12:21Let's say you are going to have one dwelling,
0:12:21 > 0:12:24what is it going to look and feel like?
0:12:24 > 0:12:28I would like for it to feel cottagey.
0:12:28 > 0:12:31I would like to put a cottage-type image into the building.
0:12:31 > 0:12:35Into the kitchen, the staircase, maybe into the ceilings
0:12:35 > 0:12:36and also the centre part.
0:12:36 > 0:12:40As you can see from the front, we do have a nice main door
0:12:40 > 0:12:45and I'm trying to have the image as you come through that door as a focal point to the stairwell.
0:12:45 > 0:12:48Then we will try and spread out from there.
0:12:48 > 0:12:51- John, I am really excited about this one. Good luck.- Thank you.
0:12:51 > 0:12:55Yes, John might have paid more than he intended on auction day
0:12:55 > 0:12:59but I am so pleased that this characterful place has
0:12:59 > 0:13:02fallen into the hands of a developer with a heart.
0:13:02 > 0:13:05And I really can't wait to see it transformed into a gorgeous home.
0:13:05 > 0:13:09Join me later in the programme and you can see what happens.
0:13:13 > 0:13:17Silverdale, west of Newcastle-under-Lyme in Staffordshire
0:13:17 > 0:13:20saw coal mining as early as the 13th century.
0:13:20 > 0:13:23But the last colliery closed in 1998.
0:13:23 > 0:13:27Nowadays, good transport links and lovely countryside nearby
0:13:27 > 0:13:30offers value for money for a property buyer.
0:13:30 > 0:13:33The lot I am here to see is quite a complicated set-up.
0:13:33 > 0:13:35You get this plot of land.
0:13:37 > 0:13:40This two-bedroom property.
0:13:40 > 0:13:43And this two-bedroom property.
0:13:43 > 0:13:47And get this, all for a guide price of £85,000.
0:13:47 > 0:13:49I've got to see this.
0:13:54 > 0:13:57First thing that hits you, very '80s feel,
0:13:57 > 0:14:00especially with that brick fireplace as well,
0:14:00 > 0:14:03and in the corner they have even built
0:14:03 > 0:14:05a sort of television stand with brick.
0:14:05 > 0:14:08I have not seen one of those in a long time.
0:14:08 > 0:14:11Knocked a wall down here to try and create as much space as they possibly can.
0:14:13 > 0:14:16I'm pretty sure that isn't original.
0:14:16 > 0:14:20Anyway, through into the kitchen, which looks quite tight.
0:14:20 > 0:14:23You've got the stairs going up to the bedrooms as well.
0:14:23 > 0:14:26And the bathroom at the back of the property.
0:14:26 > 0:14:30A bit of modernisation here and the whole of the property I've seen so far
0:14:30 > 0:14:32would bring it bang up to date.
0:14:36 > 0:14:38The structure is sound, the layout is good,
0:14:38 > 0:14:42but brick TV stands, fake beams, textured walls?
0:14:44 > 0:14:50# It was acceptable in the '80s. #
0:14:50 > 0:14:54Similarly, upstairs has two good-sized bedrooms
0:14:54 > 0:14:56and a decor that belongs in an era
0:14:56 > 0:15:00when I was sporting a pencil moustache and a Norwich youth kit.
0:15:00 > 0:15:02Who wrote this?
0:15:04 > 0:15:08Moving swiftly on, I can see that the other property has been built as an extension.
0:15:08 > 0:15:11But what will we find inside?
0:15:15 > 0:15:18So, into the extension,
0:15:18 > 0:15:22which is really a separate property all alone.
0:15:22 > 0:15:24you've got a decent-sized lounge here
0:15:24 > 0:15:28and a kitchen which sort of takes up half the downstairs.
0:15:28 > 0:15:31You've got two further floors so I imagine two bedrooms
0:15:31 > 0:15:33and bathroom upstairs.
0:15:33 > 0:15:37You've got some double-glazed doors going outside.
0:15:37 > 0:15:39But the configuration is OK.
0:15:39 > 0:15:42I am liking what I'm seeing, so it's so far so good for me.
0:15:46 > 0:15:49And so the good keeps going.
0:15:49 > 0:15:52On the next floor up, double bedroom and bathroom.
0:15:52 > 0:15:56That, OK, it's not to everyone's taste, but you can see the decor
0:15:56 > 0:15:58throughout this house is more from an era
0:15:58 > 0:16:00when I was banging them in for Villa
0:16:00 > 0:16:03and I decided that moustaches weren't for me.
0:16:03 > 0:16:04That's much better.
0:16:04 > 0:16:07But another floor up, the attic bedroom is a giveaway
0:16:07 > 0:16:10for a secret I've been holding back for some time.
0:16:11 > 0:16:13# Let this be our little secret
0:16:13 > 0:16:15# No-one needs to know we're feeling
0:16:15 > 0:16:18# Higher and higher and higher
0:16:18 > 0:16:21# Higher and higher and higher. #
0:16:21 > 0:16:24This extension property might seem in good nick,
0:16:24 > 0:16:27but it has no completion of building certificate.
0:16:27 > 0:16:30This means that none of the work carried out has been inspected.
0:16:30 > 0:16:33So you can't kid on that this is a finished house
0:16:33 > 0:16:36until you get the final stamp of approval
0:16:36 > 0:16:39and that may involve unpicking some of that work.
0:16:40 > 0:16:43Time for a look outside, where hopefully there is some better news.
0:16:44 > 0:16:47At the side of this property you have the benefit of
0:16:47 > 0:16:51this plot of land which did come with planning permission
0:16:51 > 0:16:53for a three-bed detached property.
0:16:53 > 0:16:57That planning has now lapsed, but I'm pretty sure you could get it
0:16:57 > 0:17:00reinstated, with maybe even bigger and better plans altogether.
0:17:00 > 0:17:03However, there is that to consider.
0:17:03 > 0:17:05OMINOUS MUSIC
0:17:05 > 0:17:07And what is that?
0:17:07 > 0:17:11Well, the ominous music should tell you it's not good news for any developer.
0:17:11 > 0:17:13Time to dig deep.
0:17:14 > 0:17:18It's called a culvert and it means that at some point a river
0:17:18 > 0:17:21or water management system has been routed underground.
0:17:22 > 0:17:26This could be a problem which only deep pockets could solve.
0:17:27 > 0:17:30# I'm going deeper underground
0:17:30 > 0:17:33# When I've got to go deeper
0:17:33 > 0:17:36# Got to go much deeper. #
0:17:37 > 0:17:40This is a very large underground stream and you can move them
0:17:40 > 0:17:43but you need local authority's permission and possibly
0:17:43 > 0:17:46the Environment Agency's approval and it's not cheap.
0:17:46 > 0:17:49Before you do any underground work though,
0:17:49 > 0:17:53let's do some homework with an agent from the auction house who sold it.
0:17:53 > 0:17:56What are their thoughts on that tricky culvert?
0:17:56 > 0:18:00Looking at the legal pack, it does appear there is a culvert.
0:18:00 > 0:18:05Perspective purchasers would have to really look at the building regs side of things,
0:18:05 > 0:18:09speak to the local authority and maybe get some structural engineers
0:18:09 > 0:18:12to look at the problems here and just go from there.
0:18:12 > 0:18:17The third part is complex, but what about that stand-alone extension?
