Episode 72 Homes Under the Hammer

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

who've bought at auction over the years,

-with a lot of different reactions.

-Oh, yes.

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

If you're ready for the challenge,

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

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

you end up buying something.

No. But sometimes, at the packed auctions,

you do have to work to get noticed.

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

We revisit a development in Forest Hill, London,

where the numbers were very big indeed.

Sold. £1,450,000.

To make the numbers work in Nelson, Lancashire,

it's the number of rooms that matter.

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

but could you create three?

And, in Crewe, Cheshire,

more rooms and a HMO means even bigger numbers.

-£350,400.

-Wow!

All these properties were bought at auction.

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

-when these homes went under the hammer.

-Well done.

Back in 2014, I was in the affluent area

of Forest Hill in South East London

to see an auction lot that was a bit special.

# I can see your mansion on the hill. #

Well, not so much a mansion on the hill,

but a vast plot of garages down this lane.

The guide price? £600,000.

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

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

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

when people were travelling by horse and carriage.

They would stay at the inn and their horses would be

stabled for the night right here.

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

from garages, to workshops to offices.

You can see it's rundown

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

# Breathe life into me

# Breathe life into me, come on

# I've been waiting for so long. #

Well, we might have a lot of history,

but we've also got a lot of problems.

Just have a look at that roof!

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

permission has been granted to pull this whole building down.

And in its place, you could build something spectacular.

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

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

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

and along here,

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

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

set back from the road.

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

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

Lots of cars coming up

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

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

as parking is always a big selling point in London.

So much so, it seems some car owners

really don't want to give up their spaces.

# Who's gonna drive you home

# Tonight? #

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

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

Fantastic lot, this.

Great, great opportunity for somebody.

Great development opportunity. What a great lot.

Who wants to give me a start on this?

£1 million. Thank you.

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

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

Anybody else? Million ten, yeah?

Million ten.

Million 20.

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

and the auction room is buzzing.

We return with the bidding at £1.4 million.

1.4. Four ten.

Four 20.

No?

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

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

You bidding?

You back in, yeah? Four 20.

Four 30.

Four 40.

Four 50.

Four 60.

Yes or no? Four 60.

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

£1.45 million for the second...

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

Are we all done?

-GAVEL BANGS

-Sold. £1,450,000.

Well bid.

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

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

Mark had been developing property for over 15 years after

a career as a boxer.

# It's all about the things you do

# Boy, you knock me out. #

Every fighter needs a manager in their corner

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

to rely on.

# Boy, you knock me out. #

Whose idea was this? Who's bought this?

Were you happy with the money you paid?

-Mark?

-Yeah, um...

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

We had a site in planning in another location,

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

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

You and Johnny were both there on auction day.

Guys, did you expect to win the bid?

Did you expect to pay what you paid, Johnny?

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

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

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

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

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

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

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

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

-gaining upon planning permission.

-Yeah.

So, basically, because plans were given in 2006,

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

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

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

hang on, we could get another floor on here

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

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

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

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

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

-How long is this project going to take?

-Too long.

He said that without his mouth moving.

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

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

-Yeah. There's... Yeah.

-Budget, budget, budget, budget, budget.

-Yeah.

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

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

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

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

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

If we get the four beds,

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

# One, two, three

# She knocked me to my knees

# Three, four, five

# I think I've got to take a dive

# I can't go no longer

# I'm giving up the ring. #

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

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

Mark was certainly determined to make this a successful project.

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

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

in Lambeth and I boxed there for quite a few years

and won the ABA London Championships.

So I'm anything about boxing.

I've always had that winning determination.

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

You have to keep going and it's true.

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

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

# I get knocked down but I get up again

# You're never gonna keep me down

# I get knocked down but I get up again

# You're never gonna keep me down. #

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

as they had a frame up, utilities connected

and work was under way in earnest.

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

# I get knocked down but I get up again

# You're never gonna keep me down

# I get knocked down but I get up again

# You're never gonna keep me down. #

Well, the new plans that we got passed,

in comparison to the original planning consent allowed us

to gain an extra storey on to the whole development.

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

and one two-bed.

