Episode 61 Homes Under the Hammer

Hello. There are many different ways to go about property developing.

There isn't a one size fits all approach.

Yeah. In the end, though, it's up to you, but if you do it right,

you could do very well out of it.

Yes, and you might find a bargain down at your local property auction.

Yes, how about buying your next home under the hammer?

Well, the variety of choices can be overwhelming

in the world of property development.

Yes, sometimes it's decisions, decisions, decisions,

and the stakes are high.

Yes, but did today's buyers choose wisely?

Let's find out.

I'm in Worcestershire to see a charming cottage

with some unwanted guests.

Listen.

HE CHOMPS

There are more strange noises at this house in Croydon.

Have a little look over there.

That's the railway line.

And I can hear the sound of a wallpaper stripper in this four-storey house

in Birmingham.

It's everywhere. There's woodchip wallpaper everywhere.

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.

Yours, sir.

This is the hamlet of Holy Cross Green in Worcestershire,

and isn't it lovely?

It's one of the five hamlets that make up the village of Clent.

There are two churches of note in the parish - St Leonard's,

where there has been a church since 1199 in the centre of the village,

and St Wulstan and the Oswald's,

which was a former malthouse before being offered to the Catholic Church

in 1926.

Well, commuter distance from Birmingham,

with easy access to the motorway network,

is this really charming little village, and a property that I think, mm, yep,

you're going to love. It is a two-bedroomed mid-terraced.

Let's call it a cottage.

£110,000 was the guide price.

Let's have a look.

HE CHUCKLES

So, straight off the road and the pavement into your front room.

So you would definitely want, like they've got here,

a nice thick curtain to keep out the noise and the cold.

But you step into this room and the first thing you notice is that.

Wow!

That is amazing.

What a feature that fireplace is.

Truly outstanding.

It sort of sets the scene, though, for a house that, even at first glance,

is a bit of a time warp, isn't it?

Look at the wooden bits and pieces around the place,

look at the carpets, look at the walls and the painting,

and yeah, wow!

Step through here, you've got stairs up to the bedrooms, into the rear

part of the house, where the kitchen is.

And again,

yeah, a Belfast sink - you could have predicted that.

Wow!

Another fireplace, not in as nice a condition as the one in there, but...

what a lovely feature, again.

The problem is going to be how to retain the charm of this place while

bringing in stuff that you really need in a modern house,

such as...damp-proof course, such as modern electrics, such as...

..central heating.

It's going to be a challenge. You know what?

It's going to be worth it. It's a charming little house.

It's going to need some thought, though.

My first thought is,

you'll need to dig out and refloor with a full damp-proof course here,

as it's been tiled straight on top of the earth,

which is typical of Victorian homes, especially in the kitchen and pantry.

So, upstairs, and to the front of the property,

a really nice-sized double bedroom.

Towards the back of the property, a bit of a compromise.

You've got a bathroom and loo, which is great.

It's upstairs, which is definitely good news, but it's been created,

I think, from a room which would've been the same size as the one at the

front, so the second bedroom, actually, is quite small.

When I say "quite small", it's really small.

You could just about get a single bed in here, so a child's bedroom,

perhaps. Intrinsically, you could probably live with that.

What's more serious...

..is that.

Look very carefully, or more importantly, listen.

HE CHOMPS

That is the sound of chomping.

These floorboards...

..have got woodworm. That's the telltale signs, all those little holes.

So, that definitely needs to be sorted out

cos they are hungry little devils.

You could easily get full up with all the problems in this house,

so whoever bought this would really need to make sure they don't bite off

more than they can chew.

# Get your teeth round this, open wide

# Eyes bigger than your belly tonight

# So put 'em up, put 'em up, take a bite... #

Let's hope the outside will be a little easier to stomach.

It doesn't look too bad, but it does appear to be shared access,

and that's something worth checking out.

Charming though this house is, it's not without its issues,

and even at that guide price of 110,000,

it could quickly become a money pit.

What does a local estate agent think,

and how does she think it could do on the local market?

The market is very good at the moment.

The supply is down, demand is high.

So therefore, any property that's coming onto the local market

should be, you know, getting a good price, especially in this location.

If I was buying this property,

I would try and find somehow to keep that original stove.

I think that is fascinating,

but if they want a more modern, contemporary look,

then you could actually put sort of nice wall radiators,

make more of the space,

and putting in fitted wardrobes, again,

gains you more space upstairs.

Assuming this work is carried out,

the agent thinks this could net a rental figure of between

£695 and £725

per calendar month, but what about the resale value?

I think an owner could expect to receive between £185,000 and £195,000

in this current market.

One of the great things you occasionally find when you're looking round

houses is some artefacts from years gone by.

And interestingly enough, the whole of the front page is largely about

things for sale by auction.

Some things never change, eh?

It's a charming house.

I'm sure somebody would have fallen in love with it

when it went under the hammer.

Two bids on the internet. That'll be fun. Lot 75 in Clent.

Start me at 90. An opening bid of 90, please.

A nice looking house. Pardon?

Well, we've got 110 straight on the phone.

Thank you, Stewart. 112 and a half, anyone?

110 I'm bid. 12 and a half.

The lady's bid here on my left. 115 anywhere?

After some initial bidding in the room, on the phone, and the internet,

we rejoin at 145,000.

I have 145 on the internet.

146, madam.

146. Right, I have.

Now 147, please.

No? OK, I'm going to call it.

The first time at 146.

Are you all done? The lady's bid, in the room.

Yours, madam. Well done. Thank you very much.