0:18:18 > 0:18:21In the extension, there is very little that needs doing.
0:18:21 > 0:18:23I feel, with the right investigation,
0:18:23 > 0:18:24it would be quite easy
0:18:24 > 0:18:27to get the completion certificates for its own address.
0:18:27 > 0:18:30So each part of this lot comes with its hassles and problems
0:18:30 > 0:18:34but would it be financially worth it against that 85 grand guide price?
0:18:34 > 0:18:38First of all, what about the values in the main two-bed property?
0:18:41 > 0:18:44In the current market, once renovated
0:18:44 > 0:18:49I would have this property on the resale market for £85,000.
0:18:49 > 0:18:52Should the extended part of the property have a completion certificate
0:18:52 > 0:18:56I would be expecting to achieve somewhere in the region of £90,000.
0:18:56 > 0:19:00Finally, if you built that planned three-bed at the side, what could that be worth?
0:19:02 > 0:19:05I would expect it to be worth in the region of £125,000.
0:19:07 > 0:19:09So there's quite a few things to consider here.
0:19:09 > 0:19:13That second property with that no-completion certificate,
0:19:13 > 0:19:17this piece of land with planning, but that has now lapsed, and that culvert.
0:19:17 > 0:19:20Is it worth building over it? Or would it be money down the drain?
0:19:20 > 0:19:23Let's see who was brave enough to take it on when it went to auction.
0:19:28 > 0:19:32Really good opportunity here. Lot 37. Let's say 80 to start me.
0:19:32 > 0:19:3780, bid. Thank you. At £80,000. At £80,000. I will go in twos on this.
0:19:37 > 0:19:4182. 84. 86.
0:19:41 > 0:19:4588. £89,000.
0:19:45 > 0:19:4989,000. 90. New bidder. At 90.
0:19:49 > 0:19:5291. 92. 93.
0:19:52 > 0:19:55Coming back in? No?
0:19:55 > 0:19:58If not, £93,000 then for the first time.
0:19:58 > 0:20:01£93,000 for a second time.
0:20:01 > 0:20:04Third and final time at £93,000.
0:20:05 > 0:20:07You have bought it, sir. Well done.
0:20:07 > 0:20:10And so the hammer fell at £93,000
0:20:10 > 0:20:13and the successful bidders were Matt and Julie.
0:20:15 > 0:20:18They have been slowly building up a property portfolio
0:20:18 > 0:20:20for their retirement and Matt carries out
0:20:20 > 0:20:24most of the work himself as he is a plasterer and joiner by trade
0:20:24 > 0:20:26with 22 years' experience in the building industry.
0:20:26 > 0:20:30But between these two properties and a potential third house,
0:20:30 > 0:20:32this might put his skills to the test.
0:20:33 > 0:20:35I went along to find out his plans.
0:20:37 > 0:20:39- Nice to meet you.- Nice to meet you. - Congratulations.
0:20:39 > 0:20:42- You have got yourself a monster! - I think so.
0:20:42 > 0:20:45- It's not frightening you at all? - No, not really.
0:20:45 > 0:20:48You have done stuff like this many times before?
0:20:48 > 0:20:51I've done three or four up. This is probably my fifth.
0:20:51 > 0:20:54You've got a bit of land, you've got this property, you've got that.
0:20:54 > 0:20:56You've just got to take it in stages.
0:20:56 > 0:20:58This one will be the first stage.
0:20:58 > 0:21:01That one next door and then the new-build after.
0:21:01 > 0:21:04Let's start at stage one. Let's start at this one we're in now.
0:21:04 > 0:21:08What are you going to do? Tell us what you're going to do and what it's going to be.
0:21:08 > 0:21:11This will just be a two-bed terrace, traditional,
0:21:11 > 0:21:15bathroom downstairs because there is not enough room to move it upstairs.
0:21:15 > 0:21:17It will be totally refurbished.
0:21:17 > 0:21:23So new bathroom, new kitchen, wires, plumbing. That sort of stuff.
0:21:23 > 0:21:26There are a few issues with the second phase.
0:21:26 > 0:21:28Just run us through them.
0:21:28 > 0:21:31Well, there is no completion certificate
0:21:31 > 0:21:35so that means the building inspector, I don't know what
0:21:35 > 0:21:39he's actually inspected so there is that little bit of an issue.
0:21:39 > 0:21:41But in my experience, I have been around
0:21:41 > 0:21:45and seen the quality of work so I know it's not too bad.
0:21:45 > 0:21:47But the only issue is,
0:21:47 > 0:21:51the electric supply comes from the meter that is in this house.
0:21:51 > 0:21:55Some bright spark has wired the extension's electrics
0:21:55 > 0:21:58into the existing house, so plenty to sort out.
0:21:58 > 0:22:01Then there is stage three and that culvert.
0:22:01 > 0:22:05It's piped. I don't think you will be able to build over the top
0:22:05 > 0:22:08because it's quite a big structure underground.
0:22:08 > 0:22:11But the planning have passed a three-bedroom house
0:22:11 > 0:22:13which sits just off the culvert.
0:22:13 > 0:22:16Have you got to redo the plans or will you reissue those plans?
0:22:16 > 0:22:21I'm hoping just to see if I can get a little bit bigger three-bed,
0:22:21 > 0:22:25but if all fails I can't see the council not allowing me
0:22:25 > 0:22:28to do what they have already said is OK to do anyway.
0:22:28 > 0:22:32Matt thinks a timescale of two to three months for the original house
0:22:32 > 0:22:35seems realistic as he really only needs to fix the electrics
0:22:35 > 0:22:38and get the building certificate for the extension.
0:22:38 > 0:22:40He thinks that will take two to three weeks.
0:22:42 > 0:22:44But the real prize for this lot is the new-build
0:22:44 > 0:22:47and that is something Matt has never done before.
0:22:47 > 0:22:51But he estimates it should take him around six months to construct.
0:22:51 > 0:22:54He plans to rent out the first property while the extension
0:22:54 > 0:22:57and the new-build are to be sold on.
0:22:59 > 0:23:04- Is this one of your bigger properties or one of your smaller ones?- This is probably the biggest.
0:23:04 > 0:23:06But it's not big if you take it in little stages.
0:23:06 > 0:23:08Exactly, yes, and you chop it up and do it bit by bit
0:23:08 > 0:23:11and hopefully the income of the first one...
0:23:11 > 0:23:15I might have to remortgage one of these to fund the new build.
0:23:15 > 0:23:19OK, so your total... What total have you got in your head?
0:23:19 > 0:23:21Probably 80,000 or 90,000, something like that.
0:23:21 > 0:23:23- It's not too bad, is it, really?- No.
0:23:23 > 0:23:26If we say 10, 12, 13,000 on this one
0:23:26 > 0:23:29and then, you know, five or six on that one.
0:23:29 > 0:23:31- Matt, I wish you all the best. - Thank you very much.
0:23:31 > 0:23:34I've got my overalls in the car, pal, so I'll muck in!
0:23:34 > 0:23:36OK, I give you a ring on Saturday!
0:23:37 > 0:23:40Matt has really got his hands full with this project.
0:23:40 > 0:23:44The renovation of this property, no completion certificate
0:23:44 > 0:23:46and the lapsed planning as well.
0:23:46 > 0:23:48You can find out how he gets on later on in the programme.
