Episode 11 Homes Under the Hammer

Hello and welcome to the show. Investing in property

can be a good way of looking after your money

AND grow your pension, but it's not always a sure thing.

There are some risks.

Definitely. If it sounds too good to be true,

then more often than not it is.

However, there are some bargains to be had.

Maybe down at your local property auction.

Now, a lot of people don't consider buying under the hammer a viable

option, and yet it really isn't that difficult.

Yes, but you do have to do your research.

Let's hope today's buyers have done just that.

I'm having some layout issues at this two-room flat in Sutton.

It's not even vaguely working.

It's not even vaguely in the ball park of working.

Lucy got the wrong impression at this flat in Kent.

Well, that is so misleading.

Lovely new front door, nice communal areas to this!

Could someone clean up this low guide price, mid-terrace in Middlesbrough?

There's lots of rubbish and rubble

that needs to be cleared out of here,

as like the first reception room as well.

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.

Sold to 13.

We head now to the popular London Borough of Sutton.

Full of appeal and charm, this area is highly sought-after,

thanks to its travel links to the city and a plethora of shops

and amenities on the high street.

Well, two minutes' walk from Sutton high street is the property I'm here

to see. It is a ground floor flat with a guide price of £180,000 plus.

Now, there are a few alarm bells going off already,

because it's described as having two rooms, not bedrooms.

Obviously a layout issue.

And there's one way to find out what's going on and that's to have a look.

# Give me a chance to show how much I love you

# Give me a chance to show how much I care

# How I care... #

This place might be worth giving a chance to because the outside has a

bonus - off-street parking.

And the communal stairwell looks well maintained.

OK, let's explore.

Bit of a narrow corridor when you come through the front door there.

I'm straight away noticing this little area here,

which has got a very large sort of water heating system going on.

I wonder if there's a combination boiler can go somewhere and create a bit of space there, which is good,

because we haven't got much. Straight away you can tell.

There's a bedroom, I imagine,

or at least that's what that room is, that way.

And then this way, you've got the bathroom.

Lovely avocado suite.

We've also got damp.

It's not massive. Actually, proportionally it's not a bad size,

compared to everything else, because really that avocado suite is the least

of your worries, because coming to this room here...

And what is going on?

We've got this tiny little...

sort of bit of kitchen fitments going on in this corner.

This then was what, the lounge?

I don't know. Lounge/kitchen because this...

..is the only other room.

It's tiny. It's got two doors.

I can see why they said it's only got two rooms.

Two main rooms and a tiny thing there. Eurgh!

It's not working, is it?

It's not even vaguely working.

It's not even vaguely in the ball park of working!

Yeah. Hm. Not good!

# Let's think it over

# Let's start again... #

The guide price of £180,000 plus suggested this is a popular area.

But what to do to get the best out of it?

Is it a one bed or is it a two?

Well, I think the main bedroom is THE bedroom.

That small room is a bit tight for your bedroom.

If you extend it into that cupboard space it might just work.

Could you fit the kitchen in there and have a really decent-size lounge,

with no noisy and smelly kitchen appliances?

Moving plumbing and drains could be expensive.

I think my preference would be to knock through into the cupboard,

use it as a study and get the bathroom updated.

And then you've got a flat that works.

You've got a one bedroomed, one study, one living area,

nice bathroomed flat, as opposed to what it is right now,

which is...rubbish.

As ever, it depends on what the buyer wants the property for.

But there are definitely options here.

Well, the flat is described as having a communal garden.

That's it?

It's not going to win any awards at Chelsea, is it? Let's be honest.

Yes, it just goes to prove how important it is that you physically

visit a property before you head to the auction house.

We asked a local estate agent along for his opinion on this flat guided

at £180,000.

This flat would need total renovation, total gutting,

starting again from the beginning.

New kitchen would be great.

New bathroom and new heating system and painting and decorating with new

flooring as well. I would keep it as a one bed and refurbish it to

a high standard and you could possibly achieve a high price as it's in a great location.