'Pleased-looking purchasers Anna and husband Tim got the property for

'146,000.

'Anna, who works for the Careers Service,

'met me back at their acquisition to tell me what their plans were.'

-Anna, lovely to meet you.

-Nice to meet you.

-Congratulations!

-Thank you.

A charming little place, actually. Tell me why you wanted to buy it.

We are looking for something for our retirement, really.

So, do you currently have a house?

We had a house.

We sold it to the government, because of HS2.

-Oh, did you?

-Oh, yes.

-Compulsory purchase of the land?

It wasn't compulsory but it was purchased by the government, yes.

Oh, wow! That must have been a bit traumatic.

-Or did they give you loads of money so you don't care?

-Oh, no, we lost loads.

-Did you?

-Yes. Yeah, it took us five and a half years.

Ultimately, we took the money,

and we decided to recoup by doing a couple of cottages here.

Kind of a bit of a shock.

Projects like HS2, or Crossrail, can benefit commuters and the economy,

but of course, we should never forget that there is a downside for some.

Being uprooted is costly emotionally as well as financially,

but Tim and Anna are regrouping.

We're thinking about moving to France.

-OK.

-And we wanted to buy somewhere here.

And we saw the house next door.

-Oh.

-We've offered on it and it's going through.

Then we saw this was coming up at auction, so we thought, "Well,

"if we're going to have two cottages and keep them as lets for most of

"the time, they might as well be beside each other."

-How funny.

-Yeah. So that was that.

Wow! Had you seen it?

-I hadn't seen it. He had.

-Oh, right, OK.

SHE LAUGHS

-So how did that feel?

-I got a bit of a shock. I thought there was one fireplace, but there's two.

-I know. Well, that's a good shock, isn't it?

-Er...

-it could be. Bit more difficult...

-Why?

-I want to take them down.

-You want to what?

-I want to get rid of the chimneybreast.

No, you don't, what?

-Why not?

-Why, just to open it up downstairs?

Yes, huge difference.

You're looking at, really, five feet.

You're looking at a lot of space upstairs and you get two double bedrooms.

Well, as much as I'd be sad to see the period features go,

Anna has got a point.

By removing the chimneybreasts on both floors,

she and Tim would gain extra living space downstairs, and also upstairs,

as they plan to create a Jack and Jill bathroom with separate access

from what would be two double bedrooms.

This will be very costly, though,

and they've had estimates that would bring the total budget to around

30,000, but as they are renting out,

this wouldn't necessarily equate to more income,

so I was wondering if it's worth the bother.

But long term it might be worth more.

Long term, in terms of sale, I think it's probably worth doing, yeah.

Right, OK. And what's the timescale for all this?

-Three months.

-Right, and the same timescale for next door?

Next door will be longer because we haven't exchanged yet next door.

Oh, OK. Because, presumably, it would be a lot cheaper

-to get somebody doing both.

-In to do both, quite.

And we can use certain things there that we can then put into here,

like the kitchen, we can move about a bit.

-All very exciting.

-Oh, it is. Yes, it is, actually.

-And it's exciting because my husband's from this area originally.

-OK.

-I'm not.

And it's a lovely area, a very nice area.

-Which you're going to leave and go to France.

-Yeah.

THEY LAUGH

Quite. Of course.

What kind of life are you going to live in France?

Is it the idyllic rural retired life in France life?

-I don't know, do something else.

-Well, it's all change, then.

Yeah, and we've got hobbies, odd...

-Like?

-I stuff animals.

You stuff animals?

Oh, that will make friends with loads of people watching, yeah!

-Yeah.

-You stuff them when they're dead, presumably.

Oh, preferably, and not ones that are past their sell-by date!

What kind of animals do you stuff?

Squirrels mostly, and things like that, at present.

You stuff squirrels?

Well, I'm just a beginner, you see.

Wow, I wasn't expecting that one, OK.

-I bet you weren't!

-Gosh, right, OK.

So, are we going to leave a few stuffed things around,

-just to give it a homely feel?

-Oh, yes, I like that, yes,

I like them to be somewhere where they shouldn't be.

-Right.

-I don't know, along a skirting or something,

-or the top of a curtain.

-Right... A stuffed squirrel?

-Yeah, looking down.

-Oh.

Well, listen, congratulations and good luck with it, and also your time in France.

-Thank you very much.

-Look forward to seeing how you get on.

-THEY LAUGH

# So if it's up to me

# Gonna keep you forever... #

Well, I can't formalde-hide my surprise at the interior decor choices,

but I've got a feeling not much is going to be preserved here.

So, will the chimney be here when we return?

I guess it's all going to come down to the economics.

You can find out what happens later in the show.

We're off south now to South Croydon,

which is one of the areas really benefiting from regeneration.

It's very popular with first-time buyers and renters.

The property Lucy is looking at is in a good location near all the

amenities you could want.

This area is definitely on the up, and so are the prices.

Well, if you want to be in the catchment area of your local school,

well, this is a great location, as the school is literally right there,

and directly opposite is the property I'm here to see.

Now, it's a two bedroom mid-terrace

and it had a guide price of £230,000 plus.

I wonder if I'll be giving it top marks.

So, straight into the lounge and oops, straight into the old fuse box there.

That needs to go.

It's in a rather awkward position.

Not a bad space, and actually, for an auction property,

it doesn't look like it's in really bad condition at all,

although you would need to replace these windows, I think,

and maybe just freshen the place up.

And it is awash with magnolia.

Now, I'm not down on magnolia because I know lots of people like magnolia,

but I just think there are so many other tones of paint on the market

at the moment that may just make the property feel a lot more contemporary.