0:23:49 > 0:23:51Coming up - in Tredegar, South Wales,
0:23:51 > 0:23:54property developers seem to be getting younger all the time.
0:23:54 > 0:23:56On the face of it, you seem quite young.
0:23:56 > 0:23:59- How old are you?- I'm 16.- And I'm 29.
0:23:59 > 0:24:02Youth is the name of the game, Martin.
0:24:02 > 0:24:05In Silverdale, Matt has had help from daughter, Beth.
0:24:05 > 0:24:08She will probably want paying now. That's no good!
0:24:13 > 0:24:17There's always the sweet village of Castle Donington
0:24:17 > 0:24:18on the Leicestershire border
0:24:18 > 0:24:22as its home to one of the UK's biggest rock festivals.
0:24:23 > 0:24:25Earlier, I was air-guitaring with joy,
0:24:25 > 0:24:28or whatever the property development equivalent is,
0:24:28 > 0:24:33at this vast 18th-century commercial premises and upstairs flat,
0:24:33 > 0:24:36all for a guide price of 95,000.
0:24:38 > 0:24:40Downstairs was a rocky start.
0:24:40 > 0:24:42Stadium-sized space
0:24:42 > 0:24:45but more damp than your average festival Wellington boot.
0:24:46 > 0:24:51Upstairs, characterful features from when rock only came in stone varieties.
0:24:51 > 0:24:54And a huge garden to the side.
0:24:55 > 0:24:59But it was going to take a buyer with real guts to take this on.
0:24:59 > 0:25:02Step forward experienced developer John
0:25:02 > 0:25:05and his successful £162,000 bid.
0:25:05 > 0:25:09Well, John, I've got to say, you had a lot of courage going
0:25:09 > 0:25:14for this one, so from all Homes Under The Hammer fans and myself...
0:25:14 > 0:25:20# We salute you
0:25:27 > 0:25:31# We salute you. #
0:25:31 > 0:25:36And John planned to make the whole property into one family home.
0:25:36 > 0:25:37From a developer's point of view,
0:25:37 > 0:25:40I wondered if that was more foolhardy than brave.
0:25:42 > 0:25:44I see a lot of money going into something
0:25:44 > 0:25:46and you as a developer should know -
0:25:46 > 0:25:50are you going to get it back by turning this into one family house?
0:25:50 > 0:25:54Probably not as great as if I split it.
0:25:54 > 0:25:56Because to split it, you could probably
0:25:56 > 0:25:59- thick and fast get your cash back. - Yes.
0:25:59 > 0:26:03- Why don't you want to do that? - I don't know, Lucy. You're going to have to ask...
0:26:03 > 0:26:07- Is it something in your heart that you just...?- You're going to have to ask me that in nine months' time.
0:26:07 > 0:26:09Cos when you come back, you may see three units!
0:26:09 > 0:26:13But generally, I follow my heart and on this particular one, to justify
0:26:13 > 0:26:17the building, I genuinely think I'm going to keep it as one unit.
0:26:19 > 0:26:23John's head said to split it all up, but his heart said to make it
0:26:23 > 0:26:28a big family home, so what instinct won out 12 months later?
0:26:28 > 0:26:32# And my head told my heart
0:26:32 > 0:26:36# Let love grow
0:26:36 > 0:26:40# And my heart told my head
0:26:40 > 0:26:42# This time, no
0:26:42 > 0:26:45# This time, no. #
0:26:45 > 0:26:49Well, clearly, his head has won here, as John has converted
0:26:49 > 0:26:54the property into three two-bedroom flats and a one-bedroom flat.
0:26:54 > 0:26:57The master bedrooms of the two-bed flats
0:26:57 > 0:26:59have their own en-suite shower rooms,
0:26:59 > 0:27:01as well as spacious modern bathrooms.
0:27:01 > 0:27:05Each has a kitchen-diner with tasteful decor that still gets
0:27:05 > 0:27:08a bit of that cottage feel that John was looking for.
0:27:08 > 0:27:11There's a delightful touch on the top floor,
0:27:11 > 0:27:15where one flat has a door that opens onto a new patio area
0:27:15 > 0:27:18that forms part of the new tidied-up garden.
0:27:18 > 0:27:20John must be delighted.
0:27:22 > 0:27:25But how did his head overrule his heart here?
0:27:27 > 0:27:29My heart did rule my head initially,
0:27:29 > 0:27:32but then my head started to rule my heart.
0:27:32 > 0:27:35When we looked at the aspects of what the property had, the location
0:27:35 > 0:27:37of where the property is,
0:27:37 > 0:27:40and indeed what the five-bedroom detached house would be worth
0:27:40 > 0:27:44in this area, we found that by doing the four independent flats,
0:27:44 > 0:27:48we were getting best use of the property and the location
0:27:48 > 0:27:51and also to get the increased value that four flats would have
0:27:51 > 0:27:53over an independent property.
0:27:54 > 0:27:56I've got to be honest,
0:27:56 > 0:28:00I was looking forward to a big, rambling family home, John,
0:28:00 > 0:28:03but from a financial point of view, yes, I think
0:28:03 > 0:28:06this probably was a smart decision.
0:28:06 > 0:28:08John had to get permission for change of use,
0:28:08 > 0:28:11as this was originally a commercial premises on the ground floor and
0:28:11 > 0:28:16the building was in a conservation area, so how did he deal with that?
0:28:16 > 0:28:20I think the planners realised that the ground floor of the building
0:28:20 > 0:28:22was in a dilapidated state
0:28:22 > 0:28:26and the application we put in for four apartments suited the area
0:28:26 > 0:28:28and they were quite happy with the application.
0:28:28 > 0:28:30We've tried to maintain the building...
0:28:30 > 0:28:34If you look at the outside, there's brickwork that dates the building back to 1850.
0:28:34 > 0:28:38We've just kept them four bricks and also you've got the moat wall, which is...
0:28:38 > 0:28:40The main structure of the wall.
0:28:40 > 0:28:41That's been around for 300-400 years.
0:28:41 > 0:28:44So we tried to keep it a bit of a feature on the outside
0:28:44 > 0:28:48of the building and also realise that we are in a conservation area
0:28:48 > 0:28:51and we wanted to try and keep the property in line with that.
0:28:51 > 0:28:55Well, I'm really glad John did keep some of the history of this
0:28:55 > 0:28:58beautiful building. With the three-month delay getting started,
0:28:58 > 0:29:03while head fought heart, and meeting those building regulations
0:29:03 > 0:29:07on soundproofing, the whole project has taken 12 months.
0:29:07 > 0:29:10And with the change of plan surely came a change
0:29:10 > 0:29:12to that £60,000 budget.
0:29:12 > 0:29:15What you've got to allow for, especially in a property
0:29:15 > 0:29:18in a conservation area, is the additional costs.
0:29:18 > 0:29:20I'm not saying we didn't take it into account,
0:29:20 > 0:29:24but the soundproofing was a major cost above what we anticipated.
0:29:24 > 0:29:26I think that ended up costing us about £12,000.
0:29:26 > 0:29:30The windows, again, close on £20,000.
0:29:30 > 0:29:33The ground work and the damp-proof coursing and the extras that entailed,
0:29:33 > 0:29:37the total cost of this redevelopment is in the region of £200,000.
0:29:37 > 0:29:41That's a whopping £140,000 overspend,
0:29:41 > 0:29:43but understandable, given the scale of the project,
0:29:43 > 0:29:47the extent of damp and meeting conservation requirements.
