Episode 72 Homes Under the Hammer


Episode 72

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Transcript


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Hello, and welcome to the show. Now, we have met a lot of people

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who've bought at auction over the years,

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-with a lot of different reactions.

-Oh, yes.

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We've gone from pure excitement to absolute sheer terror.

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If you're ready for the challenge,

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why not think about buying your next home under the hammer?

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Now, it's not true that, if you scratch your nose at auction,

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you end up buying something.

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No. But sometimes, at the packed auctions,

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you do have to work to get noticed.

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Let's see who caught the auctioneer's attention today.

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We revisit a development in Forest Hill, London,

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where the numbers were very big indeed.

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Sold. £1,450,000.

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To make the numbers work in Nelson, Lancashire,

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it's the number of rooms that matter.

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We've got two bedrooms, two decent-sized bedrooms,

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but could you create three?

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And, in Crewe, Cheshire,

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more rooms and a HMO means even bigger numbers.

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-£350,400.

-Wow!

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All these properties were bought at auction.

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We'll find out who got them and how much they paid

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-when these homes went under the hammer.

-Well done.

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Back in 2014, I was in the affluent area

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of Forest Hill in South East London

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to see an auction lot that was a bit special.

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# I can see your mansion on the hill. #

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Well, not so much a mansion on the hill,

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but a vast plot of garages down this lane.

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The guide price? £600,000.

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Just have a look at this. Wow! What a plot!

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Now, here's a bit of history for you. I know this used to be

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the stables to an old coaching inn, back in the early 1800s,

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when people were travelling by horse and carriage.

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They would stay at the inn and their horses would be

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stabled for the night right here.

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You can see now it's been used for other things over the years,

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from garages, to workshops to offices.

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You can see it's rundown

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and it's just ready to have some new life breathed into it.

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# Breathe life into me

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# Breathe life into me, come on

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# I've been waiting for so long. #

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Well, we might have a lot of history,

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but we've also got a lot of problems.

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Just have a look at that roof!

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Now, the good news is that, although it's in a conservation area,

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permission has been granted to pull this whole building down.

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And in its place, you could build something spectacular.

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Planning permission had been granted for seven two-bed houses,

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but it took a bit of imagination to picture all that.

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Four two-bed townhouses, all the way along here, with garages underneath,

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and along here,

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three two-storey two-bedroom houses with assigned parking spaces.

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So it'll still pretty much be in this lovely L shape,

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set back from the road.

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Now, the slight negative for me is the garage that was here is

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now just over here and access is along this driveway here.

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Lots of cars coming up

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and down this road didn't seem ideal for family homes.

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Perhaps a bit of re-jigging was needed in the layout,

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as parking is always a big selling point in London.

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So much so, it seems some car owners

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really don't want to give up their spaces.

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# Who's gonna drive you home

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# Tonight? #

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But to have new homes to drive in to, the plot needed a buyer,

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so let's head to auction and remind ourselves who bought it.

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Fantastic lot, this.

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Great, great opportunity for somebody.

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Great development opportunity. What a great lot.

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Who wants to give me a start on this?

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£1 million. Thank you.

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That's what I like. Somebody knows the value. £1 million.

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So I've got £1 million, straight ahead.

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Anybody else? Million ten, yeah?

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Million ten.

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Million 20.

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Well, with the very first bid, the guide price is smashed

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and the auction room is buzzing.

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We return with the bidding at £1.4 million.

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1.4. Four ten.

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Four 20.

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No?

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Back to you, sir. Bid's £1.41 million.

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It's against the gentleman on my left by the door.

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You bidding?

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You back in, yeah? Four 20.

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Four 30.

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Four 40.

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Four 50.

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Four 60.

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Yes or no? Four 60.

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If not, £1.45 million. For the first...

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£1.45 million for the second...

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£1.45 million for the third and final time...

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Are we all done?

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-GAVEL BANGS

-Sold. £1,450,000.

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Well bid.

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At £1.45 million, the knockout punch came from Mark, here in the middle,

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joined by his son Max at the back of the group.

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Mark had been developing property for over 15 years after

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a career as a boxer.

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# It's all about the things you do

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# Boy, you knock me out. #

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Every fighter needs a manager in their corner

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and Mark had his project manager of seven years, Johnny,

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to rely on.

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# Boy, you knock me out. #

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Whose idea was this? Who's bought this?

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Were you happy with the money you paid?

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-Mark?

-Yeah, um...

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Well, the back-story is we just...

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We had a site in planning in another location,

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over in Crystal Palace, and it got refused, so we was a bit

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sort of desperate to go and find something quickly to get work on.

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You and Johnny were both there on auction day.

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Guys, did you expect to win the bid?

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Did you expect to pay what you paid, Johnny?

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Yeah, I think Mark went there very focused, had a figure in mind.

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I think he knew the value of the potential for development.

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And went in there with a bar to set, really.

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So, Mark had come out swinging at the auction, but he now

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wanted to move the plans for the plot up to the heavyweight division.

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It's got planning for seven two-bed houses at the moment, which...

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There's a price on it, which is a fair price.

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We could do very well out of it. But my gain and my speciality is

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-gaining upon planning permission.

-Yeah.

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So, basically, because plans were given in 2006,

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I'd like to look at how I can build upon that,

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look at the London guide, see what's changed, look at what's been built

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around just recently since then, so when you're thinking about it, whoa,

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hang on, we could get another floor on here

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and make these four beds, so, when you're looking at two beds,

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which would probably be 600 to 650 or something and you're

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looking at four beds, you're then talking about £1 million a house.

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Sounds fantastic and I'm really excited to see it.

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Johnny, how long do you think you're going to be on site for?

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-How long is this project going to take?

-Too long.

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He said that without his mouth moving.

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It's estimated at the moment around about 12 months. 11 to 12 months.

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And, if you're not clocking in on time, have you got him on your back?

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-Yeah. There's... Yeah.

-Budget, budget, budget, budget, budget.

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-Yeah.

-Come on, then. How much is the budget?

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The budget on this is about... It will be, depending on what we get...

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Now, if we have the two beds built and we get rejected,

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there's no way we're going to get even more, we've got a fallback

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scheme to build upon, so, upon that, it'll be about 1.5 to 1.6.

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If we get the four beds,

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it's going to be another half a million pounds on top.

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# One, two, three

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# She knocked me to my knees

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# Three, four, five

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# I think I've got to take a dive

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# I can't go no longer

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# I'm giving up the ring. #

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The big numbers of that budget left me a bit punch drunk, but they

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were hoping to have it all done in a reasonable timescale of 12 months.

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Mark was certainly determined to make this a successful project.

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He might have given up the ring, but not the mentality.

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I was a boxer at the Fitzroy Lodge when I was growing up

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in Lambeth and I boxed there for quite a few years

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and won the ABA London Championships.

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So I'm anything about boxing.

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I've always had that winning determination.

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I get knocked down and I get up. So you have to...

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You have to keep going and it's true.

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No matter through recession or whatever it is, you've

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got to keep going. Keeps you focused, good for you.

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# I get knocked down but I get up again

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# You're never gonna keep me down

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# I get knocked down but I get up again

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# You're never gonna keep me down. #

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11 months on and it seemed nothing could keep Mark and Johnny down,

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as they had a frame up, utilities connected

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and work was under way in earnest.

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Better yet, they had got the change of plans they wanted approved.

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# I get knocked down but I get up again

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# You're never gonna keep me down

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# I get knocked down but I get up again

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# You're never gonna keep me down. #

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Well, the new plans that we got passed,

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in comparison to the original planning consent allowed us

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to gain an extra storey on to the whole development.