Possibly you could market a two-bedroom property,

depending on the builder and what they do.

They would need to open up the space there in the second room to make that larger,

maybe cut into this room to create more space for the second room.

If that's done and it's done in the right way,

then I'm sure I can market it as a two-bedroom apartment.

OK. So if a full refurbishment was done here,

what numbers could we be looking at as a one-bedroom property?

As a one-bedroom, ground-floor flat,

this property could achieve in and around £250,000 for sale and for

rental, it could achieve £900 per calendar month.

And what if it was converted into a two-bed?

This property, as a two-bedroom flat, could sell in the region of

£300,000.

For rental amount, could achieve £1,250 per calendar month.

Well, it's definitely in a good location,

but whoever bought this place definitely needs to decide

if it's a one or two-bedroomed flat and work towards that goal.

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

Our next one is lot 25.

Ground-floor flat.

I don't know, start at £180,000 here.

180. Quite a bit of discount at that for Sutton.

Oh, sorry. 180.

180. 185.

Elsewhere.

185 with you.

185. 190, sir.

195. 200. 205.

There's plenty of interest in this one.

We rejoin at £226,000.

226.

Straight ahead. 228.

230, sir.

230? 232.

230, with you.

First time. Second time.

Third and last time, if you're all done.

Sold. 230, straight ahead.

The successful bidder there was Fifi,

who, after a bit of a battle, bought the property for £230,000.

£50,000 over the guide price.

I met up with him back at the property to find out about his plans.

Fifi, great to meet you.

-A pleasure to meet you, too.

-Congratulations.

-Thank you.

-First of all, I've got to ask about your name.

That's a fantastic name.

I've never met a Fifi.

Yes, it's a Ghanaian name.

Same as Kofi. Means Friday born.

Oh, fantastic! Wonderful!

So, why did you want to buy this flat?

What attracted me is the location,

because I don't live far from here, I live in Morden,

just less than ten minutes' drive,

-and Sutton is a well sought-after area.

-Mm-hm.

So it's the location that attracted me.

OK. And is this what you do? Are you a property investor, or what?

No. This is the first time.

It's something that I've always wanted to do,

so this is the first project.

What have you been doing up to now? What's your job?

I had my own company.

-OK.

-Which I run it for...nearly about seven years.

Sold it not long ago.

-OK.

-And after the sale, I'm just looking at different things to do

and I thought this is about it.

So, what was it that you liked about this place?

It's not a lot of work.

Walls are pretty good.

Great location, as I said.

And it needs a total makeover.

And then I think I'll be able to bring that into it and make it great.

OK. And is the idea then to sell it on or rent it out?

Depends on figures at the end of the work.

So if you can make a lot by selling it on,

-you'll take that?

-Then I will.

Yeah. Good.

So, obviously it's got a very interesting layout, hasn't it?

You've got the tiny room behind us here and the other rooms.

What are you going to do to the layout?

Almost everything will stay the same,

with the exception of the door behind you,

which is the tiny room there.

We might relocate that door into the old tanked, hot water area.

-Yes.

-Before we're going to put central heating in.

So, all that will be removed.

-Right.

-That door is already created, so it's just taking,

changing the position of the entrance.

-Sure.

-Extend the kitchen.

-Straight across from where it is, close to the entrance.

-Yep.

And that will actually...

That is about it, really.

OK. What will that room then become?

I've looked at the divisions in there after the hot water tank,

so that will be extended.

-Yeah.

-And when that is taken out,

you'll have a decent room to be able to put a bedsit in there.

OK. You think you'll be able to squeeze a bed into that, just about.

Possibly a child's room or something like that.

-Absolutely.

-OK. What kind of budget have you got?

We're looking between...

-£12,000 to £15,000.

-Mm-hm.

Well, it's not a big budget,

especially since Fifi isn't doing any of the work himself.

He hopes that his builder will get the work done in six weeks,

with Fifi acting as a project manager.

So, what kind of finish are you going to go for? Are you going to for high-end or what?

We're looking at high-end.

