Episode 54 Homes Under the Hammer

The property market can sometimes seem a little bit like the good old

British weather - unpredictable and changeable.

That is correct, but if you prepare yourself, you can reduce the stress.

Yes, and one place that can throw up some really interesting

options is your local property auction.

Auction properties offer a huge variety -

from one-bedroom flats to huge acres of land.

Yeah, from old chapels to former public toilets.

Yes, so we've seen all of those on the programme over the years,

but here's what's coming up on today's show.

Lucy has a manifesto for change at this Walthamstow, London flat,

but on the whole, it's delectable.

Fantastic. It certainly wins my vote.

You'd be pretty unhappy if you didn't read the legal pack

to this former health centre in Mansfield, Nottinghamshire.

The seller would be entitled to some of the profits.

And the buyer of this Derbyshire mid-terrace

has found a neat way to help the local housing situation.

You went to the Housing Association and said,

"If I was to buy a house, what would you like it to be?"

At 63...

All these properties have been sold at auction, and we'll find out

who bought them and what they paid when they went under the hammer.

You've bought it.

Lucy is in Walthamstow in the north-east of London -

a borough that's aptly named.

The name Walthamstow actually derives from the old English

for "welcome place".

Now, locals call it Stowie.

And it's a popular place to live, with direct routes into the

centre of London, a famous high street market and, of course,

there's just a wealth of character properties.

A welcome place, indeed, I'd say.

For a property investor, the rising market is also a welcome addition,

with sales prices here up by 12% during 2015.

Still, it is possible to get a bargain at the auctions.

Well, the property I'm here to see is a bit of

a hike away from the closest tube,

but it's about a ten-minute walk to a mainline train station

and it's a 20-minute journey from there into Liverpool Street,

into the city.

So, not bad. So, here is the property.

It's actually a two-bed,

up on the first floor of this end-terrace house.

It's a bit unusual-looking, I've got to say.

It does look a little bit sort of tacked on the end

and it's got a flat roof. Now, it went to auction

with a guide price of ?220,000, so I'm going to take a closer look.

On the positive side, the flat has its own entrance

and it has 168 years left on its lease.

But that flat roof can be a stumbling block for some mortgage

providers, who may demand a roof inspection.

So, at the top of the stairs there...

nice to have your own front door into a really cosy flat.

Now, first impressions, an extra wide hallway,

although it might eat into the rooms,

so I'll have to have a look at that.

But through here, we've got the kitchen, again, which is fantastic.

It certainly wins my vote. There's a big old table in here already,

so you can eat in here.

You've got some windows letting in loads of light.

Looks like a fairly new boiler, always good to see that.

Although, you will need to update the kitchen.

And then, through into the lounge. I mean, look, really spacious.

Got little picture rails up here, which are lovely.

Bay window over here. Now, the good news is there's double glazing

because that is quite a noisy road, so I'd be aware of that.

Once you've decorated -

cos you're going to need to get this hideous wallpaper off

and that is stuck down for dear life -

I think you've got quite a good little flat here.

Lots of space, but the flat's decor is very tired

and the colour scheme has to change.

There's more greens in here then your local pitch and putt.

Now, at the back of the property, well, this is one of the two

bedrooms and, well, there are a few signs of damp,

up there, down there.

One possible cause, well, I know there's a flat roof up there,

so you definitely should get that checked out.

And then we have the bathroom,

which is OK, could do with a bit of a spruce up.

And then we've got the second bedroom through here.

So, the flat is a good size,

but there seems to be a lot of wasted space with a lot of

square footage lost in this hallway, although it is fantastic.

So maybe you could rejig the layout,

but then you are in the realms of moving walls and doors

and it could get expensive,

so you've just got to weigh up your options

and decide how quickly and cheaply you need to do this up,

and then make your decision.

One option you don't have is over outside space.

The garden here belongs to the ground-floor flat.

It's time to ask a local estate agent what

he would do with this property, guided at 222,000.

Key thing to add value, really,

is down to...depending on what the owner wishes to do with it.

If he's going to rent it out, then he needs to do things on

a slightly different financial level to if he is looking to refurbish it

to sell it on the open market.

If you're looking to sell, then really reinstating the original

features, all that sort of thing, is going to make a big difference.

So, what could this renovated flat be worth on the sales and

rental market?

There's a big demand for these.

So, easily ?1,350 per calendar month.

Done up to a reasonable standard, this could sell for around ?375,000.

Well, this is a spacious flat with not much wrong with it other

than that little bit of damp. And, hopefully, it won't be too

much work to make it spick-and-span and ready to rent or sell.

So, who spotted the potential in this two-bed property?

Let's head to auction and find out.

Down the road to Walthamstow.

Anyone bidding? ?200,000.

Yeah, bidder down here. 200,000, I've got. 205?

205 at the back.

New competition. 205. 210. 215. 220. 225. 230. 235.

240. 245. 250. 255. 260. 265.

270. 275?

If not, it's down here at 270,000.

275. 280. 285? No.

With you, sir, 280,000. 285 anywhere?

If not, ?280,000 for the first, 280 for the second,

280 for the third and final time.

We all done?

Sold, 280,000 to this gentleman in the front row there.

A bid of 60 grand over the guide price at 280,000 secured the

property for John, a local property developer.

John has a portfolio of properties in the London area,

but what did he have planned for this new purchase?

John, so lovely to meet you. Congratulations. Nice to meet you.

Thank you. Now, I hear you're local.

You literally live round the corner from this purchase.

Yes, ten minutes up the road, so it's nice and handy to get to.

So, who saw it? Who was the one that spied this in the catalogue?