So you've got a second reception room. Again, it's a great space,

it just needs modernising and freshening up.

You've got a galley kitchen, but that will need to be replaced, too,

but a lovely bright window, reflecting loads of light in there.

And as I suspected with this property, downstairs bathroom,

although it looks to be in quite good condition.

So, quite a few things to contend with with this property,

but I'm going to check out the garden.

Now, out the back you've got your garden.

Always a bonus, I like to say, but it will need a big old tidy up,

as you can see. But that is not what I'm out here to show you.

Come around here a little bit more.

Have a little look over there.

That's the railway line.

It's good, though. The train station's close by,

which means you can walk there in less than ten minutes,

but these trains rattling past regularly, well,

I don't think it's going to be the most peaceful garden to relax in, do you?

And that was a slow train trundling by.

They can get a lot quicker than that.

# Runaway train

# Running right... #

With the thick canopy of trees,

the noise from the trains is slightly deadened,

but the price to pay is a dark and gloomy garden.

It's also worth noting that the back area, where the bathroom is,

needs quite a bit of work.

Now, back inside...

So upstairs in this house you've got two really nice size bedrooms,

which is fantastic.

And then being up here now, you can see

there probably would be just enough room to

bring the bathroom upstairs.

But now something I'm going to tell you next is because I've had so much

experience of doing properties like this on Homes Under The Hammer.

In order to do that,

you've got to turn these stairs around to create a corridor area,

so it means reducing the size of the bedroom and it's also quite a costly

exercise. So I think, first of all,

speak to your local agents in the area and see what they advise,

and also it might be worth chatting to the neighbours

to see if any of them have done that.

On that note,

it seemed like a good time to invite along a local estate agent to ask

his opinion on the subject.

It's a good-sized property.

These properties are typical,

where you have the bathroom at the back of the kitchen.

There's not really much that can be done with the layout there,

I don't think, without losing half of the bedroom.

Keeping that the same, the properties are what they are and they are very good.

Compared to some auction properties we've seen,

this isn't actually that bad.

Money needs to be spent in the right areas, but, in general,

I think it's a good purchase.

This house is guided at £230,000 plus,

but given the required refurbishment,

how much could be worth?

This property would sell for approximately £335,000.

And if it was placed on the rental market?

This property would rent for approximately

£1,300 per calendar month.

No, it's not the quietest spot,

but it's great for commuter links

and it shouldn't take too much work to turn this terrace around.

So who wanted to take it on?

Let's head to auction and find out.

Right, two bedroom house in Croydon.

Who would like to kick off, 240?

Thank you, 240, standing up, 240.

245 anywhere?

After a hesitant start at the auction,

we return to the bidding at £269,000.

269.

271.

273.

275.

275 elsewhere?

If not, 273, first time,

second time,

third and last time. If you're all done...?

Sold, 273.

It was Raff and Julie who made that bid on this,

their first auction property purchase.

This is a new business venture for them,

as the couple and their daughters, Alicia and Chloe,

recently returned to the UK after living in Spain for two years.

# Goodbye, Barcelona

# So glad I've been shown ya... #

Guys, congratulations, I'm so happy for you.

-Thank you.

-Did you expect to win the bid on auction day?

Not really, no, no.

-We've been going to auctions for... fourth auction...

-Yes.

..and we've never been successful on anything.

So I think we were just shocked to win a bid.

When you were there, what happened when you actually got it

-and the hammer went down?

-Well, I wasn't paying attention.

I was looking actually down at the catalogue and Raff said to me,

"Come on, that's us, we've got it." I went, "Oooh!"

So I was a bit shocked, to be fair.

You've obviously not been in a desperate hurry to get anything

if you've just been going along to the odd auction.

What's the big plan of yours

and why did you decide now was the right time?

We've been away for a while, with work,

we were in Singapore for a while and then in Spain for a while.

We came back to the UK at the end of last year,

and neither of us are working at the moment,

so the plan was to keep busy with something in the property space.

So, we've been doing our research

and we're looking for this to be the first of many projects, hopefully.

So, what were you doing in Spain?

Not a lot really. Enjoying ourselves.

Just relaxing, taking two years out.

-Yeah.

-Yeah.

-Our daughter was in school there as well.

So we just kind of chilled out while she was finishing her education.

So you chilled out for two years?

-We did.

-We did.

-How fabulous is that?

So what were you doing prior to that?

I was working, well, we were all in Singapore.

My job took me to Singapore. I was in investment banking.

So quite a stressful job, I can imagine.

-Yeah. Glad to be out of it.

-Really?

-Yeah.

And is it really nice for you now just to catch your breath

and do something completely different?

Yeah, we've taken our time, haven't we?

As Raff said, we've been to four auctions now

and we did bid on quite a few properties. This is our first buy.

It has been nice to have the time, you know, to find something

that we were really interested in and really wanted to pursue.

-We wanted to do it right.

-Yeah.

-You know, we don't have to rush.

So we've been patient, looking for the right thing, not overbidding,

just waiting for the right opportunity,

and I think we may have got it.

So, after years of globetrotting thanks to Raff's work,

the family are now putting down roots in England.

But there is a good reason why Croydon has been selected

as the location for their first property venture.

We used to live just across the road.

-Really?

-Across the main road, yeah. Our first property, a little flat.

So that's perfect. And I always say to people,

if you know the market round here, you're certainly ahead of the game.

Although we've been away for a number of years,

I was born in Croydon, always lived more or less in the area,

-so we know it pretty well.