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That extra storey meant they would now have six three-bed houses

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and one two-bed.

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Mark couldn't film with us due to another project commitment

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and things had grown so large here that Johnny had brought

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Pat on board to help him manage the site.

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And there was a long list of things still to do.

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Since we've last seen you, a lot has gone on.

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Obviously, you can see the timber frame behind me now.

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We've done obviously all of our groundwork, footings,

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drainage, run our service ducts, getting everything prepared

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for the timber frame to be built on top of the block and beam floor.

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Got all of our trades lined up.

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Roofers are in next and then all of our internal trades.

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We've sort of maximised the development,

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still keeping it in context with the surrounding area.

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There's some big properties up and around this area and, yeah,

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we feel we've got a good result.

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They thought another six to seven months would see the project

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complete and they were going to a full £2 million on the budget,

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meaning a total estimated spend of £3.5 million.

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With prices rising in the area, they were confident of a good job

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and some profit.

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Hopefully, when you come back in five to six months' time,

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you should expect to see the development finished,

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flowers in the garden, so to speak, and everything all wrapped up.

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I'm expecting the houses to look great, really high quality,

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to a very high standard finish, which is what we pride ourselves on.

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Yeah, I'm expecting them to be a head turner

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and people are going to be pleasantly surprised.

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And that was back in April of 2015, so, when we came back,

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were the houses a head turner, or a bit of a pain in the neck?

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You can find out how the guys got on later in the programme.

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Nelson in Lancashire is about four miles from Burnley.

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Today, it's an ideal commuter town to Preston and Blackburn,

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but historically, this former mill town was once steeped

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in left wing politics and was nicknamed Little Moscow.

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-# Out on my own in the suburbs of Moscow.

-#

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I've read today's auction catalogue,

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but what property am I RUSSIAN here to see?

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Many years ago, when important people had meetings and planned out

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local authority housing schemes, they sometimes got it right.

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This is an example of getting it right.

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Houses painted in nice pretty colours and little bits of grass

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that give it a homely feel and a nice place to be.

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It is a two-bed mid-terrace house with a guide price of £30,000 plus.

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Let's go see what you can get for your money.

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OK, we're straight into a small hallway,

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with the stairs going up to the bedrooms

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and, in here, you've got a really decent-sized lounge.

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Coming through into the kitchen,

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which looks a little bit dated,

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hasn't been touched in here for some time.

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And you've got a little hatch as well just there.

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That's for the lazy person that doesn't want to get up

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to collect their tea, you can just pass it through to them.

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But you'd do well to salvage anything in here at all.

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Through into another bit of space.

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And there's no plaster on the walls, just brick.

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But what it does scream out to me is taking this wall out.

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Now, it is a load-bearing wall, so you would need some support,

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a supporting beam up there, but it's perfect to go from

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kitchen to diner, a bit of a family area.

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Instead of these two small rooms, having one big room,

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so all the family can share a nice, big family space.

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You know that I'm a fan of a kitchen-diner,

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but I also know that supporting beams can be expensive.

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However, it would really increase a sense of space

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and give you a more flexible layout with your brand-new kitchen.

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OK, so, upstairs seems to be a simple layout.

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Bathroom in the middle. You've got a decent-sized bedroom here.

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And as we go into the bathroom,

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it's not a bad size for a family bathroom.

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Very dated, nice green tiles.

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Pretty much a running theme throughout the whole of the house -

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rip it out and start again.

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I'm pretty sure that's not a power shower.

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So, across the landing into bedroom two...

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..which again is a decent size.

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I've noticed these polystyrene tiles,

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they would have to come out definitely.

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Huge fire hazard and here someone's tried to create some storage.

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Again you could take that out to make this bedroom even bigger.

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We've got two bedrooms, two decent-sized bedrooms,

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but could you create three?

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Hold that thought for a minute

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and I'll show you how you might be able to do that.

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I just wanted to come back into this bedroom,

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cos I've been thinking, could you create two bedrooms out of this one?

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OK, just quickly,

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keep that door as it is, pop in a false wall just here.

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That'd give you a small bedroom right there.

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Put another door just here, just pop a lintel in.

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You would have to shave a bit off the family bathroom,

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extend the landing across just a little bit.

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They would be small, but it's just options.

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MUSIC: One, Two, Three by Len Barry

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# One, two, three

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-# It's easy

-It's so easy... #

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Or at least it's easier than you think.

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Three is the magic number for me here,

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because this property feels like it should be a family home,

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with a spacious garden out back and several schools in the nearby area.

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But like I said, just options.

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Can a local estate agent give us any more options to consider?

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A little bit of work needed on this property before

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you could really move a tenant in. You've got two options, really.

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You could go for full refurbishment, new kitchen, new bathroom, rewire,

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upgrade the property and it'd be fit for the next ten years or so,

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or you could do a light refurbishment

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where it would make it fit to live in now,

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but you'd probably need to do some further work in a few years' time.

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So, if the new buyer or the new owner of this property wanted to do

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a light refurbishment, we would expect them to spend around 2 to £3,000.

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If they want to do a full refurbishment and modernise the whole property,

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then they would probably be looking to spend about 7 or £8,000.

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So, get it near that 30 grand guide price

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and a full refurb might cost you 38 grand.

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The agent thinks, regardless of the number of bedrooms,

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it probably has a ceiling price of £45,000 for resale.

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Perhaps renting is the right route.

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The property was previously rented at £380 per calendar month.

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With a light refurbishment,

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we would expect a current rent to be around £425 per calendar month.

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Whoever does buy this property will find that they'll get

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a very attractive yield on the rental income.

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By my calculations, get it near the guide price,

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do a little refurb, that could be a 15% yield.

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That's very interesting.

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I've always been a fan of local authority houses.

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They remind me of my youth back in Leicester

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and they are normally very well built.

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Now, this one needs a total overhaul,

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but I think, below the surface,

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there's a great family home to be had.

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Let's see who's seen its potential when it went under the hammer.

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Lot 53. Guide's 30.

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Two-bed, mid-terraced house, right, anybody here, 30's your guide, good guide.

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I have 25 in.

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Need a bid. I have 25,000. 25 here.

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I have 25. I'm bid now in ones.

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-At 25, 26, just here.

-27.

-Can you?

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£26,000.

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27. 28. 28.

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28 I've got. 29.

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30. 30 I've got.

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31. 32. 32. 33.

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Might buy it. 34?

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33 here. 34. 35.

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36. Walking away.

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With you at 35.

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First time then at 35. Second time.

0:19:050:19:08

Third and final time, then.

0:19:080:19:09

All yours, sir, at £35,000, well done.

0:19:090:19:13

The successful bidder was Waj, buying it for 35 grand.

0:19:160:19:20

And while he was at the auction with his wife Tasleen,

0:19:200:19:23

he actually bought it with his business partner and best mate Abid.

0:19:230:19:27

They came along to their new purchase to tell me more.

0:19:280:19:30

-Waj, nice to meet you.

-How are you doing, Dion?

-Abid.

-Dion.

-Congratulations to you both.

0:19:330:19:37

BOTH: Thank you very much.

0:19:370:19:38

What made you buy this house?

0:19:380:19:39

We were born and bred in this area, so we know the area really, really well.

0:19:390:19:43

So, we thought, why not just invest in this area, benefit everybody?

0:19:430:19:47

Give us a little bit more about your relationship and your background.

0:19:470:19:50

We've known each other for well over 30 years.