Well, I keep my ear quite close to the ground.

I've got a few properties and I wanted to get in there and

buy one more property before the stamp duty hike came in,

only a week ago. And it would have cost me a lot more to buy

this property now than it did when I did buy it.

As a result of having watched Homes Under The Hammer for

a long time, I have bought a few properties at auction and

I've done pretty well with them. I've got some...

I've learned a lot of ideas and I feel as if I'm quite confident now in doing this.

So, had you wanted to purchase at auction prior to watching the show,

or did it kind of, like, put something in your mind?

I hadn't even considered it before watching your programme.

So, I started watching it, I saw a few episodes and I ended up

recording it when I was at work, so it's very sad.

But I ended up having so many episodes

of Homes Under The Hammer on my hard drive that I ended up having to

start deleting them without watching them,

which was heart-breaking for me.

Seems like being a fan of the show is paying off for John.

He works full time with his local authority in housing,

so he certainly has a passion for property.

# I'm your number one fan

# I'm your number one fan. #

So, having bought this now,

are you going to be selling this on or renting it out?

I'm going to rent it out. I'd like to add it to my portfolio.

I think it's a decent property in quite a good location and I think

there is still momentum for it to appreciate in value.

So, I think over the course of the next five years,

I'll be renting it out and seeing how things go. Fantastic.

So, let's talk about what you're actually going to do here.

OK, we're not going to do anything too radical,

we're going to do a simple refurbishment.

We're going to strip all the walls, put new carpets down throughout,

put in a new kitchen, new bathroom and just tart it up

and make it look really nice for the rental market.

I'm thinking of spending no more than between 8,000 to 10,000.

I should imagine it's probably going to go towards the upper end of the budget.

How good are you at doing the work?

Because maybe if you could do a lot of the work... Oh, no!

I was going to say, you could stick to that budget.

If you need to rely on tradesmen, that's where the money comes in.

Yeah, I'm not very good, I've got to admit.

I don't really like getting my hands dirty.

And when I do, it always ends up taking three times as long

and costing three times as much.

So, I've learned from my mistakes, in that respect.

And I have got a builder lined up, ready to start work tomorrow.

I did have a look round the property myself prior to buying it

and I did see that there was a couple of damp patches.

And those patches have been made a little bit worse by my builder,

who had a quick look around it before you came.

But I think they are quite superficial.

I've seen the walls and there doesn't seem to be any outlets

where water is coming in and the roof might need to be looked at,

but my builder has already said that he'll be able to do that as

part of the refurbishment work that he's doing.

So, hopefully, it's not going to cost too much money.

Fingers crossed, because the minute you mention the word roof,

I'm like... Ahh! You need to check that out as soon as possible.

Yes, I know. But I did have a survey done on it

and the surveyor didn't pick up on any issues with damp,

so I hoping that's going to be OK. Now, any structural work?

You going to be taking down any walls or moving anything?

Or have you thought about potentially going up into the loft?

I have thought about it, there's no loft, as such, cos it's a

flat roof, but I would like to maybe put in a roof garden. Wow!

A roof garden?!

Yes, because there isn't any outdoor space that comes with this property.

There is a garden, but it belongs to the ground-floor flat.

Though, there is as much outdoor space as you want in

Epping Forest nearby, so...

I am worried that the roof garden might sort of look over the

roundabout over there.

It's quite noisy, it's not the prettiest, quietest area.

Do you really think that whoever is going to rent this or want to

buy this will want that?

I'm very interested to hear your opinion and it's something

that I'm going to consider.

It's not something that I've committed myself to yet.

A roof garden?!

I'm pretty sure how most people would advise John on that idea.

# Johnny, don't do it

# Johnny, don't do it don't do it, don't do it. #

John certainly has enough on his plate. In addition to working

full-time and having his property portfolio,

he has a nine-month-old daughter, Eliza, with his wife, Julia.

How are you going to fit everything in in your life?

I've done it for some time now and I'm used to spinning plates.

It really is a case of, "That today, that tomorrow,

"I've got to go to work now." Yeah, life goes bang, bang, bang for me.

But I've got a good team of builders who are going to turn this

place around for me. I'll obviously be here to project manage.

How do you think Eliza feels about it all?

She was here today, wasn't she? Well, I'm hoping to get her

into properties from a young age. Oh, really? Yeah, so she...

She can manage Daddy's portfolio? Yeah, well, one day, maybe.

That's something that I'd like her to consider doing,

but, obviously, I'm not going to push her down that road.

But, yeah, it's going to be something that I'd like her to

consider doing if she wants to go down that road in the future.

Listen, I'm so excited and I can't wait to see the flat when it's done.

Thank you. How long is it going to take you?

I think it's probably going to take in the region of about six to eight

weeks. OK, six to eight weeks. Fingers crossed.

Eight to ten grand, depending. Yes.

Good luck with that. Thank you.

So nice to meet you. Thank you, Lucy. Good luck. Thank you.

Now, John is no stranger to the property game.

Over the years, he's managed to build up a good rental portfolio.

And I think that he has done quite well here.

He's bought a spacious flat, close to where he lives,

which has a long lease and it doesn't need too much work.

But will sorting the damp be more problematic and costly than

John anticipates?

And will his budget be blown? Hm!

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

This is Mansfield,

a market town located around 12 miles north of Nottingham.

The area was originally a retreat for royalty

in the 14th and 15th centuries

due to its location within the Sherwood Forest.

Mansfield has been through many changes since then, and nowadays,

it's got great road links, a train station and a large shopping centre.

Just a ten-minute walk from the historic town centre of

Mansfield is the auction lot I'm here to see.