-Yeah.

-Yeah.

So, what's your plan for this house?

Good question. We're looking to completely refurbish the property -

new kitchen, new bathroom, new flooring,

new windows and just freshen the whole place up.

-And the exterior as well needs some love and care.

-Yeah, yeah.

Now, one of the first questions I need to ask you about that,

how you're going to add value to this property,

-would be the bathroom being downstairs.

-Mm-hm.

Is there any chance you might think about moving it upstairs?

And, of course, that does mean turning the stairs

and making some big alterations to the property.

We don't think so. We've noticed that,

particularly if you go out in the garden,

you can see that along the row of the houses,

most of the bathrooms are in the same position as this one

so it doesn't really make economical sense to move it upstairs

and start playing around with stairs, etc.

So we'll probably leave it where it is.

But we might have to take it down and rebuild it.

Now, you've got a train track, right at the end of your garden.

Is that going to put potential buyers off?

It's not too noisy, but you can definitely hear it.

We noticed, along this road in particular,

and on this side of the road,

that there's been quite a few houses sold.

So we don't think that that's a problem.

To me it just shows there's a train station nearby.

-Yes.

-Because it's a great commuter...

-I like the spin on it.

Yes, there might be a train track there,

-but it's because there's a station nearby!

-But you can get to work!

-Yeah, exactly.

Good work, Raff.

A positive spin goes a long way in this game.

And if everything goes to plan, the couple aim to sell on this property.

So it's £273,000 already committed to this project.

How much more do they plan to spend?

Well, erm...

Original budget was around 17,000-20,000.

Having re-inspected the bathroom space,

we probably need to do some more meaningful work there.

So I guess we're looking at a revised budget of around 25,000.

OK. And what's your timescale?

Probably four to five months, ideally,

depending on the builder we elect to work on the project

and their availability as well. But I guess four to five months.

Also, because it's winter, a lot of exterior work needs to be done

so we have to factor in the weather.

What do the kids think of Mum and Dad becoming property developers?

You know, once upon a time, stressed-out banker,

and now here you are, choosing wallpaper and paint.

Probably a lot more stressed out in a few weeks' time.

-I'm not sure...

-Yes!

It's definitely not an easier option, let me tell you that.

No, exactly. Yeah, they're curious to see what's going on.

We brought the eldest. She was visiting the other day.

We brought her to the house. She had all sorts of plans for it as well.

-So, yeah, they're curious.

-Yeah.

Guys, congratulations.

I'm really excited for you, good luck with the refurb.

-Can't wait to see it.

-Thank you very much.

-Thank you. Lovely to meet you both.

-Thank you.

-Thank you.

From Spain to the UK, and now it's time for Raff and Julie to embark on

their new property-developing career.

Now, it might not be such good weather here in South Croydon,

but will the sun be shining on their debut project?

Still to come, I've got some reservations about the additions

to this property in Birmingham.

I've seen some extensions,

and that's not one.

And back in Croydon, Julie has a familiar tale of woe.

We actually went over the budget.

Back now to the lovely hamlet of Holy Cross Green in Worcestershire,

where I looked around this charming two-bed cottage

that was guided at 110,000.

It may have been charming, but inside had its fair share of issues.

There were signs of damp, woodworm and no central heating.

But there was still plenty to like about this period property.

The first thing you notice is that.

Wow!

That is amazing.

What a feature that fireplace is.

Truly outstanding. Erm...

It sort of sets the scene, though, for a house that,

even at first glance, is a bit of a time warp, isn't it?

You know me, I do love an original feature or two,

but this place was in desperate need of updating.

But, come on, that fireplace!

No? OK...

And the lot had certainly lit a fire under the bidders on auction day.

Tim and Anna got it for 146,000, but...

Oh, yes, there it is, that "but" word again.

-I hadn't seen it, he had.

-Oh, right. OK.

-So how did that feel?

-A little bit of a shock.

I thought there was one fireplace, but there's two.

-I know. Well, that's a good shock, isn't it?

-Well, I want to take them down.

-What?!

-I want to get rid of the chimneybreast.

-No, you don't.

-You're looking at, really, five feet.

You're looking at a lot of space upstairs

and you get two double bedrooms.

# Rip it up and start again

# Rip it up and start again... #

It would be a big job to make this quirky cottage bigger,

but with a budget of £30,000 and a timescale of two to three months,

they hoped to be sorted and ready to rent

before their planned move to France.

Well, six months later,

the exterior of the cottage has been smartened up

with a new door and canopy. Looking good.

So, has the inside been knocked into shape?

Yes...but the lovely old fireplace has gone.

However, this room is now spacious and modern.

The cupboard in the corner of the living room

has now been knocked through to create an entrance into the kitchen

and what was dilapidated and damp is now...

..wow!

Removing the pantry has created more space

in this previously cramped kitchen,

and I love the stable door, which adds a nice bit of character.

The chimneybreast in the kitchen is still there, though.

So why did that escape Anna's demolition plans?

We kept the fireplace in the kitchen,

took the old metal bit out,

but left it there and put a wood beam in.

We had to maintain the chimney stack because of conservation, and that

caused us not to even consider removing the two chimneybreasts.

We just kept the one to hold up the chimney stack.

Well, I think they've got a nice mixture of modern and original here.

But has the removal of the chimneybreasts

opened up the bedrooms?

Well, that second bedroom is now much larger

and has direct access to the fresh and modern bathroom.

We wanted two double bedrooms, so we moved the bedroom out,

the second bedroom out, and Jack-and-Jilled the bathroom.