0:29:47 > 0:29:49But I think John could make that back,
0:29:49 > 0:29:53as he has four dwellings, rather than one large house now.
0:29:53 > 0:29:56Sometimes, head over heart can be a very good thing.
0:29:56 > 0:29:57But in this case, is it?
0:30:00 > 0:30:03We asked along two local property experts to give us
0:30:03 > 0:30:05their opinion on the flats
0:30:05 > 0:30:07and if they think John made the right call
0:30:07 > 0:30:10by splitting the building up.
0:30:10 > 0:30:12I would say that whoever bought this
0:30:12 > 0:30:15had a very, very tough decision to make.
0:30:15 > 0:30:17In a sense, it lends itself to a single house,
0:30:17 > 0:30:21but a single house here has got a limited value.
0:30:21 > 0:30:24To divide it into a series of smaller residential units
0:30:24 > 0:30:26gives it a greater multiple value.
0:30:26 > 0:30:28I think he's done a very, very good job with it
0:30:28 > 0:30:31and I think he's maximised the opportunity
0:30:31 > 0:30:32that was presented to him.
0:30:32 > 0:30:35He's done a very good job, in terms of the development works,
0:30:35 > 0:30:40high quality on the kitchen fittings, the plasterwork, painting, tiles.
0:30:40 > 0:30:41The layout works well.
0:30:41 > 0:30:47Good idea to convert the commercial into the four residential units in four flats.
0:30:47 > 0:30:50John is unsure if he wants to rent or sell the flats,
0:30:50 > 0:30:54so it's got to be the option that's the most profitable against
0:30:54 > 0:30:59his £362,000 spend, so what could the flats bring in in terms of rent?
0:31:00 > 0:31:04The two-bed apartments would rent for £525 per calendar month.
0:31:04 > 0:31:08The rental value for the one-bed apartment would be £495 per calendar month.
0:31:08 > 0:31:12On the rental market, we're looking at about £600 a calendar month
0:31:12 > 0:31:13for the two-bed flats.
0:31:13 > 0:31:16Probably about 550 for the one-bed flat.
0:31:16 > 0:31:20In my view, these properties will be marketed for the two-bedder
0:31:20 > 0:31:22in the region of 625
0:31:22 > 0:31:25and the one-bedder will be marketed in the region of 575,
0:31:25 > 0:31:28which I feel is a good price for a good quality property.
0:31:30 > 0:31:33So, John's still using his head, it seems,
0:31:33 > 0:31:35and his figures would give him an 8% yield,
0:31:35 > 0:31:40compared to just over a 7% yield based on the agents' average.
0:31:40 > 0:31:42But how about sales?
0:31:42 > 0:31:45You've got three two-bedroom flats which would probably average out
0:31:45 > 0:31:48at about £150,000 each.
0:31:48 > 0:31:52And your one-bedroom flat would be £110,000 to £115,000.
0:31:52 > 0:31:56The two-bed apartments, we'd look to achieve in the region of £120,000.
0:31:56 > 0:32:00The one bed, around £117,500,
0:32:00 > 0:32:03to achieve £110,000 to £112,000.
0:32:03 > 0:32:09The flats, I believe, warrant around the 125 probably for the one-bedder.
0:32:09 > 0:32:12And for the two-bedder, with the en suite,
0:32:12 > 0:32:15in the region of £145,000 to £150,000.
0:32:15 > 0:32:18So, some very differing opinions there.
0:32:18 > 0:32:22John's top estimates would mean a total sales price of £570,000,
0:32:22 > 0:32:26whereas the lower values from the agent would mean £100,000 less.
0:32:26 > 0:32:28John's figures would mean
0:32:28 > 0:32:31a potential pre-tax profit of £208,000.
0:32:31 > 0:32:34So, rent versus sales, what will win here?
0:32:34 > 0:32:36I will rent these properties, I believe.
0:32:36 > 0:32:38A lot of work's gone into them.
0:32:38 > 0:32:41They're good quality investments and I believe that we'd work them
0:32:41 > 0:32:44into our portfolio for the long term.
0:32:50 > 0:32:55Umbrellas up and rain macs on now for our visit to South Wales
0:32:55 > 0:32:56and Tredegar.
0:32:56 > 0:33:00This former mining town sits 30 miles north of Cardiff
0:33:00 > 0:33:03and about 15 minutes' drive from Merthyr.
0:33:07 > 0:33:08So, what was up for auction?
0:33:08 > 0:33:14Well, very close to the town centre, it's these former council offices.
0:33:14 > 0:33:18Look pretty new. Guide price £50,000 plus.
0:33:18 > 0:33:19Let's have a look.
0:33:19 > 0:33:21Oof!
0:33:21 > 0:33:25Well, at least it's dry, and given that it's fairly new,
0:33:25 > 0:33:29it's probably going to be fairly dry literally, without any leaks
0:33:29 > 0:33:32and all sorts of things coming through the ceiling.
0:33:32 > 0:33:36Actually, what you're looking at here is a fairly newish building
0:33:36 > 0:33:39and everything that's positive about that. Um...
0:33:39 > 0:33:44New electrics, new roof, good damp proofing, all the services etc.
0:33:44 > 0:33:47Obviously, it's been an office in the past,
0:33:47 > 0:33:49so you've got this entrance area here and then lots of these
0:33:49 > 0:33:52stud partition walls, separating out all the different areas.
0:33:52 > 0:33:56Lots of little rooms dotted around. That little room over there.
0:33:56 > 0:33:58We've got another little room over here.
0:33:58 > 0:34:01Another room here, then this sort of main area here.
0:34:02 > 0:34:05Um... For office space, ideal.
0:34:05 > 0:34:08Lots of light coming in, it's been kitted out, you've got
0:34:08 > 0:34:12all your power sockets and all the sort of cabling you might need.
0:34:12 > 0:34:16So, for office, taking it on just like this, absolutely perfect.
0:34:18 > 0:34:20It may be perfect for an office,
0:34:20 > 0:34:23but for a humble TV presenter such as me,
0:34:23 > 0:34:27it's properties like this one that can really get me...discombobulated.
0:34:49 > 0:34:52Downstairs, there are yet more offices and little rooms,
0:34:52 > 0:34:54not to mention some loos.
0:34:57 > 0:35:00Upstairs, there are another four rooms, plus a kitchen.
0:35:03 > 0:35:05Now, was it left or right I took at that photocopier?
0:35:11 > 0:35:14So, what are you going to do with this place?
0:35:14 > 0:35:16Well, you could pretty much leave it as it is,
0:35:16 > 0:35:19but I think the big money here is to be gained
0:35:19 > 0:35:21by converting this into flats.
0:35:21 > 0:35:23Well, there's some good news there
0:35:23 > 0:35:28because this currently has B1 classification.
0:35:28 > 0:35:32Now, in planning terms, it's a lot easier to get B1 office,
0:35:32 > 0:35:36which is basically stuff which isn't to do with the financial services
0:35:36 > 0:35:40industry, converted into flats than it is other kinds of offices.
0:35:40 > 0:35:44Even better than that, in 2004, there was a planning application
0:35:44 > 0:35:48made and granted for two flats in the adjoining building
0:35:48 > 0:35:52and two flats in this building, so a precedent has been set.