And it's fair to say it's not your average two up, two down.

It's this -

a former health centre, set on half an acre of land

with a guide price of ?125,000.

I'm going to take a look.

The auction catalogue states it's 0.44 of an acre,

so please forgive me for rounding up.

That's the size of an ice hockey rink, if it helps.

So, that seems like a relatively low guide price

for a property of this size.

OK, I can immediately see why that low guide price of ?125,000

has been put on this property.

Someone has had a real good go at this. There's nothing here.

The windows of all been smashed, plasterboard, non-existent.

It's a mess. Absolute mess.

Another reason why that guide price might be

so low is that it's listed and sold with

a claw back, overage clause,

which means that the seller would be entitled to some of the

profits from the developer later on down the line.

That clause could bite you in the budget.

GLASS SHATTERS

It's another reason why you should always read the legal pack.

This building is huge!

Spread over two floors.

There's a maze of examination rooms, reception areas, hallways,

all in all, adding up to a gross internal area of

1,817 square metres.

I may be some time.

The former medical centre has a D1 classification, which applies to

non-residential uses, like churches, public libraries or art galleries.

If you wanted to convert it into something residential or

another usage that doesn't fall within the D1 category, you would

need a change of use permission from the local planning authority.

So, on this type of project, my advice would definitely be

to get expert planning advice before you bid a penny.

I've had a good look round this place now and it is a mess.

I don't think there's much you can recoup from that building,

but the choice is yours. The options are huge.

For me, I've got to total that, start again,

put some really nice flats on.

You've got a great location in the centre of Mansfield.

It could be an amazing development. Car park is in place for you.

Get it turned around, get it looking pretty, get it looking new,

and offer me one of those flats.

On something as massive as this,

even a small error in your calculations could turn out

to be very costly.

So, to get a second opinion, we've called in a local property expert.

Its history is, obviously, a former health centre. I think, if it was

my plot, I would purely and simply

just demolish it and start again.

Have this as a blank canvas

and then explore a wide range of avenues.

The plot does have road access, both to the front and the rear,

so that should help with any residential plans.

But what scale development could we be talking here?

My feeling is that you probably can get 20+ units on here.

It's a sizable plot.

It's half an acre, so there's plenty of scope here.

What sort of budget would you need for such a development?

Cost of development, 20 units plus,

you are looking ?55,000 to ?60,000 per unit.

That entails towards ?2 million worth, overall.

Another factor is the demolition costs,

which will be within the region of ?20,000 to ?30,000,

but also, in addition to that,

there may be asbestos here, so the cost will rise.

So, the cost could be very high, but what about the potential returns?

If someone was to build townhouses and flats,

the townhouses would be within the region of ?120,000.

The flats would be would be within the region of ?85,000.

If somebody was to build here,

the finished project would look within the region of ?3 million!

There's options here.

You could try and redevelop what you've got,

but, for me, my choice would be to completely total it and put

some more, maybe flats, houses... You know, the choice is yours.

So much scope here.

Let's see who has seen the potential when it went to auction.

I'm going to start the bidding on the property at 100,000.

Somebody bid me 105. 105.

110. 150.' 150.

That is blowing the property out of the water. 150, gentleman's bid.

155. Either of you?

55, 60. 170. 170. 75. 80? 80. 85?

200. And five. 205, sir?

205. 210. 215. 220.

225. 240.

240. 245.

250. 55.

No. OK. 250, gentleman's bid on my right.

First time at 250. Second time at 250.

Third and final time. It's your bid.

55. 60, sir.

Yes? 60. 65?

260 with you.

260, first, second, third and final time.

Sold at 260,000.

The successful bid came from a trio of property developers,

Mark, Paul and Chris, just off to the right of our shot.

They paid more than double the 125 grand guide price for this,

their first auction purchase.

We met up back at the former health centre to discuss their options.

Chaps, nice to meet you. Mark, Paul, and Chris. Hi, Dion.

How are you doing? Yeah, doing well at the moment.

Chris, tell us how the trio got together in business.

Well, Paul and myself, our kids went to the same school,

so we met during parents evenings.

And then, Mark here actually developed the barn

that Paul lives in.

So, I got to know Mark through Paul and we came together.

And how's it working out at present for you?

Well, we get on well, but we don't like him.

LAUGHTER Before we went on camera, I could feel that.

I don't think that's necessarily the case.

Probably because I'm the staying force.

Somebody's got to keep their feet on the ground.

And that's where I'm keeping them. You've got the high-vis on.

You're the builder. Yeah, I do the construction side of things.

And, Paul, what's your...third?

What do you bring to the table?

Well, I'm the salesperson in the game,

so a bit of the sales and a bit of the buying side.

So, that's what I get particularly involved with,

amongst other things. And, obviously, I specialise in winding

Mark up as well, which always helps about finishing things quickly.

And it's never quick enough.

This is yours now. You've got it. You know, you outbid everybody.

What are your plans?

You know, there's a lot of glass to refit here. Yeah.

Unfortunately, it entails the removal of the structure

completely from site.

In terms of the plan,

we've got some initial sketch drawings made up

through the architects. We're looking at eight houses

and 26 apartments on-site.

Obviously, subject to planning.

To get this from this lovely,

salubrious place you are in,

what's your budget? How much is it going to cost you?

The total budget won't exceed around 1.9 million, including

the acquisition price.

So, we are pretty confident to that level.

Could you just give us a bit more detail, one of you?

Probably you, Mark. A bit more detail in what's exactly going on

here. You mentioned flats. What kind of flats?

Right, well, predominately, it's separated into...