Jack-and-Jill arrangements allow two rooms to access

the same bathroom, and it's a great solution for small spaces.

On the other side of the Jack-and-Jill bathroom,

the very pink bedroom has had a makeover,

with a feature, exposed-brick wall.

But what about the less-charming aspects,

like the lack of damp course downstairs

and that pesky woodworm problem?

The floors in this house didn't have a damp-proof course,

it was just earth, it was carpet onto earth.

So they had to be dug out, a damp-proof course put in,

then a floating floor put in.

That was a huge amount of work, which we did know about.

What we didn't know about was the damp and also the woodworm,

which was pretty bad.

So we had a lot of joists had to be redone.

So, how has the additional work affected their £30,000 budget?

I think it's probably nearly £40,000,

but we still think we've got value for money,

we still think the builder's done a good job,

and we're not unhappy with the price.

And we think we've got a good result.

I think they have every right to be pleased,

and given the work undertaken,

it's not surprising they have overrun their original timescale,

taking six months instead of three.

So, with a total investment of £108,000,

has it all been worthwhile?

We asked two local estate agents for their opinions,

starting with the agent who saw it originally.

What I think works here is the overall feeling of space.

The fact that you walk through the door,

you're not encumbered by a staircase right in front of you.

They've made the best of the property's accommodation.

The Jack and Jill configuration works extremely well,

as does the exposed brickwork to the front master bedroom,

which retains that rustic cottage appeal.

From a sale and rental perspective,

I think we'll have a lot of interest once it's placed on the open market.

So, what kind of figures could this translate to?

Could they make a profit on their £186,000 investment?

If this property was coming on the open market for sale,

I would put a value of between £195,000-£215,000.

We'd recommend in offering this property at an asking price between

£215,000-£225,000.

Taking that top sales figure of 225,000,

Tim and Anna could make a potential profit of £39,000 before taxes and

fees are deducted, but what about the rental figures?

I believe we could achieve between

£850 per calendar month to £950 per calendar month.

We would suggest an asking rental of £825 per calendar month.

So a range of rental figures there,

but if Tim and Anna were to achieve the top figure of £950,

that would give them just over a 6% yield.

So what do they make of those figures?

I think it was probably what we expected,

because, at the end of the day,

we're not too worried about the value,

because we're going to let them.

So, is it still off to France for Tim and Anna?

We're moving absolutely everything we own, lock, stock and barrel

at the end of next week.

I'm driving 600 miles in a day, all my own,

with two cats in the back, squawking.

So, you can see, we're just taking a measured, gradual,

sensible approach to this.

Edgbaston is a popular suburb of central Birmingham

and is world-renowned, thanks to its famous cricket ground.

As well as county matches,

England's one-day internationals and Test matches are also played here.

And what a lovely day for cricket it is too.

Not only are we close to the cricket ground,

we're only two miles away from the centre of Birmingham.

And on this leafy street is where we find our property, and here it is.

It's a terraced house,

it's got four bedrooms and attic space

and a guide price of £50,000-plus.

But will I be bowled over?

Let's find out.

It's everywhere! There's woodchip wallpaper everywhere.

There's even textured wallpaper on the ceiling as well.

Not a massive fan, I've got to say.

We've got a positive down here, there is central heating.

A bit further down the hallway,

we've got the stairs going up to the bedrooms,

and then into the main part of the downstairs area,

you've got two good-size reception rooms, nice high ceilings.

There's a bit of skirting board missing on the back walls there.

Central heating as well.

So not too bad so far.

A bit further down the hallway,

we have got the kitchen,

and at the end of the kitchen, we've got the bathroom at the end.

Now, this part of the house isn't in good condition at all.

You would have to rip all of this out and start again.

And...

..polystyrene tiles, huge fire hazard.

They would definitely have to come down.

And outside, well...

What I thought was outside,

we've got a bit of a makeshift lean-to,

but I'll come back to that.

This part of the house, not very happy with.

That - not too bad.

There is plenty of work to do down here.

Having a bathroom downstairs is not usually desirable,

and the bathroom itself, it's not good.

You'd certainly want to move it upstairs,

but will that be an option?

So the auction catalogue describes this as a four-bed with attic room,

but you would be on a sticky wicket

if you were trying to describe this as a bedroom,

because there's a few telltale signs that say it was a bathroom.

Also, the auction catalogue suggested

this could be converted into a HMO, that would be the route I'd take,

however there's lots of rules and regulations before you do that -

planning permission, safety regulations and change of use, but,

if you want a good return on your money,

that's definitely the route I would take.

# That's the thing to do

# That's the thing to do... #

A HMO, regular viewers will know,

stands for house of multiple occupancy,

and this property is certainly a candidate.

There's three other decent rooms on this floor,

plus you've got stairs leading up to an attic room.

It's in a very poor state, including a nasty bit of damp,

but once that's fixed up, it could be ideal.

So that's five bedrooms up here,

and perhaps you could even convert one or both

of the reception rooms downstairs into bedrooms.

The potential yield here could be very good indeed.

So, I just wanted to pop out the back,

just to see what we've got in the garden.

And it's not a bad size.

It has been left for quite a bit of time, we've got weeds everywhere,

but it wouldn't take much to get this back to its best.

You know, a bit of elbow grease, a new fence on both sides,

just tidy things up out the back.

You've got a bit of a patio area as well, and on days like today,

it's a bit of a suntrap.

I also wanted to look back if I could see where that damp or water

was coming in that was in the loft.

There was a bit of a damp area up in the loft.