0:35:52 > 0:35:55Doesn't necessarily mean they'll say yes now,
0:35:55 > 0:35:59but the odds are definitely looking in your favour.
0:35:59 > 0:36:04The planning laws that govern converting offices like this
0:36:04 > 0:36:06into flats changed back in 2013
0:36:06 > 0:36:10and this conversion can now be done under permitted development,
0:36:10 > 0:36:15although you'll still need to comply with building regulations.
0:36:15 > 0:36:19And modern regulations require a whole heap of fire
0:36:19 > 0:36:22and soundproofing between flats.
0:36:22 > 0:36:24So, conversion costs can mount up.
0:36:24 > 0:36:27What does a local estate agent make of this small office block
0:36:27 > 0:36:30that had a guide price of £50,000 plus?
0:36:30 > 0:36:34Does he think it would be better to keep this as a commercial premises
0:36:34 > 0:36:36or convert into flats?
0:36:36 > 0:36:38I think the most lucrative avenue here
0:36:38 > 0:36:40is probably to look for change of use
0:36:40 > 0:36:43and to put it into affordable residential dwellings,
0:36:43 > 0:36:46which are in fair demand for the rental market within the community.
0:36:46 > 0:36:49The estate agent recommends that small units such as
0:36:49 > 0:36:52one- or two-bedroom flats can be created.
0:36:52 > 0:36:55But what kind of rental figures would we be looking at?
0:36:55 > 0:37:00If it was converted into one-bedroom residential properties,
0:37:00 > 0:37:04they would achieve in the region of £300 to £325 per calendar month.
0:37:04 > 0:37:08If it was converted into two-bed residential properties,
0:37:08 > 0:37:12somewhere in the region of £400 per calendar month.
0:37:12 > 0:37:13How about sales?
0:37:13 > 0:37:17If they were developed into one-bedroom properties here,
0:37:17 > 0:37:19the sales market would allow a value of
0:37:19 > 0:37:21in the region of £35,000 to £45,000.
0:37:21 > 0:37:24If converted into two-bedroom residential properties,
0:37:24 > 0:37:29I would estimate a sales value in the region of £55,000.
0:37:29 > 0:37:34That all sounds really positive, but you always need a plan B.
0:37:35 > 0:37:40So, what kind of rental could be expected if it remained as offices?
0:37:40 > 0:37:44If it was kept as the commercial unit that we see today, it would be worth
0:37:44 > 0:37:48for rental purposes in the region of £10,000 to £12,000 per annum.
0:37:48 > 0:37:52When brought back up to the standard required for the sales market,
0:37:52 > 0:37:56it should be worth somewhere in the region of £80,000.
0:37:56 > 0:37:59Well, clearly, it's a pretty decent building as it is.
0:37:59 > 0:38:02You could just let it out as offices or use it yourself.
0:38:02 > 0:38:07However, the big money is obtained by getting planning permission
0:38:07 > 0:38:10and converting it to those flats.
0:38:10 > 0:38:13Who was willing to take a gamble? Or needed offices? Let's find out
0:38:13 > 0:38:16when it went under the hammer.
0:38:17 > 0:38:20So, lot number five. Start me, guys, at 50.
0:38:20 > 0:38:23Start me at £50,000, will you? 45 then, if you like.
0:38:23 > 0:38:24Thank you, 45.
0:38:24 > 0:38:27At 45 there. At 45 there. 6, can I see?
0:38:27 > 0:38:296, thank you, 6. 47.
0:38:29 > 0:38:3147, 48, 49, 49...
0:38:31 > 0:38:34And 50. 51.
0:38:34 > 0:38:3651, 52, 53.
0:38:36 > 0:38:3954, 55, 56.
0:38:39 > 0:38:4257, 58, 59.
0:38:42 > 0:38:45And 60, 60? 59,500 then.
0:38:45 > 0:38:4859,500. 60 to you? 60. 60,500?
0:38:48 > 0:38:50No. At £60,000 here then.
0:38:50 > 0:38:54You're now out, at £60,000 here then, for the first time.
0:38:54 > 0:38:57Are you sure? At £60,000 second time.
0:38:57 > 0:39:00- Third and last time, at £60,000. - BANGS GAVEL
0:39:00 > 0:39:01Yours, sir. Well done.
0:39:01 > 0:39:05That successful bid of £60,000 was made by Nigel.
0:39:05 > 0:39:09Nigel, who is an experienced property developer,
0:39:09 > 0:39:13was at the auction with granddaughter Jasmine.
0:39:13 > 0:39:17It was Jasmine and her cousin Alex who I met back at the property.
0:39:18 > 0:39:21Jasmine, Alex, good to meet you both.
0:39:21 > 0:39:24- You too.- Congratulations.- Thank you.
0:39:24 > 0:39:27So, tell me why you ended up buying this place.
0:39:27 > 0:39:30Well, it was quite a new build and it was local from where we're from
0:39:30 > 0:39:33anyway and we saw a lot of potential in this property,
0:39:33 > 0:39:35so we thought we'd buy this one.
0:39:35 > 0:39:39Right. Now, on the face of it, you seem quite young. How old are you?
0:39:39 > 0:39:41- I'm 16.- And I'm 29.
0:39:41 > 0:39:44You're 29, OK. So, how come you ended up buying this place?
0:39:44 > 0:39:47Well, I didn't buy it. It was my grandfather that bought it.
0:39:47 > 0:39:50But he's decided to take a backseat on this property to let
0:39:50 > 0:39:52- me and Alex experience what it's like.- Wow!
0:39:52 > 0:39:54So your granddad's come along and said,
0:39:54 > 0:39:59- "I tell you what, I think you should be property developers." - Absolutely, yes.- Yeah.
0:39:59 > 0:40:02- Right, and he's sort of helped you out with the first property. - Yes, yes.
0:40:02 > 0:40:05He's bought this property, and myself and Jasmine are going to help with the planning
0:40:05 > 0:40:08and arranging of the builders, etc, and meeting with architects.
0:40:08 > 0:40:11- Right.- So he'll be taking that kind of backseat role in it.
0:40:11 > 0:40:15So, did you have any interest in property before this? Or did Granddad just come along and say,
0:40:15 > 0:40:17"I tell you what, I think it's a good thing to do"?
0:40:17 > 0:40:19- Well, we've been to some auctions before.- Yeah.
0:40:19 > 0:40:23So, we've been to auctions with him and we've obviously helped him out
0:40:23 > 0:40:26- on odd occasions with places that he has obviously bought.- Right.
0:40:26 > 0:40:29Now, I think most people would be happy with a packet of boiled sweets
0:40:29 > 0:40:31and some fun stories from their granddad,
0:40:31 > 0:40:34but Granddad Nigel, who's been property developing
0:40:34 > 0:40:38since 2008 and has a small portfolio of rental properties,
0:40:38 > 0:40:42has seen fit to hand over the reins to Alex and Jasmine.
0:40:42 > 0:40:45I think I need to find out a little more.
0:40:45 > 0:40:50Did you have any input into the building that was chosen?
0:40:50 > 0:40:53Not particularly. I went with him to the auction and I saw it there
0:40:53 > 0:40:56and he had already told me about it, of course, beforehand,
0:40:56 > 0:40:58what he was planning on doing. So...
0:40:58 > 0:41:01And I had a phone call after the property was bought to say
0:41:01 > 0:41:05- I've just bought this property up in Tredegar.- Right. - That's my involvement in it.