0:19:500:19:54

We went to primary school together. And we've just grown up,

0:19:540:19:57

-literally, a couple of hundred yards.

-Yeah, away from each other.

0:19:570:20:01

We've been in business together,

0:20:010:20:02

we're in business together now as well.

0:20:020:20:04

So, we've done quite a lot of things together,

0:20:040:20:06

hence the reason why our friendship, you know, is pretty strong

0:20:060:20:09

and we've gone into this field as well.

0:20:090:20:11

That's a long-term relationship.

0:20:110:20:13

30 years as mates, now business partners.

0:20:130:20:15

Business partners, exactly, yeah. Even though I still look 21, but...

0:20:150:20:18

-Yes.

-You know?

-I didn't want to mention it to you.

0:20:180:20:20

Not in front of Waj anyway. THEY LAUGH

0:20:200:20:23

Abid owns a chain of health supplement stories.

0:20:260:20:28

That must be the source of those youthful looks.

0:20:280:20:31

While Waj works on the local council

0:20:310:20:33

with some business interests on the side.

0:20:330:20:35

This is now the sixth property for the pair as they look to build their portfolio.

0:20:350:20:39

So, Abid, what have you got to do to this one in particular?

0:20:420:20:45

Let's start downstairs. What are you going to do downstairs?

0:20:450:20:48

Let's start with the kitchen. Obviously we're going to redo that again.

0:20:480:20:51

A new suite's going to go in there and in there.

0:20:510:20:53

Open it up and make it into like a kitchen-diner place.

0:20:530:20:55

The main living area, I think that just needs a bit of a revamp,

0:20:550:20:59

some paint, you know, spruce it up again.

0:20:590:21:01

I can see a bit of dampness.

0:21:010:21:03

We're just going to get that checked out and see what that's like.

0:21:030:21:06

Does that mean, if you're making a kitchen-diner, you're going to knock that wall through?

0:21:060:21:09

We're thinking put a beam across,

0:21:090:21:13

a supporting beam, and make it into a kitchen-diner.

0:21:130:21:16

-And upstairs, any plans?

-Upstairs...

0:21:160:21:19

In the other bedroom,

0:21:190:21:22

we might just leave it as one or split it into two.

0:21:220:21:27

If we do split it into two, then we're going to have to use some of this bathroom space,

0:21:270:21:31

cos here is quite a spacious bathroom.

0:21:310:21:33

-Make it into a three-bed.

-Yeah, make it into a three-bed. Nice family home.

0:21:330:21:36

So, Abid, tell us about the budget, what's the budget going to be to create all that?

0:21:360:21:39

-The budget? OK, well, I've really left it in Waj's hands.

-THEY LAUGH

0:21:390:21:43

So, if anything goes wrong, it's his fault.

0:21:430:21:46

But I think the 8 to 10 mark?

0:21:460:21:49

8 to £10,000, we've set aside,

0:21:490:21:52

if we do split the kitchen and diner as one and split the bedrooms as two.

0:21:520:21:57

-I think the majority... Some of the work we can do ourselves.

-Yeah.

0:21:570:22:00

You know, we're quite handy when it comes down to doing bits and bats,

0:22:000:22:03

so we can do some of the work ourselves and, you know,

0:22:030:22:06

keep the budget down.

0:22:060:22:07

-So, you're going to get your hands dirty, chaps?

-Waj is.

0:22:070:22:09

THEY LAUGH

0:22:090:22:11

So, have you got...? Do use the same guys, the same builders, or...?

0:22:110:22:14

Yeah, we have, we've got a team of builders that we can call in, really good, handy lads.

0:22:140:22:18

They'll come in, they'll muck in and they'll get the job done.

0:22:180:22:20

8 to 10 grand...ish. How long is it going to take you two?

0:22:200:22:24

At the moment, we're doing another property as well as we speak, so...

0:22:250:22:30

-And we've spoken and said, maximum, six months.

-Yeah, six months.

0:22:300:22:35

-I think ideally I'd like to do in the four-months...

-Yeah.

-Because...

0:22:350:22:39

There's not really much that needs to be done in here.

0:22:390:22:42

Nice to see that Waj and Abid are thinking along the same lines as me

0:22:440:22:47

when it comes to that kitchen-diner.

0:22:470:22:49

And at least they're entertaining the thought of a third bedroom.

0:22:490:22:52

-We're undecided on this one.

-I think we will agree on something.

0:22:560:23:00

-You know, whatever benefits us, we'll agree on that.

-Yeah.

0:23:000:23:05

-We're very good at agreeing on things.

-Yeah.

-It looks like it.

0:23:050:23:09

That's the reason where a good partnership and we're doing things

0:23:090:23:11

and things are moving forward for us, so I think that's good.

0:23:110:23:15

We've known each other that long, trust each other,

0:23:150:23:17

so we'll make the decisions together as well.

0:23:170:23:19

Well, you've started off on the right foot, chaps, you've got all the bases covered.

0:23:190:23:23

You seem not to get on, which is perfect for business. THEY LAUGH

0:23:230:23:26

-Yeah, that's right.

-I just want to wish you two good luck.

-Thank you.

0:23:270:23:30

-I hope it works out. Abid. Good luck, pal.

-Thank you very much.

0:23:300:23:33

-Waj, good luck.

-Cheers, thank you.

-Pleasure.

0:23:330:23:35

Good mates Waj and Abid are approaching this property in the best way I can think.

0:23:350:23:40

Rip it out and start again.

0:23:400:23:42

It won't be easy,

0:23:420:23:43

but they do have that bit of experience that'll help them out.

0:23:430:23:46

I'm pretty sure they'll be fine.

0:23:460:23:47

You can find out how they get on later on in the programme.

0:23:470:23:50

Coming up...

0:23:510:23:52

In Crewe, Cheshire, this two bed needs, well,

0:23:520:23:56

very little, to be honest.

0:23:560:23:58

You know, it's all set up, isn't it? Brilliant.

0:23:580:24:00

And in Nelson, Lancashire, will this two-bed terrace help mend fences?

0:24:030:24:08

He used to bully me when I was little.

0:24:080:24:10

Earlier, we were following this story of property developer

0:24:170:24:20

Mark and his project manager Johnny,

0:24:200:24:22

seen here with Mark's son Max.

0:24:220:24:25

They paid £1.45 million for this auction lot of garages

0:24:250:24:30

and disused buildings in Forest Hill, London.

0:24:300:24:33

And they plan to expand the existing planning permission to build

0:24:330:24:37

seven family homes here.

0:24:370:24:40

When we came back 11 months on, they'd been successful

0:24:400:24:43

in getting planning permission to add another storey to the buildings.

0:24:430:24:47

And Johnny and his team had the frame up

0:24:470:24:49

and were working hard towards the end goal.

0:24:490:24:53

We promised to come back and see it when the project was finished.

0:24:530:24:56

Fast forward six months on and, well, yes,

0:24:580:25:02

work is still going on to finish six of the houses.

0:25:020:25:06

There's six three-bed properties and one two-bed house,

0:25:060:25:10

but I'm pleased to say that one is complete.

0:25:100:25:12

Sometimes, on big projects,

0:25:120:25:14

it's easy to lose sight of the little details,

0:25:140:25:17

so I want to know, have they shown the love to this house?

0:25:170:25:21

MUSIC: Feel The Love by Rudimental

0:25:210:25:22

# And all I said is true, I can feel the love, can you feel it too?

0:25:220:25:26

# I can feel it all

0:25:260:25:29

# I can feel it all... #

0:25:290:25:31

Well, this house is dressed to impress

0:25:490:25:51

and the result is certainly sleek.