I can see there's a little bit of concrete

just loose on the tiles there,

so however that water's getting in, get that sorted as soon as possible.

Now, I've seen some extensions,

and that's not one.

That's a lean-to that has just been thrown up, doesn't look very nice,

and I don't think it does a very good job either.

So, for me, I'd want to get rid of that.

Just basically tidy up out the back area

and I think you'd have a decent back garden.

There is plenty of work needed here, inside and out,

but if you get it for anywhere near the guide price of £50,000-plus,

it could be a great investment.

We've asked along a local estate agent for his opinion.

You could certainly turn this into a seven-bedroom letting property.

To turn this into a seven-bedroom HMO unit,

you would need to put a new bathroom in it.

Again, new kitchen, new decorations.

You'd need to put fire doors in, emergency lighting, smoke alarms.

You'd probably spend more like £25,000-30,000.

Well, this is a big outlay

and there's lots of red tape to contend with,

so will it be worth it?

What kind of rental could you expect for a seven-bed HMO?

A seven-bedroom HMO property

could generate somewhere in the region of £2,000 per month.

£2,000 a month is a good income,

especially if you were to get that property

for anything near the guide price of £50,000.

Based on that, and the estate agent's renovation estimate,

you could be talking about a massive 28% yield,

but it all hinges on what happens at the auction.

To turn this into a normal four-bedroom property,

there would be good demand both for sale and to let,

but I do think converted into an HMO,

there would be much stronger demand.

So, this sounds like a great investment opportunity,

and was very popular on auction day.

But unfortunately our cameras missed the action for this particular lot.

However, I can tell you the £50,000-plus

guide price was exceeded, and then some,

with the hammer going down at £155,000.

The property was bought by childhood friends

and business partners Jonathan, here on the right, and Harpreet.

Interestingly, Jonathan appeared on this show way back in 2006,

not as a buyer, but as an estate agent.

He now works in finance, but has been part of this

property-developing team with Harpreet for some time now.

Until recently, they'd been focusing on London,

which is where they're from.

This is their first venture into the Birmingham market.

-Jonathan, nice to meet you.

-Very nice to meet you.

-Harpreet, nice to meet you too.

-Nice to meet you too.

-Congratulations, chaps.

-Thank you.

Who found this house, then?

It's a combination of both of us, wasn't it?

We were looking through the catalogue,

and we sort of narrowed it down to about three or four...?

Three or four properties, yeah.

In the end, this is the one we had the best gut feeling about,

and then we just kind of went all the way on it.

It looked like a good choice.

I mean, we didn't actually see it inside,

we just kind of came up on a Saturday, saw it from outside,

got a good feeling about the area,

had a word with one of the neighbours

and saw a couple after this and just happened to get lucky

with this one at the auction.

What is it about this property that made you think,

"We can make money from it"?

Because that's basically what you need to do.

I think it was in the catalogue, it said seven bedrooms.

-Seven bedrooms, yeah.

-What we've seen is that some...

We know the price we paid for as a stand-alone house wasn't going to be

anything special, but I think what we saw in the auction room

was a lot of people competing for it,

because obviously the yield's fantastic.

If you compare it to London,

if we were to do the work, we worked out it will be 15-16% return.

-OK.

-Whereas in London, 5-6% is hard to do.

-It's good, yeah.

Now, you went slightly over the guide price.

-When I say slightly, you went a lot over the guide price.

-Yeah.

Why was that and why did you stick it out and pay

what I consider to be quite a lot of money?

I don't think the guide prices were realistic for any of the lots.

-OK.

-I don't think anything went for the guide price.

Most things were going three times the guide price, from what we could see.

-That's funny, because you two paid three times.

-Yeah, we did.

We had a figure in our head for about 145, didn't we?

We were always going to go a little bit up that.

The thing is, coming to Birmingham is a learning curve for us,

so if we've made something, fine, if we haven't,

obviously the return is great, so, you know,

you've got get out of jail free cards with property, it seems.

# Don't count your chickens before they hatch... #

These two are confident lads,

but they didn't view the property before buying and, of course,

it went for three times over the guide price.

Alarm bells are ringing for me already.

Hopefully their plans for the property will ease my fears.

Tell us what you're going to do with it.

We're going to turn it into a six-bedroom HMO.

It's already laid out as it is.

The reception behind us is going to be opened out into a communal area,

and we're going to replace the kitchen and bathroom, rewire,

new radiators, do everything to whatever the regulations stipulate

and see what we can get for it, in terms of on the open market,

see what someone will pay for it.

If we get that, great, if we get what we're looking for, great,

if we don't, then obviously we'll just rent it.

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

-I think we've said, what, around 15,000?

-Yeah, about 15, yeah.

To get everything you'd want done in this house,

-finished, ready to go?

-We've got it priced up, yeah.

So I know it sounds cheap to a lot of people,

but we've done so many before with the same guys,

they do look after us.

-How long's it going to take, what's your timescale on this turnaround?

-Four weeks.

Four weeks? Is that cracking on, cracking on?

There's going to be three or four guys in here.

What we find is you can either drag it out and it takes longer,

but if you get it done sooner,

you can move onto the next project quicker.

So it's what you pay a bit extra for now,

you kind of make up because you can do more in the same amount of time.

How are you going to make the difference,

are you guys going to get your hands dirty and get stuck in,

-or have you got other people working for you?

-No chance!

You wouldn't want to dirty that shirt.

-I had to bring the shirt up, by the way.

-Yeah, nice one.

We've got our guys ready to do it,

so they're going to start literally after today.