0:41:05 > 0:41:08So, what's your experience? What do you both do?
0:41:08 > 0:41:12Well, I'm in college at the moment, studying maths and some science subjects.
0:41:12 > 0:41:16- And what about you?- I'm a site buyer for a manufacturing company.- OK.
0:41:16 > 0:41:18So I have some experience in purchases and obviously
0:41:18 > 0:41:22liaising with kind of contractors, so that'll be partly what I'll be doing.
0:41:22 > 0:41:25But also, I might possibly in the future want to go into property
0:41:25 > 0:41:29development myself and possibly good experience to gain here.
0:41:29 > 0:41:32Yeah, for sure. So, obviously, in the past it has had planning permission.
0:41:32 > 0:41:36Was that important to you, in terms of the decision to buy it?
0:41:36 > 0:41:39I think we know that if it's already had planning permission once,
0:41:39 > 0:41:42- then applying for it again is always going to be easier.- Yeah.
0:41:42 > 0:41:45Obviously, you can meet with the same kind of architects,
0:41:45 > 0:41:47- so they'll structurally know the building.- Right.
0:41:47 > 0:41:50So it does make it a slightly easier project for us, yes.
0:41:50 > 0:41:52What's your plans?
0:41:52 > 0:41:54Our plan is to turn it into three flats.
0:41:54 > 0:41:56Downstairs will be a two-bedroom flat
0:41:56 > 0:42:00- and upstairs will be two one-bedroom flats.- OK.
0:42:00 > 0:42:03Let's talk through the numbers then. Ballpark...
0:42:03 > 0:42:06What do you think it's going to cost to do what you have in mind?
0:42:06 > 0:42:11We're thinking around £15,000 per unit. So around 45,000 all together.
0:42:11 > 0:42:15- Right, which would bring your total investment to...- 105.
0:42:15 > 0:42:17105, yep.
0:42:17 > 0:42:22OK, I'm a bit worried because using the agent's valuations,
0:42:22 > 0:42:25the flats would be worth about £130,000
0:42:25 > 0:42:29and even at that £15,000 per flat,
0:42:29 > 0:42:32in my opinion, it's tight to convert this building.
0:42:32 > 0:42:36However, the plan is long term and renting is their chosen path.
0:42:36 > 0:42:40They've predicted they'll bank a 10% yield from this investment,
0:42:40 > 0:42:43but the big question is...
0:42:43 > 0:42:45How does it work financially?
0:42:45 > 0:42:49- Cos your granddad obviously paid for this, did he?- Yes.- Yeah.
0:42:49 > 0:42:51What about the renovation costs?
0:42:51 > 0:42:55All the renovation costs will again be funded from that.
0:42:55 > 0:42:57So you're putting your time and effort...
0:42:57 > 0:43:00- We're putting our time and effort in and gaining experience at the same time.- Yeah.
0:43:00 > 0:43:04- And do you financially benefit at all?- Not entirely sure yet.
0:43:04 > 0:43:07It's all about the family. It's about us helping the family out.
0:43:07 > 0:43:09We're a very close family.
0:43:09 > 0:43:13So whatever money comes into it is obviously all based around the family.
0:43:13 > 0:43:15So what's the timescale for the whole thing?
0:43:15 > 0:43:20We're thinking, after the planning permission, around six months, six to seven months.
0:43:20 > 0:43:22- Congratulations to you both. Good luck with it.- Thank you.
0:43:22 > 0:43:26- We look forward to seeing how you get on.- Thank you very much.
0:43:26 > 0:43:28Well, how about that?
0:43:28 > 0:43:31What a great opportunity Granddad Nigel has given
0:43:31 > 0:43:35Jasmine and Alex to become property investors and developers.
0:43:35 > 0:43:38But quite a project to take on for your first one and it's not
0:43:38 > 0:43:43exactly a two-up, two-down terrace that just needs a bit of paint.
0:43:43 > 0:43:46Still, with all those challenges comes lots of experience.
0:43:46 > 0:43:50How will they get on? You can find out later in the show.
0:43:53 > 0:43:56So, one of our properties has taken a bow and gone.
0:43:56 > 0:43:59But luckily, there are two more waiting in the wings.
0:43:59 > 0:44:03Will you be giving them a standing ovation? Let's take a look.
0:44:07 > 0:44:10We return now to Silverdale, near Newcastle-under-Lyme,
0:44:10 > 0:44:14and this former mining village was home to this complex lot.
0:44:16 > 0:44:19You get this plot of land,
0:44:19 > 0:44:21this two-bedroom property,
0:44:21 > 0:44:25and this two-bedroom property,
0:44:25 > 0:44:29and get this - all for a guide price of £85,000.
0:44:29 > 0:44:31I've got to see this.
0:44:33 > 0:44:37Inside this first property was an '80s throwback in need
0:44:37 > 0:44:41of renovation, but next door in the other two-bed property,
0:44:41 > 0:44:45built as an extension, it was in need of a building certificate,
0:44:45 > 0:44:47as despite its good condition,
0:44:47 > 0:44:50it hadn't been passed by the local authorities.
0:44:50 > 0:44:53A plot of land had been granted permission for the building
0:44:53 > 0:44:56of a three-bed house, but those plans had lapsed.
0:44:58 > 0:45:02And there was a culvert - to me and you that's an underground stream.
0:45:02 > 0:45:05That meant building said house could be tricky.
0:45:05 > 0:45:07Are you keeping up with all this?
0:45:07 > 0:45:12# Tell me, why'd you have to go and make things so complicated?
0:45:12 > 0:45:16# I see the way you're acting like you're somebody else
0:45:16 > 0:45:19# Gets me frustrated
0:45:19 > 0:45:21# No, no, no. #
0:45:21 > 0:45:24But no job was too complicated for Matt,
0:45:24 > 0:45:29who, along with his wife Julie, saw this as a good addition to their growing portfolio
0:45:29 > 0:45:34and after paying £93,000 at auction, Matt was keen to utilise his skills
0:45:34 > 0:45:37amassed over 22 years in the building trade.
0:45:37 > 0:45:41Now, what were their plans for property number one?
0:45:41 > 0:45:45Well, this will just be the two-bed terraced, traditional,
0:45:45 > 0:45:49bathroom downstairs, cos there's not enough room to move it upstairs.
0:45:49 > 0:45:54And the extension property just needed that building certificate and some minor work as well.
0:45:54 > 0:45:57But then there was the potential of a new build.
0:45:57 > 0:46:01Have you got to re-do the plans, or will you reissue those plans again?
0:46:01 > 0:46:05I'm hoping just to see if we can get a little bit bigger three-bed,
0:46:05 > 0:46:09but if all fails, I can't see the council not allowing me
0:46:09 > 0:46:13to do what they've already said is OK to do anyway.
0:46:13 > 0:46:15New builds were a new challenge for Matt,
0:46:15 > 0:46:19but I knew he could rise to it and overcome any obstacles.
0:46:19 > 0:46:21# I'm building up... #
0:46:21 > 0:46:26Yes, I'm building up this new build because six months on,
0:46:26 > 0:46:30I was expecting a gleaming new three-bed house on that derelict plot.
0:46:30 > 0:46:33# I'm building up... #
0:46:33 > 0:46:37OK, I can't build it up any more. Here's that beautiful build.