Because we're in between two streets,

we're going to put the terrace blocks,

which will be in stacked rows of three, we're going to try and get

nine, I think we'll end up probably with eight, facing the church,

which is a nice facade there. And to the rear here,

we're going to have two blocks of flats, which you drive in

and then it will have rear parking and gardens for the amenity.

And, Chris, do you think -

you've obviously done your homework -

that's the best thing to do with the money you're spending

in this area?

HE LAUGHS

Personally, I'd rather go to Barbados, but, you know...

Yeah, it's a good site, centre of town,

new accommodation always sells well in Mansfield, so, yeah. It's good.

It's hopefully going to be good.

Are most of your projects in this area or are they out?

No, no, this is the third project. We've just come slightly out of town as such.

Just hoping Mark gets it right this time, aren't we? Absolutely.

Absolutely, yeah. Yeah. I'll get it right. He provides the comedy.

I'm still waiting. Anyway... LAUGHTER

I'll get my coat. Somebody's got to be serious.

Behind the banter, you are all serious guys and taking on

a job of this size, which involves demolition,

you definitely have to have a serious side.

I think it's just the cost of waste disposal,

the relative problems with demolition, generally.

Size, just the quantity of moving all this structure away.

But, actually, what is in our favour,

it's predominantly a steel frame building.

So, once the cladding and internal stuff is taken away,

it shouldn't be actually that bad to move.

So...I'll go to you, Chris.

What's the cost of getting rid of this huge building, the demolition?

Too much.

We've been quoted for 60,000 to take it out and get rid of everything.

Obviously, with it being a building of the '60s, '70s,

there's probably asbestos in here somewhere.

So, we've got to be careful how that's got rid of.

This property was sold with a claw back and overage.

Tell us a little bit more about that.

It means that the seller has the rights to actually...

The seller to us has rights to take a portion of the uplifting value

once we get planning.

And also, when we sell on in the final stages,

they get a claw back of the profit that we make.

And, obviously, you've put that in the budget as well?

Yeah, and what we're trying to do is negotiate down the terms of

those percentages that they get.

So, we will see.

I'm pretty sure most people would run for the hills

looking at this property.

Despite this being their third project,

they don't seem phased by it at all.

And with three of them bringing something different to the table,

I'm sure in a year's time, when we come back,

it's going to be looking pristine and just how they want it.

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

Coming up in Derbyshire,

a mid-terrace that's a safety disaster.

Some near-death experiences in the space of 20 yards.

That's pretty good going.

And in Mansfield, Nottinghamshire, Mark, Paul and Chris have

major safety issues too.

It's absolutely full of asbestos.

Earlier on in the show, Lucy was in Walthamstow,

north-west London to see a two-bed flat guided at ?220,000.

While it needed a decor change, it seemed someone

had already started stripping the wallpaper,

and with some assistance with the damp.

There are few signs of damp, up there, down there.

One possible cause, well, I know there's a flat roof up there,

so you definitely should get that checked out.

# Number one has gone through the roof

# Number two won't believe it's the truth. #

And John had it checked via a survey before

he bought the property for 280,000.

This was in addition to his portfolio,

and the local developer was confident the damp

was nothing to worry about.

I think they are quite superficial.

I've seen the walls and there doesn't seem to be any outlets where

water is coming in, and the roof might need to be looked at,

but my builder's already said that he'll be able to do that

as part of the refurbishment work that he's doing.

So, hopefully, it's not going to cost too much money.

Fingers crossed, because the minute you mention the word roof,

I'm like, ahh!

You need to check that out as soon as possible. Yes, I know.

Fingers crossed indeed.

Three months on, has the flat roof flattened John's dreams

of getting this property rental ready, or has he lucked out?

Lucky rabbit's foot at the ready.

# I see...

# Shadows of a doubt

# But I'm keeping my fingers crossed. #

Well, it certainly looks much fresher with the lovely new kitchen

and clean decor throughout, but all is not as it seems.

The whole flat's been refurbished, from top to bottom. So...

It was all very simply done, all painted white,

and the living room, the kitchen,

had a new bathroom and both bedrooms were completely redecorated.

New carpets, new flooring.

Er, fortunately, it had double glazing and central heating.

I didn't realise how bad a condition the roof was in,

so I got somebody to have a look at it,

and upon closer inspection of the second bedroom,

we ended up having to take all the ceilings down in both the bedrooms

and the kitchen and put new ceilings up, new installation and a new roof.

The budget went through the roof.

Over the long term, hopefully, I'll definitely get my money back.

An unfortunate pun, all things considered, John.

Can we assume he's pushed through the ceiling

of his ?8,000 to ?10,000 budget, then?

The roof in total cost about ?5,000,

so that was quite a lot of money I hadn't expected to have to pay.

But I had expected to spend something in the region

of about 8,000 to 10,000,

but what with the roof and a few other bits and pieces,

the budget has more or less doubled,

so we have spent something in the region of about 20 to 22,000.

I haven't actually added up all the receipts yet, I'm a bit scared to,

but I will be doing that over the next couple of days.

But I expect they'll total something in the range of about 20 to 22,000.

Well, a 12 grand overspend is not ideal,

but better the budget goes up than the roof comes down.

All those repairs have pushed his timescale from eight weeks

to three months to complete, but the good news is John

has secure tenants - and he didn't have to look very far for them.

My plans for the property are to move the tenants

from downstairs upstairs.

Soon after I first bought the property, I gave them a little knock just to explain what my plans were,

what I was going to do, how long it's going to take and all that sort of thing.

And to apologise for any noise, cos I knew there'd be a lot of that.

I asked if they'd like to move in, because we got on really well

and I felt that they could be pretty good tenants.