They've got the skip booked.

It's going to be strip out, probably three or four days strip out,

then it's probably... The main thing's the electrics,

the electrician and the wiring,

but I can't see it being more than three or four weeks.

-Back to you soon, I think.

-Brilliant.

-Thank you very much.

-Good luck, good luck.

-Thanks, mate.

-Good luck.

-Cheers.

OK, they didn't view the property

and they paid three times over the guide price.

However, if they do make this into a HMO,

I think they could salvage what could have been a bad situation.

15 grand budget?

I'm not sure about that. They might have to double that,

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

I'd always advise taking the careful approach

-when it comes to getting into property.

-That's true, Dion,

but you sometimes you need to be a bit brave,

because people can suffer from being too cautious.

It's about making the right decisions at the right time.

So, how did our purchasers get on?

Time to head back to South Croydon now.

It was in this trendy hotspot

that Lucy first had a look around this two-bed mid-terrace

that had a guide price of £230,000 plus.

Inside, the property was in pretty good shape,

but in the overgrown back garden,

the first potential problem signalled its arrival.

That's the railway line.

It's good, though. The train station's close by,

which means you can walk there in less than ten minutes.

But these trains rattling past regularly, well,

I don't think it's going to be the most peaceful garden to relax in, do you?

# Runaway train, never going back... #

Unless you're an avid trainspotter, this could be a negative.

But, of course, lots of people live near railway lines

and get used to the noise.

Another negative was the downstairs bathroom,

one of Lucy's pet peeves.

However, unless you were flush with cash,

moving it wasn't really a viable option.

The buyers weren't going to miss the train on this one, though,

and the auction day was busy, with the property selling for 273,000.

Sold, 273.

The successful bidders were married couple

and first-time property renovators Raff and Julie.

Having spent the past few years living in Spain,

they recently moved back to the UK with their two daughters

and they hoped this property investment

would be the first of many.

But before that, they had to sort out the here and now.

So, what's your plan for this house?

Good question. We're looking to completely refurbish the property.

New kitchen, new bathroom, new flooring, new windows,

and just freshen the whole place up.

-And the exterior as well needs some love and care.

-Yeah, yeah.

-Yeah.

They planned to get in tradespeople to do the work

and wanted to sell it on once completed.

They hoped this would not take more than four to five months,

and under a budget of 25,000.

Here we are, nearly nine months later,

and the outside is looking much better

with new render and a lovely paint job.

Let's hope the good work continues inside.

My goodness, what a change to the back of the property.

The new floors in the rear reception are beautifully finished

and the neutral decoration is ideal for sales and rental markets.

As for the kitchen, perhaps Julie can explain

exactly what they've done.

We completely refurbed the kitchen.

We took down the suspended ceiling that we had

and it really opened it up and made it a lot more bright and airy.

The bathroom extension is completely new.

We did a new layout and just retiled everything,

replastered everything.

And, yeah, took the door off here, which opened the whole area out

and made it a lot more spacious and airy.

It may still be downstairs, but they've really made the most of it,

creating a lovely bright and fresh bathroom.

Moving into the front reception room, it's also been refloored,

replastered and redecorated to a high spec.

The window's been replaced, as they all have throughout the property.

Upstairs, the two bedrooms are looking much more appealing,

again, with a lovely finish.

Outside, the trains might still be rumbling by, but the garden has been

given a really good tidy-up and they have had the back of the house

re-rendered and repainted to match the front.

Overall, this house is as good as new

and it's a triumph for their first renovation project.

The works that we carried out on the property

were basically from top to bottom.

So, everything was completely redone -

plastering, new flooring, new radiators,

new boiler, kitchen, bathroom, even to the outside,

where we did the complete re-render of the front of the house.

At the rear, the garden before was a bit of a jungle,

and that's been tidied up and new paving stones,

some new lawn's been laid and some new gravel, a patio space,

and a little bit of fencing, just to tidy up the whole garden.

We've also taken down what was a pretty meaty tree

that was blocking off a lot of sunlight.

It's a big improvement but there have been numerous

unforeseen setbacks, including a change of builders doing the work.

Their original budget was 25,000, so how is it looking now?

We actually went over the budget and went up to 40,000.

The delays meant that their timescale changed

from four to five months to almost nine.

But despite things not being straightforward,

I think they now have a smashing house.

In total then, Raff and Julie have invested £313,000

on their first project, and with them keen to sell,

it seems an opportune time to hear the thoughts

of two local estate agents.

This property looks absolutely fantastic.

I remember seeing it the first time round

and definitely there's massive changes here. It's a really modern,

really bright and I think it's exactly what a buyer would want.

They've done really well. They will sell, hopefully,

to City workers, and they do expect a high-spec finish.

So the wood flooring, the decor's neutral

and the bathroom and kitchen are all good facilities.

The main selling points of this property

are definitely the kitchen

and also the garden looks really, really lovely.

Very nice rooms, great decoration.

The agents are impressed with the work here,

but will that translate into profit?

Let's hear the rental first.

I would value this property at £1,250 per calendar month.

This property for rental would achieve approximately

£1,350 per calendar month.

If we make an average of £1,300 per calendar month,

that would mean a yield of just under 5%.

But it's the sales market Raff and Julie are most interested in.

I would value this property at £360,000.

On the sales market, this property would achieve

approximately £370,000.

I think they're pretty much in the range of what we thought.

We didn't expect much higher than that, and, to be honest,

we didn't expect to go much lower than that,

so, yeah, pretty much what we thought.

Yeah, I think that sounds pretty realistic.