We've got plans for the bathroom.

The bathroom is going to be very high-end and modern as well.

At the same time, the kitchen as well.

We're looking to have open-plan, very, very small,

but will have all the necessary white goods fitted in here.

-Great.

-Integrated.

And then, do you have any idea what it might be worth when you've done the work?

I've got figures in mind.

Go on, then?

I've got figures in mind, because I know the property value around Sutton.

There's one up above us, just a two-bed,

but it's quite a decent size and that is on the market

-at the moment for £315,000.

-Whoa!

This hasn't got the same size,

-so we'd be looking at roughly about £280,000, £290,000.

-Wow.

So what kind of profit's in it for you, then, if it all goes well?

If all goes well, then we'll be looking at roughly between £40,000 to £50,000.

Wow, that would be great for your first project, wouldn't it?

It would be absolutely fantastic!

Listen, congratulations.

-Thank you.

-Good luck and I look forward to seeing how you get on.

-Thank you.

Well, an interesting one for Fifi's first development project.

Tight budget to get a high-end finish and a relatively short timescale.

How will he get on?

You can find out later in the show.

Lucy is in the town of Chatham, in Kent,

famous for its dockyard situated on the River Medway.

It served the Royal Navy for 414 years

and during that time produced over 500 ships.

# Did I build a ship to wreck? #

Now, however, the ports,

dockyards and ship building sites are being redeveloped into more

contemporary tourist-attracting wharfs for fine dining,

nightclubbing and shopping.

Chatham has changed massively in recent years, owing to all the

regeneration that's taken place here

and those changes are most definitely for the better.

# ..To wreck

# To wreck...#

Well, if you want to be right in the heart of Chatham,

you can't get much more central than this, because all the shops and all

the action is just around the corner there.

Well, I'm here to see a studio flat and it went to auction with

a guide price of £50,000 to £55,000

and the entrance, well, it's just around here.

The entrance is located on a private road,

so best to check out what permits, if any, are required for parking.

Heading inside,

there's a rather nice foyer and a charming stairwell.

Looking good.

Well, that is so misleading.

Lovely new front door, nice communal areas to this!

Oh, it's a little bit grotty on the inside, I am not going to lie.

I have seen better.

So, a nice area of damp.

It is really wet to the touch.

Flaky, flaky, flaky.

Wedding cake sort of effect here.

In fact, when you look at this wall, look, it's just...

just got to be sorted out.

So, on first glance, this room is not very welcoming.

I mean, I'm not even looking at the cobwebs everywhere.

You've got a big old water tank through here.

But, look, there's just holes everywhere.

I mean, look at the state of that door!

Yeah, I think it's been empty for quite some time.

Leading through into the kitchen,

so I'm taking it that was probably the sleeping/living area.

Through here is the kitchen.

Oh, my goodness me!

Look at it!

Yup, so we need a skip and we need to get all this stuff out and it needs to be dumped in there.

You've got a little shower room through here with what

looks like half the wall is missing.

Quite a bit of work needs to be done in here.

You've got strip lighting.

It's just not very nice.

So, really once you spend a little bit of money,

I mean, it's not too big, so it's not going to take such a huge

injection of cash, it will look amazing.

But as it stands at the moment, it looks pretty terrible.

# B-B-B-Bad

# Bad to the bone... #

Yes, it's not pretty.

But there's nothing that stands out as a major issue.

But are there any hidden nasties lurking in the legal pack?

Now, if you're a regular viewer of Homes Under The Hammer you'll know

that flats often come with a sting in their tail when it comes to the

finer details laid out in the legal pack.

So, I've carried my own investigations out with this studio,

so what I can tell you?

Well, now, the ground rent is £150 a year,

which is a fairly standard amount, and then the service charge,

well, that's £350 a year.

Which, well, it sounds OK for a flat with communal areas to maintain,

and the biggest bonus, for me, well,

it's got to be the new 125-year lease that's on offer.

So, all in all,

there doesn't seem to be any hidden nasties here and that is why you

should always read the legal pack, just in case.