0:25:510:25:53

In the basement, the kitchen is high spec.

0:25:560:25:59

And there is a handy downstairs loo with a laundry room next door.

0:26:030:26:07

On the ground floor, the sitting room is spacious and light.

0:26:150:26:20

Carry on up to the next floor in this tall house

0:26:210:26:24

and there are two good-sized bedrooms.

0:26:240:26:26

And if you've got the puff to get to the top floor,

0:26:330:26:36

there's a large master suite...with an en-suite.

0:26:360:26:38

# I can feel it all

0:26:400:26:43

# All I said is true, I can feel Can you feel it too...? #

0:26:440:26:47

Time for Mark and Johnny to tell us the story of how they

0:26:470:26:50

transformed this site from derelict buildings to desirable homes.

0:26:500:26:55

We were allowed four-bed houses, but we went back to planning,

0:26:550:26:58

even though we were granted four beds, and changed it to three.

0:26:580:27:01

Now, some people might say, "That's mad, you'll get more money," but...

0:27:010:27:06

The houses are over four storeys.

0:27:060:27:08

I prefer to give people bigger rooms,

0:27:080:27:10

more spacious accommodation and...

0:27:100:27:12

..much more for their money.

0:27:140:27:16

I think, the last time we met,

0:27:160:27:18

my timber frame structure had just gone up, so we've closed

0:27:180:27:22

the building up, weathered it, windows came in, that got us inside.

0:27:220:27:27

And then from there, we've gone through our dry lining processes,

0:27:270:27:31

first fixed plumbing, electrics, dry lining and then finishing.

0:27:310:27:35

The rest of the houses are falling well behind,

0:27:350:27:38

so it's on the schedule, so this is plot one, plot two,

0:27:380:27:40

plot three, plot four I've finished, with carpets, plot five and six,

0:27:400:27:44

carpets this week, plot seven, just some snagging

0:27:440:27:48

and carpets will be going in by the end of the week.

0:27:480:27:50

So, not much left to do before the houses are ready to sell,

0:27:520:27:55

but this project has not been without its challenges.

0:27:550:27:58

We had a couple of issues externally.

0:28:010:28:04

We did have problems with services here.

0:28:040:28:06

Remember this was an MOT station years ago,

0:28:060:28:10

so therefore there was toxic in the ground.

0:28:100:28:13

So, we came across some old arched cellars in the ground

0:28:130:28:17

which are still active and in use by neighbouring properties.

0:28:170:28:21

So, we had to deal with that.

0:28:210:28:23

So, therefore, there was an extra cost of £72,000 on top

0:28:230:28:26

of the £30,000 already paid to do the job in the first place.

0:28:260:28:31

You can never have enough rainy day money in developing.

0:28:310:28:34

Always stick it to one side. Forget about it.

0:28:340:28:38

Good advice, Mark,

0:28:400:28:41

but having to redo ground works has been a contributing factor

0:28:410:28:44

of the budget rising from 2.1 million to £2.7 million.

0:28:440:28:50

Another reason has been the high-end finish.

0:28:500:28:53

What's more important for me when developing is not just the money.

0:28:540:28:59

It's the creation.

0:28:590:29:01

It's what I can do, what I can see, cos I'm proud of what I do.

0:29:010:29:04

Mark's got a vision as to how he feels we should present ourselves,

0:29:040:29:09

which works every time.

0:29:090:29:12

He's absolutely incredible at it.

0:29:120:29:14

Yeah, I've tried to decorate the house pretty much old school

0:29:140:29:18

and then with modern furniture,

0:29:180:29:20

so it's kind of, the word is fusion that we're looking for.

0:29:200:29:23

If I've fused the old with the new,

0:29:230:29:25

where you've got your original style rads, your timber-sashed windows,

0:29:250:29:31

your oak-polished wood flooring, so I buy all reclaimed material.

0:29:310:29:35

I have everything checked to BCSA standards and I fit it all.

0:29:350:29:40

He's very good at picking an area,

0:29:400:29:44

working out what works in that area.

0:29:440:29:46

Spends a lot of time on the research, even on external finishes.

0:29:460:29:50

I go around everything, I look at the drawings

0:29:500:29:52

and everything is done on impulse, just there and then.

0:29:520:29:56

I can just see what I want, urban inside, urban outside.

0:29:560:30:00

This project has been very tough,

0:30:020:30:04

even for experienced developers like Mark and Johnny.

0:30:040:30:07

But has their friendship survived it?

0:30:070:30:10

Me and the Johnny are brothers.

0:30:120:30:15

Not bonded by blood brothers,

0:30:150:30:16

but we're brothers.

0:30:160:30:18

We love each other to bits

0:30:180:30:20

and we get to see each other as often as we can.

0:30:200:30:24

We work closely together.

0:30:240:30:26

We're very different in terms of our personalities, but it works.

0:30:260:30:32

We've earned that together, we trust each other, we're very loyal,

0:30:320:30:36

and no matter what mistakes he does,

0:30:360:30:38

and he does do them, he's forgiven,

0:30:380:30:40

because he stuck with me, and I can't forget that.

0:30:400:30:44

Time to get the popcorn out for the valuations

0:30:460:30:48

on these show-stopping houses.

0:30:480:30:50

What do two local estate agents think the houses could be worth,

0:30:500:30:54

and will it stack up against the boys' total spend of £4.15 million?

0:30:540:30:59

I think the three-bedroom houses here could sell

0:31:020:31:04

for anywhere between £900,000 and £1 million.

0:31:040:31:07

And the two-bedroom house probably going for a range

0:31:070:31:10

between £750,000 to £800,000.

0:31:100:31:14

Well, there's one two-bedroom house

0:31:140:31:16

which we'd expect to achieve in the region of £800,000.

0:31:160:31:20

The three-bedroom houses vary in terms of size, and we would

0:31:200:31:24

expect to achieve somewhere within the region of £1.1 to £1.2 million.

0:31:240:31:31

We have our values in mind, and what the agents have said

0:31:310:31:33

is pretty much bang on with what we thought.

0:31:330:31:36

The agents' top values give a total resale figure of £8 million,

0:31:380:31:43

meaning a potential pre-tax profit of £3.85 million.

0:31:430:31:48

A successful project for the two.

0:31:480:31:50

So what makes them such a good team?

0:31:500:31:53

Yeah, we're both grafters.

0:31:580:31:59

We both get our head down, get our teeth into something

0:31:590:32:02

and I love getting out of bed every day.

0:32:020:32:05

He's lovely.

0:32:050:32:06

He's gorgeous, isn't he, our Johnny?

0:32:060:32:08

I couldn't live a day without him.

0:32:080:32:10

Yeah, everyone loves Crewe in Cheshire, and it's long been known

0:32:250:32:28

as a town of major manufacturing,

0:32:280:32:31

from railway locomotives to cars.

0:32:310:32:34

But I want to show you another little-known part

0:32:340:32:37

of its industrial heritage.

0:32:370:32:39

Now, this may look like an ordinary brick wall

0:32:390:32:42

at the side of a building,

0:32:420:32:43

but there are some faint markings

0:32:430:32:46

which give away a really interesting bit of its historical past.

0:32:460:32:52

In the Second World War, there was a factory on the other side

0:32:520:32:54

of the wall that made ammunition.

0:32:540:32:57

And, in order to disguise the building from overhead bombers,

0:32:570:33:01

they actually painted houses

0:33:010:33:04

on this wall to make it look like it was a normal street of houses.