That top valuation would mean a pre-tax profit of 57,000,

which is pretty good if you ask me.

But would Raff and Julie be happy to work again together?

Definitely. Well, I would, anyway.

I had fun. Great learning experience,

high learning curve, but definitely work together again.

Yeah, it can be stressful at times,

but I think that was due to external factors

as opposed to working together.

So, yeah, it will be something that we'll look to do again.

Back now to Edgbaston,

a suburb of central Birmingham, not far from the famous cricket ground.

It was here I saw this four-bed terrace house

that had a useful-looking attic space.

Inside, it fell foul of some dated choices

and I was left stumped by the strange lean-to in the garden.

But the sheer size of the place had me wondering about

the rental possibilities.

The auction catalogue suggested this could be converted into a HMO.

That would be a route I would take.

However, there's lots of rules and regulations before you do that -

planning permission, safety regulations and change of use.

But if you want a good return on your money,

that's definitely the route I would take.

It might take more pen pushing and elbow grease

to get this property up to its full potential,

but it was friends and business partners Jonathan and Harpreet

that were up for the challenge.

They paid £155,000, which was three times over the guide price.

But they had plans afoot to recoup that cost.

We're going to turn it into a six-bedroom HMO.

It's already laid out as it is.

The reception behind us is going to be opened out

into a communal area and we're going to sort of replace

the kitchen and bathroom, rewire, new radiators,

do everything to whatever the regulations stipulate.

The boys have an optimistic budget of 15 grand

and an even more optimistic timescale of four weeks.

We're back three months later to find out if it's more OMG than HMO.

Let's have a look.

Well, the place is looking bright and fresh.

That front reception room has been revived with fresh, white walls

and neutral carpet.

It's now a generously sized double bedroom.

The second reception room is now a brilliant communal living space,

which is looking A-OK thanks to some skirtings and a cracking wood floor.

And I'm green with envy over the sparkling kitchen

with snazzy tiles and splashback.

Time for Jonathan to explain how he did it.

So, as you can see, compared to before,

obviously, it was a right state,

so we've literally stripped everything out.

We've gone for a neutral finish,

a little bit of colour with the tiles,

but everything has been changed.

So we've had the units changed,

the boiler has been changed as well,

everything's been squared off and boxed in.

We've had a dishwasher added and,

instead of having a bathroom downstairs,

we've added a utility area with a washer and dryer.

By HMO regulations, that downstairs bathroom is now classed as a WC

as the bath has been removed.

But the utility room will come in handy when the tenants move in.

The renovation continues upstairs,

where there's now three spacious bedrooms,

all decorated with a tasteful, monochrome colour palette.

The loft is now looking a lot less damp and a lot more bedroom.

We've got five double bedrooms spread over three floors.

What we did with the rear bedroom,

we effectively lost it and turned it into two bathrooms.

And I think having more in the way of bathrooms

will increase its desirability.

HMO guidelines state that for six or more occupants

you have to have two bath or shower rooms.

Jonathan and Harpreet have opted for two shower rooms and three toilets.

If they wanted that sixth bedroom,

they would have had to convert the cellar, which seemed a step too far.

So, we looked at the guidelines, spoke to the council as well.

So, effectively there were only a few things they were looking for.

There were sort of like minimum standards with regards to size of

the shower room, sinks and things like that.

Obviously, fire doors had to be in place and, you know,

a fire alarm system.

So we just effectively looked at the guidelines, you know,

bought everything to spec, and have done it accordingly.

So we're just waiting for the licence to come through.

The HMO guidelines can be tricky,

but it's important to stick by the book because licences can,

and often have been, refused.

But how did it affect the budget?

We've spent about sort of 21, maybe 22-ish,

and the only reason being we spent...we had the plastering done.

I think with the fire alarm system,

we hadn't budgeted for the full, you know, zoned alarm system.

But, obviously, that wasn't too much more.

But, yeah, I think probably five or six grand overspend,

which isn't the end of the world.

It's not the end of the world, but it's the end of that dodgy lean-to.

So let's see if they'll have a lean return

or they'll make a meaty profit?

We've asked two local estate agents for their opinions on this property.

First impressions is condition.

It's done really well. It's done to a good standard.

And the main thing is, people can move straight in.

There's nothing they need to do.

The standard of finish is right for the area and for this property,

because the high turnover of tenant you're going to have in here,

you need to just have something nice and simple you can quickly replace if anything's damaged.

Maintenance and repair costs always have to be taken into consideration

with any rental property.

Wear and tear, as well as mishaps, do occur.

And while we're on the subject of money,

what if Jonathan and Harpreet decided to sell this renovated HMO

as a whole? How would their £177,000 investment fare?

On the sales market, I would put a price on here

of anywhere between £180,000-190,000.

On the sales market,

this property would achieve around £200,000-220,000.

That top estimate of £220,000 could give the guys

a pre-tax profit of 43 grand.

A top rental value of £400 per month per room

would mean a yield of 13.5%,

or an income of £2,000 per month.

2,000's more than what we expected.

We've got someone interested at 1,700,

so, obviously, if we can get more, it's a good result.

The people we've got interested are considering a five-year lease so,

yeah, that gives us a bit of security of tenure

for the interim period and, hopefully, if we decide to offload,

it's quite attractive for the onward purchaser.

We do love to hear about your renovation stories.

Sometimes they can be inspiring.

I agree, Dion. It's such a privilege to hear about your journeys.

Well, it may be the end of the show, but it's not the end of the journey.

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

-Goodbye.

-Bye-bye.

-Goodbye.