Could this studio flat, guided at between £50,000 and £55,000,

be a small, but perfectly formed investment?

We invited a local estate agent along to give us his opinion

on what could be done here.

The flat is quite a small property.

It does need just some love and care.

I would leave the layout as it is.

I would suggest central heating into the property,

a new kitchen and a new bathroom.

With such a small flat and no obvious structural changes to be made,

this flat could be renovated for a relatively small sum.

But could there be a profit margin on a guide price of £50,000 to £55,000?

This property could sell for approximately £65,000 to £70,000

and rent for approximately £450 to £475 per calendar month.

Yep, it does need quite a bit of work, but being such a small space,

well, it shouldn't take too much time or money to turn this studio flat around.

Once that's done, well, it could be a decent little investment for someone.

Who agreed? Let's head to auction and find out.

Lot 57. Again, studio flat.

Main line railway station, et cetera.

Guided at £50,000 to £55,000.

You've got to start me at 50.

50, can I say? 50, can I say?

Give me 45, then.

45 from anybody?

45 at the back, with you.

Thank you. 45. 47 now.

47, fresh place.

And 50, can I say?

50 I have. 52 for either of you?

52 now. Well, at £50,000, I shall sell, then.

For the first time at 50.

52. Thank you.

54. 54.

56. 56.

54,000 is back with you, sir. £54,000.

56, can I say? I shall sell then for the first time at 54.

56.

56. 58. Yes? No?

58. And 60 now. 60, can I say?

£58,000 for the first time.

60. £60,000.

Lady's bid. 62 now.

62. If not, lady's bid at £60,000.

First time. Second time.

You're going to miss it, sir. Third and final time.

Back of the room at £60,000.

Sold, madam. £60,000, you've got yourself a flat.

And your bidder's card number?

The successful bid of £60,000 came from Mary, who is retired,

but develops property.

Regular viewers of the show may remember this fashionista,

when Lucy met her three years ago at a property in Deal.

Lucy caught up with Mary again to hear her plans for her newest acquisition.

# And then along comes Mary... #

Mary, congratulations.

Gosh, it must have been three years since I've seen you last.

-Yes, it was.

-Tell me, why are you here in Chatham?

I was looking for something not too expensive

and I decided on this place.

What did it, the difference, it's got a new 125-year lease.

Some of these properties, there's only about 69 years left on them,

so you have to pay extra for an extension.

So, tell me, did you get a chance to get in this property and have a good look around before you bid?

No, I didn't, but the trouble is, I looked at so many properties,

I just didn't have the time to look at them all.

-It's great news for you that it has got a new 125-year lease.

-Yes.

But you didn't look inside!

No. When I looked, I thought, "Oh, my God!"

SHE LAUGHS

But once you start, you say, "Well, this is going to get done."

Essentially, it's just one large room, a bit of a kitchen.

A bit of a loo. I mean, you can do it all up.

-It's not going to cost you the earth to do this place, is it?

-No.

-Then what are you going to do with it?

I'm going to let it out to start with.

And later on I'll probably sell it off.

Are you happy with what you paid now?

It's all right. Once it gets done up, I know I'll be able to sell it again.

I don't think I'll lose any money on it, that's the main thing.

Having completed 20 property renovations in her time,

Mary should know better than to buy blind,

but hopefully this time it will pay off.

What is it about property that keeps her on her toes?

It's exciting, you never know what you're going to get hold of next and

what you're going to do with it. To be honest, it's something you can get into from scratch.

You don't have to study for five years to do it.

You have to get a bit of money one way or the other, but you...

Anyone, you can get into it quick.

Is this what you've always done?

No, no. I was a housekeeper.

This interests me more.

Because when you're in a job, you're sort of tied down by the people.

Doing this you're your own boss.

Mary, I love your energy.

You are not kicking back and relaxing and retiring.

-You're still out and about, aren't you?

-No. I want to get out.

I don't want to be stuck in the house.

So, Mary, tell me, what's been happening since we last saw you on Homes Under The Hammer?