And, er... So, yeah, they are moving in

as soon as you've finished filming. Yikes!

Well, we'd better scarper sharpish, then.

With his overspend, John has held off on his planned roof garden,

but is he still pleased with his end result of the flat?

I'm most pleased with everything, really.

It all looks really good, it looks how I expected it to look,

possibly a little bit better, actually.

The standard of finish has been quite good.

I should hope so, for the money I've spent.

There are some things that still need doing.

I need to sort of, like, finish a few things off,

but it shouldn't take more than a day or two.

By then, I think I'll be very happy with all of it.

But will John be pleased

with what two local estate agents have to say?

And will he raise the roof when it comes to valuations?

My first impression of the property is that it's been refurbed

to the sort of standard that I usually see when people

are looking to rent - nice and clean and white walls.

The main selling points to the property are its location.

It's very near to...sort of local transport links,

so for people who work in the city, it would be ideal for them.

And I think it's got a lot of amenities

in this natural area, as well.

I think the layout of the property works really well.

The fact that it's a separate kitchen works really well

for working professional families.

A lot of people do want a big size. Even if they are sharers,

they want to make sure they have same enough sized rooms,

rather than one person having a bigger room and the other one

doesn't have the same, or similar type of room that's the other.

John has spent ?302,000 on buying and renovating this property.

He has already rented it out, but did he get it for the right price?

And will the sales value make it a good long-term investment?

I believe this property can achieve, on the sales market,

anything between ?350,000

to ?400,000, and on the rental market,

I believe this property can achieve anything between

1,275 to 1,300 per calendar month.

For the resale market, I think you're probably looking between ?375,000 and ?400,000.

If you went down the rental route,

you're probably looking at about ?1,300 per calendar month.

Yeah, those are pretty good.

That's kind of what I was hoping for, so I'm quite pleased with that.

It's a case of "Johnny be good" here.

While ?1,300 per calendar month gives him a 5% yield,

a resale value of 400,000 would give him a pre-tax profit of 98 grand.

He plans to keep renting the property in the short term.

Maybe one day it will fall to little Eliza to decide

what to do with it, but has her dad enjoyed the experience?

ELIZA CRIES

I think in spite of all the difficulties,

it's definitely been worthwhile.

I've enjoyed some parts of it, there have been other parts which

have caused me a bit of stress, but I think overall it's been

a good experience and I will more than likely go back

into the auction room again at some point in the future.

Heanor in Derbyshire is a market town, and the name comes from

the old English meaning "place at the high ridge".

So you've probably guessed the problem

with the property, then.

# It's the climb... #

You're right, Miley Cyrus.

While we're only half a mile from the town centre,

I hope you've brought your walking boots.

So, will the property I'm here to see prove

a hill to climb for the person who bought it?

Well, I guess that depends on its condition,

and we'll find that out in a moment.

I am here to see this - it's a three-bedroom mid-terrace,

guide price of 58,000 quid. Let's have a look.

That's a nice little feature, a sort of entrance porch there,

keeps the cold and the noise out

and it's straight into your front room.

You've got the bay window there, which is quite nice.

I mean, it looks a bit tired and dated,

but I've not seen anything I don't particularly like. Apart from that!

Oh, my gosh!

Right, here's my health and safety tip for today.

Glass doors like that were all the rage in the 1960s, the 1970s.

They are a disaster waiting to happen.

If you've got one of those in your house, please get rid of it now,

because it's easy to fall into it, it's not safety glass,

you go in there, it breaks, you fall on it and, you know,

just let your mind run riot and you won't be far wrong.

Get rid of that straightaway.

Through into the rear of the property, where you've got

a classic sort of two-up, two-down terraced property layout.

Um... MARTIN LAUGHS

Water electrics?

What do we think? Mm... Not ideal.

So, here we have a leaky water pipe and lots of cables,

which look very, very old indeed.

Fantastic, that needs to be sorted out straightaway.

Er, but, erm, moving swiftly on... MARTIN WHEEZES AND LAUGHS

Two near-death experiences in the space of 20 yards,

that's pretty good going.

Through into the kitchen, it's a very, very standard layout.

This is an extension at the back,

carries on through there to a separate bathroom and a loo.

It's going to need a bit of work,

it's definitely going to need to some new doors and electrics. Apart from that though, I like it.

# You're an accident...

# Waiting to happen... #

I'm sure I don't have to tell you this,

but water and electricity do not mix.

After you have addressed the immediate dangers,

a new bathroom and kitchen would not go amiss.

Now, judging by the hazards downstairs,

I'd better tread lightly upstairs.

Ooh.

Well, that's nice. You know, so many modern houses don't have

a nice-sized landing - and that's exactly what you've got here.

Bedroom's off it, but it's just nice to have that little bit of space.

It just gives...an open feel upstairs, which is really good.

The bedrooms are a pretty decent size - three bedrooms, of course.

This is the biggest one.

In here, though, the first thing I noticed, the floors. Hm.

Something here. Feel a bit...

Well, you can sense something as you walk around,

in terms of some level changes,

so that immediately starts some bells ringing.

Is there any subsidence in this property?

We are in an area of mining, so there is a possibility.

That can easily be resolved. You need a mining survey,

that will tell you whether there was a mine shaft within 20 metres

of the property that could be causing a problem.

I don't see any cracks, it could just be settlement to the floor,

I don't know, but it definitely needs investigating.

Well, there is certainly plenty of space up here,

but it is worth getting the mining report and a structural survey,

just in case you end up having the unwanted space

of an abandoned coal mine for a basement.

There is a lot of space outside, too.