0:33:040:33:08

I don't know about you, but I prefer my houses in three dimensions and not painted on.

0:33:110:33:17

Time to move on to a more modern style of construction.

0:33:170:33:20

Well, coming bang up to date,

0:33:220:33:23

lots going on in Crewe in terms of regeneration and investment,

0:33:230:33:28

which potentially makes it a really interesting place to buy property.

0:33:280:33:32

Which is just as well,

0:33:320:33:33

because I'm here to look at one that was at the auction.

0:33:330:33:36

It's a two-bed mid-terrace.

0:33:360:33:38

Let's have a look.

0:33:380:33:39

Guide price on this one - £65,000.

0:33:410:33:44

Some nice features on the outside, but what's it like inside?

0:33:440:33:48

OK, so what have we got?

0:33:490:33:51

Nice, sort of, light, bright entrance hall, which is always good.

0:33:510:33:55

Nice bit of plasterwork up there. Quite ornate, which is also good.

0:33:550:33:58

Couple of obvious things, you've got central heating.

0:33:580:34:01

Again, it's all looking very positive.

0:34:010:34:02

You've got your stairs up to your bedrooms there

0:34:020:34:05

and then through into what is a very traditional layout, isn't it?

0:34:050:34:07

This front living room area here,

0:34:070:34:09

and then an archway leading through

0:34:090:34:11

to a rear, sort of, living area here.

0:34:110:34:14

It's a very, very usable space.

0:34:140:34:16

One big room, I think, is better than lots of little ones.

0:34:160:34:19

So that gets a big tick.

0:34:190:34:21

As you travel through the property, you come to the kitchen.

0:34:210:34:24

Well, it's not huge, but then the house isn't massive,

0:34:240:34:27

so I think you'd just about get away with it.

0:34:270:34:30

Boiler looks like it's very dated,

0:34:300:34:32

so maybe that's needs a good servicing or looking at for sure.

0:34:320:34:37

Units, serviceable possibly, but I think, for the cost,

0:34:370:34:40

I would look at replacing them,

0:34:400:34:42

because you'd definitely sparkle everything up.

0:34:420:34:44

And then, at the back here, you've got a loo,

0:34:440:34:46

very low ceiling height.

0:34:460:34:48

A bit of a utility area. It's all useful stuff.

0:34:480:34:50

And, as a starting point, yeah, it's looking good.

0:34:500:34:53

The layout works, and it's in pretty good nick.

0:34:560:34:59

My only thoughts beyond general modernisation would be

0:34:590:35:03

to raise the roof in the utility area.

0:35:030:35:06

That way you can get more cupboards or tall appliances in.

0:35:060:35:10

So upstairs, and good decorative order continues,

0:35:130:35:17

and again nice-sized rooms.

0:35:170:35:18

Big double bedroom at the front there.

0:35:180:35:20

Good-sized second bedroom there,

0:35:200:35:22

and then, final bonus...

0:35:220:35:24

..a brilliant family bathroom. Big enough for a shower and a bath.

0:35:260:35:30

You know, it's all set up, isn't it? Brilliant.

0:35:300:35:33

It's all good inside.

0:35:330:35:36

Very little to do beyond the superficial.

0:35:360:35:38

Outside, cosmetic issues can be cured with a bit of weedkiller.

0:35:380:35:42

With the kitchen being on the small side,

0:35:430:35:46

you could extend out back under permitted development.

0:35:460:35:49

But with the house being in good condition, perhaps a spruce up

0:35:490:35:53

and then renting it out would be the most profitable option.

0:35:530:35:56

Time to ask the thoughts of a local estate agent.

0:35:560:35:59

What does he think this property requires?

0:35:590:36:02

I don't think it needs masses of work done to the property.

0:36:020:36:04

I think definitely it needs a new kitchen.

0:36:040:36:07

I think the bathroom would need tidying up a little bit.

0:36:070:36:09

Certainly it needs refreshing up, decorating

0:36:090:36:12

and maybe some new flooring and carpets.

0:36:120:36:14

We'd be looking to spend around £5,000 to get this

0:36:140:36:17

to a rentable condition.

0:36:170:36:19

So get it near the guide price

0:36:190:36:21

and you could be looking at a total £70,000 outlay.

0:36:210:36:24

If it was in rentable standard, what could it command on the open market?

0:36:240:36:28

For rental purposes, we'd be looking

0:36:280:36:30

£485 per calendar month to £525 per calendar month.

0:36:300:36:36

And what about sales?

0:36:360:36:39

If the property was refurbished to a really nice standard,

0:36:390:36:42

we'd be looking around £90,000.

0:36:420:36:44

Well, there really is nothing to fault with this property, is there?

0:36:500:36:54

Great guide price in an area where it's definitely on the up.

0:36:540:36:57

And it's in good order.

0:36:570:36:59

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

0:36:590:37:02

Lot 22 has been withdrawn.

0:37:060:37:08

Lot 23. We now go to Crewe, Cheshire.

0:37:080:37:11

60 bid. Thank you.

0:37:120:37:14

At £60,000. Going once.

0:37:140:37:16

61.

0:37:160:37:17

62.

0:37:170:37:18

63.

0:37:180:37:19

64.

0:37:190:37:20

65.

0:37:200:37:22

At £65,000, then. Are we all done?

0:37:220:37:25

Got you at 66.

0:37:260:37:28

67.

0:37:280:37:30

68.

0:37:300:37:32

Got you.

0:37:320:37:33

69.

0:37:330:37:34

70, sir?

0:37:340:37:36

No. At 69. To my left then at 69.

0:37:360:37:38

70 anywhere else now?

0:37:380:37:40

If not, I'm selling it at £69,000.

0:37:400:37:42

For the first time.

0:37:420:37:44

£69,000 for the second time.

0:37:440:37:47

Third and time at £69,000.

0:37:470:37:50

You've bought it, sir. Well done.

0:37:500:37:52

A pat on the back for Phil from his business partner Anthony.

0:37:530:37:58

They've secured the property for £69,000.

0:37:580:38:01

Their wives, both called Emma, were childhood friends,

0:38:010:38:04

and introduced the two, sparking this property development business.

0:38:040:38:09

But what do they have planned for their new acquisition?

0:38:090:38:13

Anthony, Phil, good to see you. Congratulations.

0:38:150:38:18

Tell me why you wanted to buy this place.

0:38:180:38:20

Yeah, so this place is ideally located

0:38:200:38:22

to one of the major employers of the town,

0:38:220:38:24

and we have great demand for tenants in this area.

0:38:240:38:27

So, on behalf of an investor, we're sourcing the property,

0:38:270:38:31

refurbing in the property, and letting it for them.

0:38:310:38:34

We love the proportions of this house,

0:38:340:38:37

so, although it's only a two-bed property as it stands at the moment,

0:38:370:38:40

we're going to look to turn it into a four-bed shared house.

0:38:400:38:43

Oh, great. So how are you going to get four bedrooms in here, then?

0:38:430:38:46

Yeah, I guess, in terms of rooms, we need to separate the two downstairs

0:38:460:38:49

reception rooms and create a separate entrance to the front one.

0:38:490:38:52

The kitchen doesn't need too much work,

0:38:520:38:54

other than a bit of updating and some appliances in there.

0:38:540:38:58

There's currently a downstairs toilet-cum-utility room,

0:38:580:39:02

so we're going to turn that into a wet room.

0:39:020:39:04

Quite a low height in that room at the moment. What are you going to do about that?