Loads of people have recognised me about...

Over 20 people in the street have recognised me.

All over the place.

-I can't believe it!

-So complete strangers have been coming up to you and saying,

-"We recognise you from Homes Under the Hammer."

-Today, a car stopped.

He said, "Oh, have you been on Homes Under The Hammer?"

I said, "Yes."

You see, we can take you there, Mary,

because I know you quite like acting, don't you?

-You'd quite like to be an actress, wouldn't you?

-I would.

SHE LAUGHS

If I was about five foot ten, I think I'd be...

I'd love to be a top model.

You must be one of the most glamourous landladies I think I've ever met.

I like dressing up.

# She's in fashion... #

It would be a shame to ruin that fantastic outfit,

so Mary is going to get local builders in to do the work.

So, Mary, talk me through the changes you're going to be doing here.

Let's start in this room.

Obviously the plastering's most important, but as it's...

As it's damp as well, it's going to be quite a job.

It's not as easy as you think. To get this really just dead-on,

it's quite a job.

And then we've got the roof.

Got to get a new kitchen.

Once you get the new kitchen,

you wouldn't believe it's the same place.

Maybe a new bathroom and maybe a new shower.

But it will be a big difference when it's done.

So, Mary, what about the central heating?

Are you going to be installing it?

I will definitely get central heating put in.

Everyone wants central heating nowadays.

And what about that old tank - is that going to go?

I'd like to get rid of it.

But I better check it out if it's allowed.

Maybe the whole place is just electricity.

We'll have to look into it first.

And how much are you going to spend on the work here?

I don't know, maybe £4,000, £5,000.

So, that's...

It's actually quite a... You look at it, it's quite a lot to be done here.

It's quite a mess.

So, what is your timescale?

I could probably get it sorted out in three months without actually

rushing it. Oh, my God, it's just too much.

You know, just within that timescale somewhere.

Well, Mary, we look forward to coming back and seeing the big

transformation of this very small studio flat, and it's been a real

pleasure to see you again.

-Thank you.

-Lots of love.

Thanks.

Oh, it's great to see that Mary's still got as much energy and enthusiasm as when I last saw her.

She seems to be taking her latest project in her stride and I just

hope it all works out for her.

You can find out how Mary gets on later in the show.

Still to come - there's problems afoot at this mid-terrace

in Middlesbrough.

As you can see, there's a lot of floorboards missing in here,

which is very dangerous.

And will Mary be seeing red after budget issues in Kent?

I thought maybe it'd be £4,000, £5,000, but it went over.

But first, let's head back to the sought-after London Borough of Sutton.

It was here I saw this ground-floor flat guided at £180,000 plus.

Inside was a tight squeeze,

not helped by the large water heating system occupying space in the narrow hallway.

The avocado bathroom suite was stuck firmly in the '70s, and the bedroom,

although dusty, was a decent size.

But it was the flat's description as a two-room property that had me concerned.

What is going on? We've got this tiny little...

..sort of bit of kitchen fitments going on in this corner. Erm...

This then was what, the lounge?

I don't know. Lounge/kitchen.

Because this...

is the only other room.

It's tiny. It's not working, is it?

It's not even vaguely working.

It's not even vaguely in the ball park of working!

£230 with you, first time.

Second time.

Third and last time, if you're all done?

The man to make it work was first time property developer Fifi,

who paid £230,000 on auction day and he had a simple plan to get the

dysfunctional layout working.

Almost everything will stay the same,

with the exception of the door behind you,

which is the tiny room there.

We might relocate that door into the old tanked,

hot water area, before we're going to put central heating in.

-So all that will be removed.

-Right.

That door is already created, so it's just taking...

changing the position of the entrance.

Fifi hoped the new layout would make enough space to turn this flat

from a two-room, to a two-bedroom.

He had a budget of £12,000 to £15,000

and a tight schedule of six weeks.

We're back just eight weeks later to see how he got on.

A bright new kitchen stretches along the wall,

where there was once a doorway.