0:46:37 > 0:46:41# I'm building up to an awful let down. #
0:46:42 > 0:46:44Aw, that's disappointing,
0:46:44 > 0:46:48but Matt has good reason for not tackling that build just yet.
0:46:48 > 0:46:54The plans are still there. I could build, really, but there's the culvert issue.
0:46:54 > 0:46:57I have looked into it a little bit. I could leave it for a later date,
0:46:57 > 0:47:01but I think it's going to cost a little bit too much money
0:47:01 > 0:47:04for what the house is going to be worth in the end.
0:47:04 > 0:47:06So, that nightmare culvert
0:47:06 > 0:47:10and a little bit of finance got in the way, but it's more than
0:47:10 > 0:47:14made up for with the stunning work Matt has done on the existing houses.
0:47:21 > 0:47:24Matt has installed a brand-new modern kitchen
0:47:24 > 0:47:28with plenty of cupboard space, which is ideal in a cramped terrace.
0:47:30 > 0:47:33The black granite worktops are a world away from that old
0:47:33 > 0:47:35'80s kitchen.
0:47:37 > 0:47:40The bathroom now feels much larger, thanks to these tiles
0:47:40 > 0:47:43and a brand new suite is an ideal touch.
0:47:46 > 0:47:50The bedrooms are completely replastered and re-carpeted,
0:47:50 > 0:47:54while there's no more brick TV stands in the living room.
0:47:54 > 0:47:57And Matt has altered the arch for a more modern feel.
0:47:59 > 0:48:03Throughout, electrics, plumbing and re-plastering have been done.
0:48:04 > 0:48:08Over to the extension property and over to Matt, who I am pleased
0:48:08 > 0:48:12to say has secured a building certificate for this property.
0:48:12 > 0:48:16The electrics have obviously been tested. The gas has been tested.
0:48:16 > 0:48:20New bathroom and we've probably done a lot more work downstairs,
0:48:20 > 0:48:24as in we've taken the breakfast bar out and opened the room out.
0:48:24 > 0:48:27Again, put good quality stuff back in.
0:48:27 > 0:48:30Probably the biggest...really work out there was the outside,
0:48:30 > 0:48:33which, obviously, as you can see, was a mess
0:48:33 > 0:48:36and now is hopefully looking a little bit better.
0:48:36 > 0:48:39It is looking so much better outside, Matt.
0:48:39 > 0:48:43Both properties' gardens have been divided and beautifully landscaped.
0:48:43 > 0:48:48Matt has finished both houses in his timescale of six months.
0:48:48 > 0:48:52Although there are some snagging issues in the extension property.
0:48:52 > 0:48:55He has tried to keep the costs low by doing most of the work himself,
0:48:55 > 0:48:59with help from his brother and daughter, Beth.
0:48:59 > 0:49:01But has family elbow grease helped him
0:49:01 > 0:49:04stick to his 19 grand budget for these two houses?
0:49:04 > 0:49:06Obviously, I've put nice stuff in,
0:49:06 > 0:49:09so it's going to cost a little bit more.
0:49:09 > 0:49:13But I think I've roughly spent about 25 grand, probably.
0:49:13 > 0:49:16Matt might build the three-bed in the future,
0:49:16 > 0:49:20so he has changed his plans for the two existing houses.
0:49:20 > 0:49:23The plans have changed. I was going to sell this one
0:49:23 > 0:49:29and rent the other one. But I've decided to rent them both now.
0:49:29 > 0:49:32I really want it to be a long-term let, so whoever comes
0:49:32 > 0:49:35and rents it, then, you know, they don't want rubbish stuff.
0:49:35 > 0:49:39And again, it lasts longer, so I haven't got to come back again.
0:49:41 > 0:49:44A great attitude from Matt, and hopefully,
0:49:44 > 0:49:47putting quality first means you don't have to come back.
0:49:52 > 0:49:56It's time to get some valuations from two local estate agents.
0:49:56 > 0:50:00Will Matt's total of £118,000 investment pay off?
0:50:00 > 0:50:03While he's looking to let the properties out long term,
0:50:03 > 0:50:05could he make a profit on the resale market?
0:50:08 > 0:50:11I would expect the larger property to achieve
0:50:11 > 0:50:13somewhere in the region of £90,000.
0:50:13 > 0:50:16I would expect the smaller property to achieve
0:50:16 > 0:50:19somewhere in the region of £80,000.
0:50:19 > 0:50:22In today's market, I would expect the larger property
0:50:22 > 0:50:25to achieve in the region of £97,000.
0:50:25 > 0:50:29For the attached smaller dwelling on the side, I would estimate
0:50:29 > 0:50:33the property in today's market to be worth in the region of £85,000.
0:50:33 > 0:50:36I was hoping probably if I sold the larger one,
0:50:36 > 0:50:39I'd probably get nearer to the hundred.
0:50:39 > 0:50:43But 80-85 for the smaller one, yeah, is probably what I was thinking.
0:50:43 > 0:50:47Well, those top valuations of £97,000 and £85,000
0:50:47 > 0:50:51would give Matt a pre-tax profit of £64,000.
0:50:51 > 0:50:55Not bad at all. But what about those all-important rental figures?
0:50:56 > 0:50:58In today's letting market,
0:50:58 > 0:51:01I would expect the more spacious larger property
0:51:01 > 0:51:05to achieve in the region of £525 per calendar month
0:51:05 > 0:51:08and the attached smaller dwelling, I would expect that
0:51:08 > 0:51:11to achieve in the region of £475 per calendar month.
0:51:11 > 0:51:15I would look to rent the larger property for somewhere
0:51:15 > 0:51:17in the region of £525 per calendar month.
0:51:17 > 0:51:20I would look to rent the smaller property for somewhere
0:51:20 > 0:51:24in the region of £475 per calendar month.
0:51:24 > 0:51:26Probably a bit more than I thought.
0:51:26 > 0:51:31I was thinking 475 and 450, so yeah, again, good news really.
0:51:31 > 0:51:33Shows you, good job.
0:51:33 > 0:51:38Good job from a good team equals a good yield of 10%,
0:51:38 > 0:51:41if Matt gets the figures the estate agents suggested, but will
0:51:41 > 0:51:45the youngest member of the team be following in her dad's footsteps,
0:51:45 > 0:51:46regarding property?
0:51:46 > 0:51:51Yeah, I would imagine. Yeah. Hopefully, she... You know.
0:51:51 > 0:51:55She does lend a hand. So, we'll see how she goes.
0:51:55 > 0:51:58She'll probably want paying, you know. That's no good!
0:52:05 > 0:52:10Time to head back now to South Wales and the town of Tredegar.
0:52:10 > 0:52:14It was here that I first encountered this rather unusual lot.
0:52:14 > 0:52:20These former council offices had a guide price of just £50,000 plus
0:52:20 > 0:52:22and whilst they were in good condition,
0:52:22 > 0:52:26and would be ideal for anyone looking for offices, I felt that
0:52:26 > 0:52:31if you wanted to maximise profit, you'd have to think a little bigger.
0:52:31 > 0:52:35In 2004, there was a planning application made and granted for
0:52:35 > 0:52:39two flats in the adjoining building and two flats in this building.
0:52:39 > 0:52:42So, a precedent has been set.
0:52:42 > 0:52:45Doesn't necessarily mean they'll say yes now.