0:39:040:39:07

We're going to turn it into a wet room rather than

0:39:070:39:09

a traditional shower, so we don't have to incorporate

0:39:090:39:11

the shower tray, and we'll excavate the floor out slightly,

0:39:110:39:14

-so that will just give us that little bit more headroom to fit a shower room in there.

-Brilliant.

0:39:140:39:18

And then upstairs, really, it's carpets and decor

0:39:180:39:22

and really just a bit of updating to the house.

0:39:220:39:25

Is it going to be corridors and partitions?

0:39:250:39:28

Yeah, we're going to put a corridor in here to split this back reception room.

0:39:280:39:32

This will become a bedroom and this will be a walk-through there

0:39:320:39:34

-for the kitchen, and the shower room at the end of the house.

-Wow.

0:39:340:39:38

So what kind of planning permission is required for doing what you're suggesting?

0:39:380:39:43

So, in terms of what we're doing, because it's classed as a small HMO,

0:39:430:39:46

it doesn't need to go through full planning in that sense.

0:39:460:39:49

It needs to go through building regs

0:39:490:39:51

and we then also work closely with the housing standards

0:39:510:39:54

from the local council, in terms of making sure we're

0:39:540:39:57

meeting all their regulations from an HMO perspective.

0:39:570:40:01

So, even though it isn't a licensable HMO,

0:40:010:40:03

-you're treating it as if it is an HMO?

-That's right, yeah.

0:40:030:40:06

This HMO route, then - is that something you're finding is successful?

0:40:060:40:10

Yeah, there seems to be a lot of demand in the area for this.

0:40:100:40:14

People looking to rent a room, know exactly the cost of all their bills.

0:40:140:40:19

So we fix that for them...

0:40:190:40:20

So you do an all-inclusive rate?

0:40:200:40:22

All-inclusive rate. That's right, yeah.

0:40:220:40:24

So what kind of price would you get for an average, sort of,

0:40:240:40:27

room in one of your conversions?

0:40:270:40:29

-So anywhere between £350 and £400.

-Wow.

-Yeah, typically.

0:40:290:40:32

If it's ensuited, then we can perhaps achieve a little bit more,

0:40:320:40:35

but, in this particular property, we're looking at close to £400,

0:40:350:40:39

because of its location to a major car manufacturer in the town.

0:40:390:40:42

I'm just trying to get my head round the economies of that.

0:40:420:40:45

Because £350-£400, surely you could get, like, a little terrace and rent that out,

0:40:450:40:49

if you were a renting person, for about the same amount?

0:40:490:40:52

So why would somebody pay such a high amount just for a room?

0:40:520:40:55

I think the challenge that people find is it's not just the rent,

0:40:550:40:58

it's once you've added all the bills and utilities and outgoings

0:40:580:41:01

on top of that, it tends to double the price

0:41:010:41:04

by the time you've paid council tax and your utilities.

0:41:040:41:08

So people like the idea of just being able to have that

0:41:080:41:11

-one outgoing a month, and know everything is covered.

-Right.

0:41:110:41:14

One way that HMOs are used obviously is for either lower income or students.

0:41:140:41:19

You've taken a slightly different approach to that.

0:41:190:41:22

Yeah, I mean, we certainly do offer up HMOs to students,

0:41:220:41:25

but with this particular property, it's going to be for professionals,

0:41:250:41:29

blue-collar workers, white-collar workers in the local area.

0:41:290:41:34

I think Phil and Anthony are onto a winner with this style of HMO.

0:41:340:41:37

They don't require a licence, as HMO permits are only mandatory

0:41:370:41:41

for properties with three stories or five or more occupants.

0:41:410:41:46

And they think a budget of £6-£8,000 will be required to convert it.

0:41:460:41:51

Well, that means four rooms renting at £400 per calendar month

0:41:510:41:57

could net their investor a pretty brilliant 24% yield.

0:41:570:42:03

With numbers like that you've got to ask the question...

0:42:030:42:06

Why don't more people convert these kind of houses into lettable rooms, then?

0:42:060:42:09

What's the downside? Because there must be one, otherwise everyone would do it.

0:42:090:42:13

Yeah, there's more work required.

0:42:130:42:14

You've got separate contracts for each tenant,

0:42:140:42:17

more turnover of tenants as well,

0:42:170:42:19

there's more voids to manage, to reduce,

0:42:190:42:23

and so there's more risk and work required.

0:42:230:42:26

I think, for the average by-to-let single-let investor, it's more...

0:42:260:42:33

-There's certainly a lot more work involved.

-Right.

0:42:330:42:36

-But the potential returns are surely worth it?

-Absolutely.

0:42:360:42:41

I think, if you've got the right systems in place, then that

0:42:410:42:44

management doesn't need to be too much of an overhead, but certainly,

0:42:440:42:47

-that is the perception, I think, from an investor point of view.

-Right.

0:42:470:42:50

Phil and Anthony plan to turn this around in six weeks,

0:42:520:42:55

and their usual team of contractors will be handling the renovation.

0:42:550:42:59

-Do you two get your hands dirty or are you...?

-We used to.

0:42:590:43:03

Oh, you used to? Is that what you tell people, is it?

0:43:030:43:05

THEY LAUGH

0:43:050:43:07

We figured we'd try at least every job once, you know?

0:43:070:43:10

-At least then we know how painful it is.

-Yeah, and how much they're paying for it.

0:43:100:43:13

-But now you get other people to do it?

-That's right, yeah.

0:43:130:43:15

Your time is more precious to do other things.

0:43:150:43:17

Absolutely, we can do more projects with more people doing work for us.

0:43:170:43:20

Well, listen, congratulations.

0:43:200:43:22

-Good luck with it.

-Thank you.

-I look forward to seeing how you get on.

-Thank you.

0:43:220:43:26

So Anthony and Phil following a very well thought through strategy

0:43:260:43:31

in terms of their property investment,

0:43:310:43:34

and, potentially, it could pay big dividends.

0:43:340:43:38

You can find out how they got on sorting this property out later in the show.

0:43:380:43:42

So that's one property owner who's ready to move on.

0:43:450:43:48

Yes, but what about the other two?

0:43:480:43:50

Can they see the light at the end of the tunnel?

0:43:500:43:52

Let's find out.

0:43:520:43:54

Early in the show, I was in Nelson, Lancashire,

0:43:590:44:01

to see a two-bedroom ex-local authority house,

0:44:010:44:04

guided at £30,000 plus.

0:44:040:44:06

And I thought it had the potential to become a lovely family home

0:44:060:44:10

by dividing this bedroom to make it a three-bed,

0:44:100:44:12

and undividing... Is that a word?

0:44:120:44:15

..the kitchen and dining room.

0:44:150:44:17

What it does scream out to me is taking this wall out.

0:44:190:44:23

Now, it is a load-bearing wall, so you would need some support -

0:44:230:44:26

a supporting beam up there -

0:44:260:44:28

but it's perfect to go from kitchen to diner,

0:44:280:44:31

a bit of the family area.

0:44:310:44:33

Instead of these two small rooms, having one big room,

0:44:330:44:36

so all the family can share a nice, big family space.

0:44:360:44:39

Waj, here on the right, and his business partner, Abid,

0:44:420:44:45

agreed with me.

0:44:450:44:47

They planned to make a kitchen-diner,

0:44:470:44:49

and were considering a third bedroom

0:44:490:44:51

at their new £35,000 purchase.

0:44:510:44:54

Walls would be coming down,

0:44:540:44:55

but there was one bond that wouldn't break.