It's so easy when you're looking at auction properties to get

wrapped up in the property itself and forget some of the really

nice little bonuses that you occasionally have.

In this case, a really nice garden to the rear of the property.

And as you can see, it stretches back...

oh, I don't know, maybe 100 feet or so from the house?

It's thin, but this could be absolutely beautiful,

and as an additional bonus, lovely views over the hills down there.

So, yeah... Great. Really great.

Time for some views of a different kind -

those of an agent from the auction house who sold this property.

What does he make of this house, guided at ?58,000?

I've had a quick look around the property,

and my first thoughts are it does need some upgrading and improvement.

I think there's evidence of some damp and I would say the

electrical installation also needs to be upgraded.

The bathroom at the moment is currently downstairs.

Some people don't like ground-floor bathrooms.

It would be an opportunity maybe to bring it upstairs,

make it a two-bedroom and bring the bathroom to the first floor.

I think bringing the bathroom upstairs would certainly make the property more saleable.

I don't think it would detract from the value,

it certainly wouldn't add any, but I think it would enhance

its prospects on the sales market.

If I were looking to simply rent this property out, I would possibly

leave the bathroom downstairs, as it wouldn't increase your rent at all.

But value is what we're after,

so let's compare sales values for a three and a two-bed.

As a three-bedroom property, I would look to put this property,

on the current market, for sale at ?90,000.

If it were reduced to a two-bedroom property and bringing the bathroom upstairs,

I would still look to market the property at ?90,000.

However, I do think that would make it more saleable.

And for rental?

I would say that if the property were left as a three-bedroom

and offered on the rental market, it would achieve

a rent of somewhere in the region of ?600 per calendar month.

I think if the property were reduced to a two-bedroom and offered

to the rental market, the rent would be reduced slightly

and it would achieve somewhere in the region of ?550 per calendar month.

Well, a few things to sort out with the property.

First and foremost, those health and safety issues

of the glass in the door and the electrics

and the water in far too close proximity.

Definitely need a mining survey, but apart from that,

this is a good, solid house

that I think could do very well for somebody.

Let's find out who that was when it went under the hammer.

58 on the guide then, to put it into the bidding.

58? 55 to start me?

54?

55.

56.

56, 57,

58, 59.

At 59, 60,000.

At 60. 61?

60.5, at 60.5. 61.

500. 62.

At 62,500 in two places, 63 on the front row.

63.5, 64.

64.5. 65,000.

65.5, 66.

66.5. 67.

And five.

67. Eight?

At 67,500, your bid.

For the first time, 68, 68,500.

68.5.

Once, twice, third chance.

You've bought it, well done. 68,500, thank you.

Very happy to get the house for 68,500 was Sarah,

who works in IT procurement.

She was cheered on by her mum, Anne.

# That's Sarah... #

Just in case you were in any doubts as to who she was.

This is Sarah's second property.

I met her to find out more.

Sarah, lovely to meet you. And you. Congratulations. Thank you.

Tell me why you wanted to buy this place.

Well, it's in the area I wanted it to be.

I've got a property already, which has gone to

a housing association in Derby as four lettable rooms.

So it's not a single-family let, it is four lettable rooms.

So this is... I'm following the same formula,

so I asked them, er,

if they wanted another property, where would it be?

They said Heanor, and this is where I started my search.

So, you went to the housing association and said, "If I was to buy a house,

"where would you like it to be and what would you like it to be?"

That's right... There's no guarantee from them at that point that they would rent it from you.

No, no, that was the original one that they've taken, so this was...

I've got an established relationship with them and I said, "If I

"brought you another one now, where would you like it to be?"

Phenomenal. They didn't guarantee that they would rent it off you,

but obviously things are stacked in your favour. Well, absolutely.

They've already come to spec out what they want,

more features in terms of fire safety than a standard,

a standard let, so there's more work to do here

than there would be in a single dwelling let.

But it's, it's a good strategy.

# Take care of your homework, fella

# If you don't, somebody will

# Oh, yeah... #

Wow, talk about doing your homework.

Sarah doesn't have to manage the property, and she's received

a guaranteed rent of ?650 per calendar month.

But she certainly needs to brush up on plenty of regulation

to make it legal and above board.

Actually, this afternoon, somebody will come in who's recommended

by the local water authority to look at the, er, the leak.

There is a leak from the main connection,

so that will be looked at this afternoon, and then the plumber

for the internal water coming down the wall,

he's going to come and have a look at that this afternoon.

And the floors?

Er, I hadn't actually realised the floors!

SARAH LAUGHS

So they need to be looked at.

There needs to be a heat detector in the kitchen, a smoke detector

in the hall, a smoke detector in what will be a corridor here,

and one of the first floor landing, and they all need to be interlinked.

So that's the main piece of work making this into

a habitable bedroom.

The kitchen will stay pretty much as it is and then the bathroom,

it will require a shower, but also,

the bedroom doors need to be solid wood doors.

They don't need to be fire doors, but they need to be solid wood,

and also the kitchen door needs to be a fire door, as well.

So, by approaching a council in the first instance and being

referred on to some housing associations

has allowed Sarah to forge herself a neat little business model.

She has certainly found an ideal property to convert into

a four-bed and she'll use the team of builders and tradespeople

that worked on her previous project.

She's hoping it will all take a timescale of three months.

And what budget have you got?

I'm looking around 6,000. Six? Yes.

Including doing all those fire things and upgrading it? Yes, yes.

I'm hopeful. We'll see, won't we?

SARAH LAUGHS

Well, listen, congratulations. Thank you very much. Very well done. Thank you, thank you.