0:52:45 > 0:52:49But the odds are definitely looking in your favour.
0:52:49 > 0:52:51And after a bit of a battle,
0:52:51 > 0:52:55the successful bid of £60,000 went to Nigel.
0:52:55 > 0:52:59Experienced property developer Nigel decided that this was
0:52:59 > 0:53:02the perfect property for grandchildren Jasmine and Alex
0:53:02 > 0:53:05to have their first taste of property development.
0:53:05 > 0:53:08So your granddad's come along and said,
0:53:08 > 0:53:11"I tell you what, I think you should be property developers."
0:53:11 > 0:53:14Myself and Jasmine are going to help with the planning
0:53:14 > 0:53:17- and arranging of the builders, etc, and meeting with architects.- Right.
0:53:17 > 0:53:19So he'll be taking that kind of backseat role in it.
0:53:19 > 0:53:21# Why don't we, why don't we
0:53:21 > 0:53:24# Why don't we
0:53:24 > 0:53:28# Jump right in to the middle of it, you and I
0:53:28 > 0:53:30# Let's give it a try. #
0:53:30 > 0:53:34With Granddad Nigel financing the work, Jasmine and her cousin Alex
0:53:34 > 0:53:38had plans to create three flats, a two-bedroom flat on the ground floor
0:53:38 > 0:53:42and two one-bedroom flats on the first floor,
0:53:42 > 0:53:44all of which they hope to rent, once complete.
0:53:47 > 0:53:50Now, it's almost nine months later
0:53:50 > 0:53:54and first impressions are that this still looks very...
0:53:54 > 0:53:56Um... Council office-like.
0:53:56 > 0:54:01And inside? Well... Yup, it's still ex-council office-like.
0:54:04 > 0:54:08# Don't count your chickens before they hatch
0:54:08 > 0:54:12# Don't count your chickens before the hatch. #
0:54:12 > 0:54:17Aside from some cleaning up of rubbish, very little has been done.
0:54:17 > 0:54:21And there are certainly no signs of the planned flats.
0:54:21 > 0:54:24And with Alex unable to attend filming due to work commitments,
0:54:24 > 0:54:28it's up to Jasmine and her granddad, Nigel, to explain to us
0:54:28 > 0:54:30what's going on.
0:54:30 > 0:54:32Or not going on.
0:54:32 > 0:54:35Things didn't quite go to plan, with regards to budget
0:54:35 > 0:54:38and due to new building regs, really.
0:54:38 > 0:54:41When you convert a building like this,
0:54:41 > 0:54:43from an office block to a residential,
0:54:43 > 0:54:46then the work has got to be done as if it's a brand-new build,
0:54:46 > 0:54:49so it's got to be built to that specification,
0:54:49 > 0:54:52which raises things up, obviously.
0:54:52 > 0:54:56It brings a lot in with the fire, the security, the soundproofing,
0:54:56 > 0:54:58and not only that,
0:54:58 > 0:55:02you've got to have the engineers who come in beforehand to measure it
0:55:02 > 0:55:06and then tell you what you've got to do
0:55:06 > 0:55:08to make it to the brand-new standard.
0:55:08 > 0:55:10Obviously, I mean...
0:55:10 > 0:55:13Fortunately, this building is not that old,
0:55:13 > 0:55:15but that could be quite extensive.
0:55:15 > 0:55:17Nigel's quite right.
0:55:17 > 0:55:20Recent changes to building regulations meant that
0:55:20 > 0:55:23when he got the quotes to make them,
0:55:23 > 0:55:25it was pushing the costs of the flats up too much.
0:55:25 > 0:55:29So he and Jasmine and Alex decided on a different approach.
0:55:29 > 0:55:31First, a very smart move,
0:55:31 > 0:55:34they went ahead getting the appropriate permissions.
0:55:34 > 0:55:38We got planning permission without no problems at all.
0:55:38 > 0:55:40There was no real conditions,
0:55:40 > 0:55:44other than we stick to the original plans, and that took us three months
0:55:44 > 0:55:47because the architect did the drawings and then we kept...
0:55:47 > 0:55:50- Changing. - Changing them all the time.
0:55:50 > 0:55:53Redesigning it. And then it was about...
0:55:53 > 0:55:56Eight weeks for planning permission to go through.
0:55:56 > 0:55:59Eight weeks. So, eight weeks after that.
0:55:59 > 0:56:02That's probably five months, near enough.
0:56:02 > 0:56:06Including all fees and tidying up the building and surrounding areas,
0:56:06 > 0:56:10they've spent around £11,000 and it seems the trio were always
0:56:10 > 0:56:13prepared to change their plan if they needed to.
0:56:13 > 0:56:16We had a contingency plan when we started it,
0:56:16 > 0:56:20so, say if we went a certain amount over our budget, that we would revert
0:56:20 > 0:56:24and put it back in to auction. Cos of the location, basically,
0:56:24 > 0:56:28it wouldn't be worth going too much with it. So that's what we did. We put it back in auction.
0:56:28 > 0:56:31And good for us, we made a little profit as well.
0:56:31 > 0:56:33All's well that ends well.
0:56:35 > 0:56:40They sold the property at auction for £75,000, giving them
0:56:40 > 0:56:42a £4,000 profit.
0:56:42 > 0:56:44But did they do the right thing?
0:56:44 > 0:56:47We asked the agent who saw it the first time for his opinion.
0:56:49 > 0:56:51The owner moving this on with planning
0:56:51 > 0:56:53was probably quite a shrewd idea,
0:56:53 > 0:56:56knowing that the cost implications of converting this place
0:56:56 > 0:56:59are going to be such that it may make these properties
0:56:59 > 0:57:02quite difficult to re-sell and get the money back.
0:57:02 > 0:57:05The new owners here, I would imagine, will probably try and
0:57:05 > 0:57:09do something where they will release equity via a rental agreement here.
0:57:09 > 0:57:11So, the agent thinks they were right to get
0:57:11 > 0:57:15the necessary permissions before selling the property on,
0:57:15 > 0:57:18but will that be reflected in his valuations?
0:57:20 > 0:57:24This property, without planning, as a commercial unit requiring
0:57:24 > 0:57:28some modernisation would be worth in the region of £60,000.
0:57:28 > 0:57:32With the residential consent in place for three flats,
0:57:32 > 0:57:36this property is worth somewhere in the region of £70,000 to £75,000.
0:57:36 > 0:57:40Well, I think it's fairly spot on as an auction value again
0:57:40 > 0:57:44because that's what we achieved with it, we achieved 75, so we...
0:57:44 > 0:57:46He's absolutely spot on there with that one.
0:57:46 > 0:57:50Nigel bought this property so his grandchildren could get experience
0:57:50 > 0:57:53in the property game, and despite all not going to plan,
0:57:53 > 0:57:57it's still a good lesson in how fickle the property market can be.
0:57:59 > 0:58:04- It was a good experience. It was all new and we had a good time doing it. - Yeah. It was great.- It was good.
0:58:04 > 0:58:08- A bit of an eye-opener here and there, but good.- Yeah.
0:58:08 > 0:58:11Well, that's it today. We'll be back with more properties
0:58:11 > 0:58:14and their new owners for you next time.
0:58:14 > 0:58:17We look forward to seeing you for more Homes Under The Hammer then.
0:58:17 > 0:58:19- Until then, goodbye.- Goodbye.