0:44:550:44:58

We've known each other for well over 30 years.

0:45:000:45:02

We went to primary school together.

0:45:020:45:04

That's a long-term relationship.

0:45:040:45:06

30 years as mates, now business partners.

0:45:060:45:08

Business partners, exactly, yeah.

0:45:080:45:10

-Even though I still look 21, but you know.

-Yes.

0:45:100:45:12

I didn't want to mention it, not in front of Waj anyway!

0:45:120:45:16

There you have it. The fountain of youth is apparently in Lancashire.

0:45:210:45:25

I'm moving.

0:45:250:45:26

But six months on, have the boys rolled back the years on this property?

0:45:260:45:30

And have those walls in the bedroom been built

0:45:300:45:33

and those in the kitchen been knocked down?

0:45:330:45:35

The lads have knocked down the walls for the kitchen-diner,

0:46:060:46:09

but opted to keep it as a two-bed upstairs.

0:46:090:46:12

That involved a bit too much work,

0:46:130:46:15

and the timescale that we had, I thought, you know what?

0:46:150:46:18

It's best if we just renovate the house the best as we can,

0:46:180:46:22

really, and just get on with it.

0:46:220:46:24

Yeah, because we had a tenant waiting as well

0:46:240:46:27

and they were happy with two bedrooms.

0:46:270:46:29

The time implications and the cost implications we had to think about,

0:46:290:46:32

so it was just financially viable just to stick with two.

0:46:320:46:35

It's good to hear they've met their tenants needs,

0:46:380:46:41

but the kitchen-diner is the real star selling point in this property.

0:46:410:46:46

When we bought this house originally, there was two rooms,

0:46:460:46:48

the kitchen on the side,

0:46:480:46:50

and there was a room here with a wall where I'm stood, with a doorway.

0:46:500:46:55

What we've done is take this wall down,

0:46:550:46:58

and because it was a supporting wall,

0:46:580:47:01

what we've done is put a high-spec kitchen in, which the tenant loves.

0:47:010:47:07

I loved the job, because it was brilliant.

0:47:070:47:09

I had to manage the builders,

0:47:090:47:11

make sure they done it to my specifications.

0:47:110:47:15

We've added spotlights as well.

0:47:150:47:17

It just makes the room spacious and a family-friendly room.

0:47:170:47:21

Elsewhere, they've sorted the damp in the living room

0:47:240:47:27

and decorated, while upstairs, there's a brand-new bathroom

0:47:270:47:31

and no more green tiles, thankfully!

0:47:310:47:33

The bedrooms have also had tiles stripped out

0:47:350:47:38

of the dangerous polystyrene variety.

0:47:380:47:40

In the back garden, the lads haven't quite finished,

0:47:420:47:45

but it's ready to be landscaped.

0:47:450:47:47

With a high standard throughout, that list of work came at a cost.

0:47:480:47:53

Originally, we were thinking of spending 87,000,

0:47:530:47:56

but we went slightly over, £12,000, which we've spent so far.

0:47:560:48:00

Going to add a bit more to that with the gardens, probably £1,000 more.

0:48:000:48:06

They've had another property to develop at the same time,

0:48:060:48:08

but they've managed to pull this off

0:48:080:48:10

bang on their timescale of six months,

0:48:100:48:12

with Waj coordinating most of the work.

0:48:120:48:15

So, still mates, guys?

0:48:150:48:17

Nothing can come between our friendship, no matter what it is.

0:48:190:48:22

We're brothers. We're actually more than brothers.

0:48:220:48:25

We've been through ups and downs through our lives, you know, from

0:48:250:48:27

family to business, this, that, the other, and we're still here today.

0:48:270:48:31

And I think that's a blessing from God.

0:48:310:48:33

He used to bully me when I was little.

0:48:330:48:35

I think that's the sound of a can of worms being opened.

0:48:370:48:40

We'll just let Abid and Waj settle their childhood differences

0:48:400:48:43

like grown-ups while we ask two local estate agents

0:48:430:48:46

what they think of the property,

0:48:460:48:48

starting with the agent who saw it before the renovation.

0:48:480:48:51

Obviously, as we can see, it's a very nice conversion.

0:48:530:48:56

It's been fully modernised, fit for a family.

0:48:560:48:59

Very nice layout downstairs.

0:48:590:49:00

Maximum use of the space available, perfect for modern living standards,

0:49:000:49:04

modern family, open-plan kitchen, breakfast area, brilliant.

0:49:040:49:09

Well, the first impressions of the property are good.

0:49:090:49:11

It gives you a natural feeling

0:49:110:49:13

when you come inside and it's a good family home.

0:49:130:49:17

The layout is really good.

0:49:170:49:18

As you walk in, you know that it's got a good kitchen size,

0:49:180:49:21

it's got a little dining area around the corner of the kitchen,

0:49:210:49:24

which gives it a very big selling point.

0:49:240:49:27

When all is said and done,

0:49:290:49:30

Abid and Waj have spent a total of 48 grand.

0:49:300:49:35

They're currently renting at just over £525 per calendar month,

0:49:350:49:40

giving them just over a 13% yield.

0:49:400:49:43

But could they make more by selling the property?

0:49:430:49:46

I would value this property at £65,000.

0:49:480:49:51

Sale valuation on this property would be between 60 and £75,000.

0:49:510:49:56

That's absolutely, that's actually pretty awesome.

0:49:560:49:59

Really pleased with that, actually, yeah.

0:49:590:50:01

That top valuation of £75,000 would give them

0:50:040:50:07

a pre-tax profit of 27 grand, but they're planning to hold on

0:50:070:50:11

to the property for the time being and seeing if the market rises.

0:50:110:50:15

Abid was away for most of the project,

0:50:150:50:17

leaving it in the capable hands of Waj.

0:50:170:50:20

So does he think his bezzie mate

0:50:200:50:22

and business partner has done a good job?

0:50:220:50:24

It was a job well done.

0:50:280:50:30

Waj handled most of it, basically getting the builders in,

0:50:300:50:33

getting everything sorted.

0:50:330:50:34

I was busy doing other work,

0:50:340:50:37

but it was a job well done and he's done it.

0:50:370:50:39

-Really proud of him.

-Can I have a pat on the back?

0:50:390:50:42

THUD!

0:50:420:50:43

There you go, mate.

0:50:430:50:45

Earlier on in the show, I was in Crewe in Cheshire

0:50:500:50:54

to see a two-bed, mid-terrace guided at £65,000.

0:50:540:50:58

And while the decor needed updating,

0:50:590:51:01

the layout downstairs was spacious, with one big reception room.

0:51:010:51:06

There were ideal facilities with a reasonable kitchen,

0:51:070:51:10

downstairs toilet,

0:51:100:51:12

and a generous-sized upstairs bathroom.

0:51:120:51:15

This house was situated near one of the town's largest employers.

0:51:160:51:21

You know, it's all set up, isn't it? Brilliant.

0:51:210:51:24

'And it added up enough for property developers Phil,

0:51:240:51:28

'here on the right, and Anthony to pay £69,000 at auction,

0:51:280:51:32

'but they plan to add something else - extra bedrooms.'

0:51:320:51:36

On behalf of an investor, we are sourcing the property,

0:51:380:51:41

refurbing the property and letting it for them.

0:51:410:51:44

We love the proportions of this house,

0:51:440:51:46

so, although it's only a two-bed property as it stands at the moment,

0:51:460:51:49

we're going to look to turn it into a four-bed, shared house.