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

and things had grown so large here that Johnny had brought

Pat on board to help him manage the site.

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

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

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

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

drainage, run our service ducts, getting everything prepared

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

Got all of our trades lined up.

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

We've sort of maximised the development,

still keeping it in context with the surrounding area.

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

we feel we've got a good result.

They thought another six to seven months would see the project

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

meaning a total estimated spend of £3.5 million.

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

and some profit.

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

you should expect to see the development finished,

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

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

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

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

and people are going to be pleasantly surprised.

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

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

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

Nelson in Lancashire is about four miles from Burnley.

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

but historically, this former mill town was once steeped

in left wing politics and was nicknamed Little Moscow.

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

-#

I've read today's auction catalogue,

but what property am I RUSSIAN here to see?

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

local authority housing schemes, they sometimes got it right.

This is an example of getting it right.

Houses painted in nice pretty colours and little bits of grass

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

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

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

OK, we're straight into a small hallway,

with the stairs going up to the bedrooms

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

Coming through into the kitchen,

which looks a little bit dated,

hasn't been touched in here for some time.

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

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

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

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

Through into another bit of space.

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

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

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

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

kitchen to diner, a bit of a family area.

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

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

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

but I also know that supporting beams can be expensive.

However, it would really increase a sense of space

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

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

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

And as we go into the bathroom,

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

Very dated, nice green tiles.

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

rip it out and start again.

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

So, across the landing into bedroom two...

..which again is a decent size.

I've noticed these polystyrene tiles,

they would have to come out definitely.

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

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

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

but could you create three?

Hold that thought for a minute

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

I just wanted to come back into this bedroom,

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

OK, just quickly,

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

That'd give you a small bedroom right there.

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

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

extend the landing across just a little bit.

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

MUSIC: One, Two, Three by Len Barry

# One, two, three

-# It's easy

-It's so easy... #

Or at least it's easier than you think.

Three is the magic number for me here,

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

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

But like I said, just options.

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

A little bit of work needed on this property before

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

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

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

or you could do a light refurbishment

where it would make it fit to live in now,

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

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

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

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

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

So, get it near that 30 grand guide price

and a full refurb might cost you 38 grand.

The agent thinks, regardless of the number of bedrooms,

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

Perhaps renting is the right route.

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

With a light refurbishment,

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

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

a very attractive yield on the rental income.

By my calculations, get it near the guide price,

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

That's very interesting.

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

They remind me of my youth back in Leicester

and they are normally very well built.

Now, this one needs a total overhaul,

but I think, below the surface,

there's a great family home to be had.

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

Lot 53. Guide's 30.

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

I have 25 in.

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

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

-At 25, 26, just here.

-27.

-Can you?

£26,000.

27. 28. 28.

28 I've got. 29.

30. 30 I've got.

31. 32. 32. 33.

Might buy it. 34?

33 here. 34. 35.

36. Walking away.

With you at 35.

First time then at 35. Second time.

Third and final time, then.

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

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

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

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

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

-Waj, nice to meet you.

-How are you doing, Dion?

-Abid.

-Dion.

-Congratulations to you both.

BOTH: Thank you very much.

What made you buy this house?

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

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

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

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

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

-literally, a couple of hundred yards.

-Yeah, away from each other.

We've been in business together,

we're in business together now as well.

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

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

and we've gone into this field as well.

That's a long-term relationship.

30 years as mates, now business partners.

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

-Yes.

-You know?

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

Not in front of Waj anyway. THEY LAUGH

Abid owns a chain of health supplement stories.

That must be the source of those youthful looks.

While Waj works on the local council

with some business interests on the side.

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

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

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

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

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

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

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

some paint, you know, spruce it up again.

I can see a bit of dampness.

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

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

We're thinking put a beam across,

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

-And upstairs, any plans?

-Upstairs...

In the other bedroom,

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

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

cos here is quite a spacious bathroom.

-Make it into a three-bed.

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

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

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

-THEY LAUGH

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

But I think the 8 to 10 mark?

8 to £10,000, we've set aside,

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

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

-Yeah.

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

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

keep the budget down.

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

-Waj is.