Well, it's so obvious when you hear someone like Sarah talking,

the route that makes a lot of sense when it comes to some types

of property development.

Talk to the person who's going to be the end user. What do you want?

And then do what they want. It's brilliant.

How will she get on sorting it out?

Will it turn out to be that amazing cash cow that she hopes?

You can find out later in the show.

Well, we still have to see how two properties

are going to turn out, so don't go anywhere.

Yes, will our remaining renovators be quids in?

Or will they wish they hadn't even started bidding? Let's find out.

Time for the ?250,000 question

from the lot I saw earlier in Mansfield.

What would you do with 260 grand? A Mediterranean villa?

A small yacht? Or the biggest party for you and your mates?

Sold at 260,000.

Well, Mark, Paul and Chris, who is just out of shot here,

bought a former health centre that was not easy on the eye.

# Doctor, my eye

# Tell me what is wrong

# Just say if it's too late for me. #

Worse was what you couldn't see -

the almost half an acre site

was listed and also had a claw-back clause that allowed

the seller to receive some of the profits from future sales.

But the trio could see real potential here.

In terms of the plan, we've got some initial sketch drawings made up

through the architects.

We're looking at, erm, eight houses and 26 apartments on site.

Obviously, subject to planning. To get this from this lovely... Mm.

..salubrious place we're in... Mm. What's your budget?

How much is it going to cost you?

The total budget won't exceed around 1.9 million,

including the acquisition price.

Demolish and rebuild was the plan, so, 16 months later,

do we have eight houses and 26 flats?

# I ain't felt nothing like this, like this

# I ain't felt nothing like this, like this... #

Well, not entirely what I was expecting,

but I must say, I really...

# Like this, like this! #

From one side of the site, there are eight three-bed homes,

almost complete, apart from decoration.

Built across two storeys, their layouts are identical,

with kitchen, downstairs loo

and a large lounge with patio doors leading out to the garden.

The three bedrooms are also spacious and the bathrooms are finished

to a very high standard.

Around the side of the site are seven townhouses,

also with three bedrooms but built over three storeys.

With the exterior, the boys have followed their yellow brick code,

so to speak.

A lovely brick finish that meets the listed status of the area.

These townhouses should be finished in around two months,

meaning that despite the change of plan,

this site is running to schedule.

So, why did the trio change their plans?

With Chris on holiday, Mark and Paul can tell us.

On reflection, on more research with the local agents,

it became apparent there was a need for new houses.

Looking deeper into that, it was the three-bedroom new properties

that were high on the list of agents, etc.

So, that swayed us into building three-bedroom houses.

We had the space.

The problem was we had actually gone in for planning permission

for 22 apartments when we decided against that particular plan.

So, we then had to go back in for planning permission to supersede

the 22 apartments for the seven houses at the back,

which is phase two.

The process normally takes sort of three months in total

but it took four and a half, five months in total

from the beginning to the end.

So, it was more difficult than we anticipated, but eventually,

we got there.

Demolition was always going to be difficult.

So, on the demolition, we employed an excellent contractor,

who was first class.

It was a very challenging project.

It was a '60s CLASP building, which by nature of the animal

is absolutely full of asbestos.

So, specialists were brought in to remediate the site.

Once you've got the asbestos out of the way,

then dismantling the structure is relatively straightforward.

The biggest challenge is separating the debris inside the building.

Once you've done that process, crushing the hard-core

and the rest of the procedures is relatively straightforward.

The demolition issues, delays with planning and the change in the build

could spell disaster for the budget.

They hope to bring the whole thing in at 1.9 million,

including the purchase price, so how have they done so far?

Clearly, we've now gone into two phases of eight and seven houses.

We're looking... We've got a very good handle and we're on budget.

We're looking at about 1.35 million.

We're heading quite tightly towards that figure.

Clearly, we're not finished yet, but we believe that 1.35 million

will be the spend budget.

Despite all the difficulties,

the boys have kept to the time and kept a sensible budget.

But will they impress two local estate agents?

Let's start with the agent who remembers it

when it was just a disused health centre.

I'm very impressed with the transformation so far.

It's beyond what I conceived initially,

so currently as I stand now, we've got a fantastic site.

I think the design is what modern-day living requires.

Obviously, in a central location,

they've made the most of the space that they've got

and it gives somebody everything they actually need

in a three-bed townhouse.

So, time for the valuations.

Phase one, the eight two-storey houses, and phase two,

the seven yet-to-be-completed three-storey townhouses.

What could they each sell for?

If this property was put on the open market,

I think it could achieve around ?135,000.

I haven't seen phase two,

I haven't been in them or studied the plans,

but because they're bigger,

I think they could achieve in excess of ?150,000.

With regards to the two-storey three-bedroom townhouses,

my view is you'd be pitching this on the open market

within the region of ?130-140,000.

With regards to the three-storey townhouse,

my view would be you'd command a figure

within the region of ?150-160,000.

Very positive.

the phase one figures were in line with where we expected them to be.

Phase two, slightly higher than we thought, so that would be good.

But, overall, really positive.

Yeah, definitely. Good project.

A good project indeed.

The highest values of the properties could mean

a potential sales income of ?2.24 million.

Once the 1.35 million spend has been deducted,

that leaves a potential pre-tax profit of ?890,000.

And the trio have negotiated that claw-back clause with the

original seller that both sides are very happy with.

Paul, Mark and Chris have created 15 homes from a dilapidated site,

all on schedule and on budget.

And they've had a good time while doing it.

Absolutely, we've got other projects in line,

quite good ones in front.

So, yeah, it's good.

It's not just about building,

there's quite a bit of skylarking, isn't there?