0:51:490:51:54

# House of four doors... #

0:51:540:51:57

And this house of four doors - or four bedrooms, rather -

0:51:590:52:03

didn't need an HMO licence, as it was only two storeys

0:52:030:52:06

with less than five occupants, a formula that was producing

0:52:060:52:10

plentiful profits for Phil and Anthony's investors.

0:52:100:52:13

-£350 and £400.

-Wow!

-Yeah, typically.

0:52:150:52:18

If it's en suited,

0:52:180:52:19

then we can perhaps achieve a little bit more,

0:52:190:52:22

but in this particular property, we're looking at close to £400,

0:52:220:52:25

because of its location to a major car manufacturer in the town.

0:52:250:52:29

It's now two months on and I'm eager to see

0:52:310:52:34

if the duo have turned this two-bedder into a four.

0:52:340:52:37

# Four to the floor, I was sure

0:52:410:52:45

# Never seeing clear

0:52:450:52:48

# I could have it all... #

0:52:500:52:54

Oh, yes, they've got it all, with four on two floors here.

0:52:540:52:57

The standard of finish is above your usual HMO as they were

0:52:590:53:03

targeting professionals.

0:53:030:53:05

It took them one week over their six-week timescale,

0:53:050:53:08

but again, there were a few difficulties along the way.

0:53:080:53:11

So we started with ripping out the necessary parts of the property.

0:53:110:53:15

We discovered that the kitchen carcasses

0:53:150:53:18

weren't suitable, so we took those out the property.

0:53:180:53:21

We were originally just hoping to keep the kitchen carcasses

0:53:210:53:23

and put a new worktop on, but as we took out the old worktop,

0:53:230:53:26

we found a damp issue behind one corner,

0:53:260:53:29

so it made sense, really, to remove the carcasses.

0:53:290:53:32

We treated the damp before we put a brand-new kitchen in.

0:53:320:53:36

With the kitchen replaced, they could crack on

0:53:360:53:38

with making this HMO-ready.

0:53:380:53:40

We then went through to the wet room,

0:53:420:53:44

what is the wet room now, didn't we?

0:53:440:53:46

-Yeah.

-And excavated.

0:53:460:53:47

Excavated there, put up the various stud walling downstairs

0:53:470:53:51

to partition off the separate rooms, plastered that out,

0:53:510:53:55

full decoration throughout, then, new carpets upstairs,

0:53:550:53:58

laminate flooring downstairs

0:53:580:54:00

and then the wet room was the final piece of the jigsaw,

0:54:000:54:03

really, in terms of finishing of the tiling

0:54:030:54:05

-and getting all the appliances hooked up in there.

-Yeah.

0:54:050:54:08

And while this didn't need to be a licensed HMO, Phil and Anthony

0:54:080:54:12

have put in all the safety features a permit would require.

0:54:120:54:16

But has that unexpected kitchen change caused some alarm

0:54:160:54:20

with the budget?

0:54:200:54:23

Our original budget, we were hoping to spend around £8,000.

0:54:230:54:25

We've spent just slightly over that,

0:54:250:54:28

because we had a few extra works that we included.

0:54:280:54:31

We've replaced a few windows,

0:54:310:54:32

so, all in all, the building works will be just under 10,000.

0:54:320:54:36

A little over is OK with that unexpected kitchen change,

0:54:370:54:40

but is their investor happy?

0:54:400:54:42

Yeah, they're really pleased with it. We've got tenants in,

0:54:440:54:46

so they're starting to receive rental income on the property.

0:54:460:54:50

And what kind of income are they getting

0:54:500:54:52

and did they get the professional tenants they wanted?

0:54:520:54:55

So we managed to get the professional tenants

0:54:560:54:58

that we were looking for,

0:54:580:55:00

being close to the major manufacturer in the town.

0:55:000:55:03

We've managed to achieve £390 per month, per room, in this property.

0:55:030:55:08

There's been good demand and we'll certainly have people

0:55:080:55:13

moving in straightaway, so we're looking forward to that, yeah.

0:55:130:55:16

And having spent £79,000 buying and renovating on behalf

0:55:180:55:22

of their investor, that £390 per calendar month, per room, figure

0:55:220:55:27

gives you a total yield of what?

0:55:270:55:29

Dum-de-dum...

0:55:290:55:31

If you said 23%, top of the class for maths.

0:55:310:55:35

But time to ask a school of local estate agents swimming this way

0:55:350:55:39

if this was the right decision, to convert to an HMO.

0:55:390:55:44

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

0:55:440:55:48

I think what they've done with the property is very good.

0:55:480:55:50

I wouldn't have, er...

0:55:500:55:52

You know, to maximise income, I think they've done the right thing,

0:55:520:55:55

so I would have probably done the same thing.

0:55:550:55:57

They've pretty much done all they can do to get the amount of bedrooms

0:55:570:56:00

they have out of the property,

0:56:000:56:02

and they are quite spacious and they do work really well.

0:56:020:56:05

My first impression of the property is, it flows really nicely.

0:56:050:56:07

All the rooms have their own individual space,

0:56:070:56:09

nice kitchen area, nice wet room for people to use.

0:56:090:56:12

It's finished to a really high standard, you can see that,

0:56:120:56:14

particularly in the kitchen and the bathroom.

0:56:140:56:17

While this is a long-term investment as an HMO rental,

0:56:180:56:21

what could it fetch on the sales market?

0:56:210:56:24

As an HMO, you're probably looking at around £85 to £90,000

0:56:260:56:30

for the property.

0:56:300:56:31

If it was converted back to a family home,

0:56:310:56:33

you'd probably be looking at around £95,000 for the property.

0:56:330:56:36

As an HMO property,

0:56:360:56:37

it's going to be in the region of £115,000 to £120,000.

0:56:370:56:42

The reason for this,

0:56:420:56:43

it is bringing in quite a considerable income per year,

0:56:430:56:47

so it is, I guess, in a way, a business investment for somebody,

0:56:470:56:50

so because of that, they do tend to fetch more money.

0:56:500:56:53

If it was converted back into a family home,

0:56:530:56:55

you'd be around about the 100 to £105,000.

0:56:550:57:00

Those top figures mean, as a family home,

0:57:000:57:03

they could net a pre-tax profit of 26,000,

0:57:030:57:07

or a profit of 41,000, if sold as an HMO,

0:57:070:57:10

before the usual taxes and expenses.

0:57:100:57:13

Yeah, I mean, that's the sort of valuation that we would expect

0:57:160:57:18

as a regular property.

0:57:180:57:20

Obviously, if you factor in the commercial elements of the HMO,

0:57:200:57:23

then we'd look to probably achieve something higher than that,

0:57:230:57:26

but we're going to hold the property anyway for the investor

0:57:260:57:29

and let it, but it's good for them to know that there's plenty

0:57:290:57:33

of equity in the property now.

0:57:330:57:35

Yeah, they're starting from a profitable position from day one.

0:57:350:57:38

A long-term investment, because 23% yields don't come along very often.

0:57:380:57:43

Will this be a trick the guys repeat in the future?

0:57:430:57:46

-Absolutely, yes, yeah.

-More of the same, more of the same.

0:57:480:57:52

-Yeah, we'll keep repeating the model, I think.

-Yeah.

0:57:520:57:55

So those were our stories from the auction houses of the UK today.

0:57:570:58:01

But there are many more out there.

0:58:010:58:03

So make sure you join us next time for more Homes Under The Hammer.

0:58:030:58:06

-We'll see you then.

-Goodbye.

-Bye.

0:58:060:58:07

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