THEY LAUGH

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

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

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

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

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

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

-Yeah, six months.

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

-Yeah.

-Because...

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

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

when it comes to that kitchen-diner.

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

-We're undecided on this one.

-I think we will agree on something.

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

-Yeah.

-We're very good at agreeing on things.

-Yeah.

-It looks like it.

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

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

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

so we'll make the decisions together as well.

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

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

-Yeah, that's right.

-I just want to wish you two good luck.

-Thank you.

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

-Thank you very much.

-Waj, good luck.

-Cheers, thank you.

-Pleasure.

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

Rip it out and start again.

It won't be easy,

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

I'm pretty sure they'll be fine.

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

Coming up...

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

very little, to be honest.

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

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

He used to bully me when I was little.

Earlier, we were following this story of property developer

Mark and his project manager Johnny,

seen here with Mark's son Max.

They paid £1.45 million for this auction lot of garages

and disused buildings in Forest Hill, London.

And they plan to expand the existing planning permission to build

seven family homes here.

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

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

And Johnny and his team had the frame up

and were working hard towards the end goal.

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

Fast forward six months on and, well, yes,

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

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

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

Sometimes, on big projects,

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

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

MUSIC: Feel The Love by Rudimental

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

# I can feel it all

# I can feel it all... #

Well, this house is dressed to impress

and the result is certainly sleek.

In the basement, the kitchen is high spec.

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

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

Carry on up to the next floor in this tall house

and there are two good-sized bedrooms.

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

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

# I can feel it all

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

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

transformed this site from derelict buildings to desirable homes.

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

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

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

The houses are over four storeys.

I prefer to give people bigger rooms,

more spacious accommodation and...

..much more for their money.

I think, the last time we met,

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

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

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

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

The rest of the houses are falling well behind,

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

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

carpets this week, plot seven, just some snagging

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

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

but this project has not been without its challenges.

We had a couple of issues externally.

We did have problems with services here.

Remember this was an MOT station years ago,

so therefore there was toxic in the ground.

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

which are still active and in use by neighbouring properties.

So, we had to deal with that.

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

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

You can never have enough rainy day money in developing.

Always stick it to one side. Forget about it.

Good advice, Mark,

but having to redo ground works has been a contributing factor

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

Another reason has been the high-end finish.

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

It's the creation.

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

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

which works every time.

He's absolutely incredible at it.

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

and then with modern furniture,

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

If I've fused the old with the new,

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

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

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

He's very good at picking an area,

working out what works in that area.

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

I go around everything, I look at the drawings

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

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

This project has been very tough,

even for experienced developers like Mark and Johnny.

But has their friendship survived it?

Me and the Johnny are brothers.

Not bonded by blood brothers,

but we're brothers.

We love each other to bits

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

We work closely together.

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

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

and no matter what mistakes he does,

and he does do them, he's forgiven,

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

Time to get the popcorn out for the valuations

on these show-stopping houses.

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

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

I think the three-bedroom houses here could sell

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

And the two-bedroom house probably going for a range

between £750,000 to £800,000.

Well, there's one two-bedroom house

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

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

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

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

is pretty much bang on with what we thought.

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

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

A successful project for the two.

So what makes them such a good team?

Yeah, we're both grafters.

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

and I love getting out of bed every day.

He's lovely.

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

I couldn't live a day without him.

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

as a town of major manufacturing,

from railway locomotives to cars.

But I want to show you another little-known part

of its industrial heritage.

Now, this may look like an ordinary brick wall

at the side of a building,

but there are some faint markings

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

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

of the wall that made ammunition.

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

they actually painted houses

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

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

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

Well, coming bang up to date,

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

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

Which is just as well,

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

It's a two-bed mid-terrace.

Let's have a look.

Guide price on this one - £65,000.

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

OK, so what have we got?

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

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

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

Again, it's all looking very positive.

You've got your stairs up to your bedrooms there

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

This front living room area here,

and then an archway leading through

to a rear, sort of, living area here.

It's a very, very usable space.

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

So that gets a big tick.

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

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

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

Boiler looks like it's very dated,

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

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

I would look at replacing them,

because you'd definitely sparkle everything up.