Well... We have fun doing it. Absolutely.

MARTIN: Back now to the hilltop market town of Heanor in Derbyshire

and the three-bed property that I saw earlier which had an unwanted

indoor water feature, alongside some other issues.

Water and electrics, what do we think?

Not ideal.

# Danger! Danger! #

But Sarah, who bought the property for 68,500,

had a brilliant idea for this place.

I've got a property already

which has gone to a housing association in Derby

as four lettable rooms.

So, it's not a single-family let, it is four lettable rooms.

So, I'm following the same formula and I said, "If I brought you

"another one now, where would you like it to be?"

And the answer was Heanor.

Three months on, does Sarah have four rooms

for the housing association?

# One, two, gimme 1-2-3-4! #

The answer is oh, yes, she does.

Turning the front living room into a bedroom maximises the

lettable space in the house.

The other bedrooms have been repainted and re-carpeted.

While the kitchen is much the same, the bathroom does have a new shower.

Due to the size of the property and the number of occupants,

it's not subject to mandatory House of Multiple Occupancy rules,

but Sarah has had to comply with the housing association's spec.

For the housing association,

the sort of things I've had to bear in mind

are the interlinking heat detector in the kitchen

and the smoke detectors throughout the halls.

As you can see in the kitchen, there's a fire blanket.

They also wanted white goods in there.

So, another thing I had to think about was the thumb turns

on the external doors.

So, these are necessary in the event of a fire.

You can get out of the property without the need for keys.

So, that's a necessary for a house of this type.

And she's found a novel solution to the damp issue.

The damp situation probably caused me the greatest stress

throughout the whole project.

So, as you saw last time, it was very moist on the dining room wall.

The plumber has taken away the pipes and the issue has gone.

It's just that for months and months, water has been coming down

that wall and when the builders put in their new frame

for the fire door in the kitchen,

they said that the wall was sopping wet.

So, my dad offered to tile it for me, so it does look a little strange

having towels on the dining room wall. But we're just concerned

over the long-term that it will be a constant needing to paint the wall.

Sarah had the electrics removed by a qualified electrician

and a dehumidifier and all sorts of paint

and stain removers were tried, so hopefully the tiles

will be a resolution to the damp.

Similarly, Sarah has ensured safety by placing a plastic safety film

over the glass doors,

which is considerably cheaper than replacing them.

Out back, the garden has been cleared up and is now

low-maintenance for tenants.

Unsurprisingly, Sarah, a procurement manager by day,

has brought this in on her six-grand budget

and her three-month timescale.

She's had plenty of tradespeople to help out, and her family too.

The garden is something I'm particularly proud of.

I worked hard on that along with my partner and my parents.

You don't do this on your own.

My partner has been a great support.

He's been giving technical advice

and I've been borrowing all his tools.

Mum's been stripping wallpaper and helping me to keep going at times

when I wanted to give up.

Dad's been wonderful and it's fantastic that I remember

as a kid, as a five-year-old, following him around in the garage

and handing him a different type of screwdriver he asked for.

So, on this project, it's been wonderful to work with him on that

and it really brought that memory home.

The housing association now have four lettable rooms

for the local community.

But what will two local estate agents think?

Let's start with the agent who saw it first time.

Coming back to the property, my thoughts are that the makeover

that's been done is OK.

It could have been better, and I think it's actually

aimed at the market that the property is intended for.

I would say the downsides of the property, now it's complete,

are if it were ever to be used again as a family home,

the living accommodation is relatively small.

It really has been engineered now to provide maximum letting capacity.

Looking at the property for the first time,

it appears the owner has spent a very limited budget

carrying out essential works, in their mind, to complete the project.

On the positive side,

the work the owner has done has made it a clean, fresh property.

The double-glazing, the central heating, the decor

just means someone can move in and make the most of it.

Sarah's budget was six grand and that's what she spent on the work.

Add that to her ?68,500 purchase price,

brings her total to ?74,500.

The local housing association are paying her ?7,800 a year

for the four rooms, which gives her just over a 10% yield.

Letting to the housing association gives her guaranteed income

and covers her for the periods when the rooms could be vacant.

But has she chosen the most profitable route?

If she were to let this as individual rooms, it would be

round about ?60 per week per room,

which grosses up to nearly ?1,000 a month.

However, there would be far higher costs involved,

they would need to include all the utility bills, council tax.

There's going to be a higher unoccupancy rate

and far higher management rates,

so it would probably net down to more like ?600-700 a calendar month.

In the current rental market, in its current condition,

I would anticipate lets as a four-room HMO, this property

would generate somewhere in the region of ?600-650

per calendar month.

I think that's what I would expect.

The 650 is being managed by someone else

and the 1,000, it would be on a per room, per week basis.

But I then would be responsible for the bills,

which I'm not, in this instance.

So, yes, they are fair, accurate evaluations.

So, that ?1,000 a month on the open market might seem attractive

at first with a higher yield, but when you take off the costs

mentioned by the agent and having to manage the property

and keep occupation levels at full,

Sarah has made a deal she's happy with.

So, what's next?

I've already spoken to the housing association

of where they'd like to go next.

There's certainly another one in me, and from a personal perspective,

I would like to buy a property to live in.

That would be the dream,

to get something like this but on a bigger scale to actually live in.

So, watch this space!

Well, we hope you've enjoyed today's stories and perhaps learnt

some lessons along the way.

Yes, and hopefully, we've given you a bit of inspiration

to get involved in property developing yourself.

Or...perhaps we've put you off for good.

Join us next time for more Homes Under The Hammer.

Goodbye. Goodbye.

MUSIC: Beyond The Sea