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

very low ceiling height.

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

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

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

My only thoughts beyond general modernisation would be

to raise the roof in the utility area.

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

So upstairs, and good decorative order continues,

and again nice-sized rooms.

Big double bedroom at the front there.

Good-sized second bedroom there,

and then, final bonus...

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

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

It's all good inside.

Very little to do beyond the superficial.

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

With the kitchen being on the small side,

you could extend out back under permitted development.

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

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

Time to ask the thoughts of a local estate agent.

What does he think this property requires?

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

I think definitely it needs a new kitchen.

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

Certainly it needs refreshing up, decorating

and maybe some new flooring and carpets.

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

to a rentable condition.

So get it near the guide price

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

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

For rental purposes, we'd be looking

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

And what about sales?

If the property was refurbished to a really nice standard,

we'd be looking around £90,000.

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

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

And it's in good order.

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

Lot 22 has been withdrawn.

Lot 23. We now go to Crewe, Cheshire.

60 bid. Thank you.

At £60,000. Going once.

61.

62.

63.

64.

65.

At £65,000, then. Are we all done?

Got you at 66.

67.

68.

Got you.

69.

70, sir?

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

70 anywhere else now?

If not, I'm selling it at £69,000.

For the first time.

£69,000 for the second time.

Third and time at £69,000.

You've bought it, sir. Well done.

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

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

Their wives, both called Emma, were childhood friends,

and introduced the two, sparking this property development business.

But what do they have planned for their new acquisition?

Anthony, Phil, good to see you. Congratulations.

Tell me why you wanted to buy this place.

Yeah, so this place is ideally located

to one of the major employers of the town,

and we have great demand for tenants in this area.

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

refurbing in the property, and letting it for them.

We love the proportions of this house,

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

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

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

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

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

The kitchen doesn't need too much work,

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

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

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

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

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

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

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

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

-Brilliant.

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

and really just a bit of updating to the house.

Is it going to be corridors and partitions?

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

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

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

-Wow.

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

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

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

It needs to go through building regs

and we then also work closely with the housing standards

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

meeting all their regulations from an HMO perspective.

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

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

-That's right, yeah.

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

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

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

So we fix that for them...

So you do an all-inclusive rate?

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

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

room in one of your conversions?

-So anywhere between £350 and £400.

-Wow.

-Yeah, typically.

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

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

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

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

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

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

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

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

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

on top of that, it tends to double the price

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

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

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

-Right.

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

You've taken a slightly different approach to that.

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

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

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

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

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

for properties with three stories or five or more occupants.

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

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

could net their investor a pretty brilliant 24% yield.

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

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

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

Yeah, there's more work required.

You've got separate contracts for each tenant,

more turnover of tenants as well,

there's more voids to manage, to reduce,

and so there's more risk and work required.

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

-There's certainly a lot more work involved.

-Right.

-But the potential returns are surely worth it?

-Absolutely.

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

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

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

-Right.

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

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

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

-We used to.

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

THEY LAUGH

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

-At least then we know how painful it is.

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

-But now you get other people to do it?

-That's right, yeah.

Your time is more precious to do other things.

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

Well, listen, congratulations.

-Good luck with it.

-Thank you.

-I look forward to seeing how you get on.

-Thank you.

So Anthony and Phil following a very well thought through strategy

in terms of their property investment,

and, potentially, it could pay big dividends.

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

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

Yes, but what about the other two?

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

Let's find out.

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

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

guided at £30,000 plus.

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

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

and undividing... Is that a word?

..the kitchen and dining room.

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

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

a supporting beam up there -

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

a bit of the family area.

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

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

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

agreed with me.

They planned to make a kitchen-diner,

and were considering a third bedroom

at their new £35,000 purchase.

Walls would be coming down,

but there was one bond that wouldn't break.

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

We went to primary school together.

That's a long-term relationship.

30 years as mates, now business partners.

Business partners, exactly, yeah.

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

-Yes.

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

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

I'm moving.

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

And have those walls in the bedroom been built

and those in the kitchen been knocked down?

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

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

That involved a bit too much work,

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

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

really, and just get on with it.

Yeah, because we had a tenant waiting as well

and they were happy with two bedrooms.

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

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

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

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

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

the kitchen on the side,

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

What we've done is take this wall down,

and because it was a supporting wall,

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

I loved the job, because it was brilliant.

I had to manage the builders,

make sure they done it to my specifications.

We've added spotlights as well.

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

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

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

and no more green tiles, thankfully!

The bedrooms have also had tiles stripped out

of the dangerous polystyrene variety.

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

but it's ready to be landscaped.

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

Originally, we were thinking of spending 87,000,

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

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

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

but they've managed to pull this off

bang on their timescale of six months,

with Waj coordinating most of the work.

So, still mates, guys?

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

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

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

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

And I think that's a blessing from God.

He used to bully me when I was little.

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

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

like grown-ups while we ask two local estate agents

what they think of the property,

starting with the agent who saw it before the renovation.

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

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

Very nice layout downstairs.

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

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

Well, the first impressions of the property are good.

It gives you a natural feeling

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

The layout is really good.

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

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

which gives it a very big selling point.

When all is said and done,

Abid and Waj have spent a total of 48 grand.

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

giving them just over a 13% yield.

But could they make more by selling the property?

I would value this property at £65,000.

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

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

Really pleased with that, actually, yeah.

That top valuation of £75,000 would give them

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

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

Abid was away for most of the project,

leaving it in the capable hands of Waj.

So does he think his bezzie mate

and business partner has done a good job?

It was a job well done.

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

getting everything sorted.

I was busy doing other work,

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

-Really proud of him.

-Can I have a pat on the back?

THUD!

There you go, mate.

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

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

And while the decor needed updating,

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

There were ideal facilities with a reasonable kitchen,

downstairs toilet,

and a generous-sized upstairs bathroom.

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

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

'And it added up enough for property developers Phil,

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

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

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

refurbing the property and letting it for them.

We love the proportions of this house,

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

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

# House of four doors... #

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

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

with less than five occupants, a formula that was producing

plentiful profits for Phil and Anthony's investors.

-£350 and £400.

-Wow!

-Yeah, typically.

If it's en suited,

then we can perhaps achieve a little bit more,

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

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

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

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

# Four to the floor, I was sure

# Never seeing clear

# I could have it all... #

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

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

targeting professionals.

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

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

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

We discovered that the kitchen carcasses

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

We were originally just hoping to keep the kitchen carcasses

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

we found a damp issue behind one corner,

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

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

With the kitchen replaced, they could crack on

with making this HMO-ready.

We then went through to the wet room,

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

-Yeah.

-And excavated.

Excavated there, put up the various stud walling downstairs

to partition off the separate rooms, plastered that out,

full decoration throughout, then, new carpets upstairs,

laminate flooring downstairs

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

really, in terms of finishing of the tiling

-and getting all the appliances hooked up in there.

-Yeah.

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

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

But has that unexpected kitchen change caused some alarm

with the budget?

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

We've spent just slightly over that,

because we had a few extra works that we included.

We've replaced a few windows,

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

A little over is OK with that unexpected kitchen change,

but is their investor happy?

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

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

And what kind of income are they getting

and did they get the professional tenants they wanted?

So we managed to get the professional tenants

that we were looking for,

being close to the major manufacturer in the town.

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

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

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

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

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

gives you a total yield of what?

Dum-de-dum...

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

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

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

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

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

I wouldn't have, er...

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

so I would have probably done the same thing.

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

they have out of the property,

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

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

All the rooms have their own individual space,

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

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

particularly in the kitchen and the bathroom.

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

what could it fetch on the sales market?

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

for the property.

If it was converted back to a family home,

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

As an HMO property,

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

The reason for this,

it is bringing in quite a considerable income per year,

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

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

If it was converted back into a family home,

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

Those top figures mean, as a family home,

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

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

before the usual taxes and expenses.

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

as a regular property.

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

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

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

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

of equity in the property now.

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

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

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

-Absolutely, yes, yeah.

-More of the same, more of the same.

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

-Yeah.

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

But there are many more out there.

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

-We'll see you then.

-Goodbye.

-Bye.