It's open-plan, with a compact living-dining space.

The water tank has been removed and that space has been incorporated into

the small room, creating a second bedroom.

The master bedroom has had a refresh too.

The whole flat now benefits from new PVC double glazing and central

heating. That avocado suite, well, that's gone too,

replaced by an ultra modern, super stylish, tiled bathroom.

We decided to go for a modern fitting bathroom.

It's been amazing, the designer was fantastic.

She came out with great designs that I love.

And we were able to fit the things that we wanted in there.

So the bathroom looks modern.

The shower is amazing.

I wish it's even the shower at my home, but unfortunately, it's not.

Well, if the flat doesn't sell, you could always keep it for yourself.

But based on the exceptional finish here, I think that's unlikely.

Project manager Fifi and his builder Pajo have made it look easy.

But were there any struggles along the way?

The most difficult part was the kitchen, because we had a very

limited space and you need to try and squeeze almost everything you

can think of in that space.

And it was challenging.

We draw and then we look at the drawings and then we scrap it

and said, "No. This is not good enough."

Even last minute, we had to order a few different things, because we realised that

some of the cupboards, when you walk in,

the cupboards shouldn't be right on your face,

it has to be nicely tucked away.

So we went for slight different changes,

with a curved edge at the entrance, which cost us a lot more money.

It's little touches like those curved cupboards that make all the

difference to the end user.

And while you can't put a price on good design,

how much of that £12,000 to £15,000 budget did Fifi spend?

We've gone over budget.

There's no question about that.

We've gone over budget.

I thought we'd be able to deliver what we wanted within £12K to £15K,

but unfortunately we couldn't.

We went extra mad. We went over budget £5K.

So we ended up spending £20K on the flat.

The £20,000 bill costs takes Fifi's total spend

to £250,000. As he is unsure whether to rent or sell,

let's see what two local estate agents make of the changes to this ground-floor flat.

It's in excellent condition.

And it's really made some really good use of the space.

It's quite a spacious main bedroom as well.

But also, I think it's got really good usable space in the

kitchen/diner as well and in really good condition.

The flat's been completed to a high specification,

although it is a little bit compact.

However, being close to the high street, it is expected,

and the amenities and transportation links make up for that.

So, what kind of prices would someone pay to rent a high-end flat in this city location?

In the rental market, very popular,

I'd say you'd be looking in the region of sort of £1,250 to £1,350

per calendar month.

I believe this property will fetch in the region of £1,300

per calendar month.

That is a great figure.

That is the sort of figure that I was thinking about

within the region of £1,200.

So that's fantastic.

The top value of £1,300 a month could mean a potential yield of over 6%,

which isn't bad. But could there be good profit on the £250,000

investment on the resale market?

Sales market, I mean,

you're looking probably around about £300,000 to £315,000.

I believe this property will achieve in the region of £320,000.

That is amazing!

That is way beyond my projections.

I think I might probably go, put it on the market for a resale.

With a potential profit of £70,000, minus taxes and fees, it's no wonder.

So, has this experience been all he had hoped for?

Hearing the values, and also taking into account that this is the first main project,

I think I'm very excited and I can't wait to set a foot in that auction room again.

Teesside in the north-east of England is made up of a series of towns,

including Middlesbrough and Stockton-on-Tees.

They are separated by the River Tees and connected by the Newport Bridge.

The bridge was the first vertical lift bridge to be built in the UK

and was lifted over 1,000 times a week in its peak.

These days, it remains permanently lowered,

providing an important road connection between Stockton and Middlesbrough.

# Here I am Stuck in the middle with you... #

So, I'm in Middlesbrough,

just a ten-minute walk away from the town centre and an even shorter walk

to Teesside University, which is just down the road.

I'm here to see a two-bedroom, mid-terrace property

with surprisingly low guide price of £14,000.

Now, is that going to prove to be a good deal or a good deal of work?

Let's find out!

Right.

OK, that's not a great front door,

but what I do like is if you put a brand-new door on there,

you've got a second door here as well, which is good for security,

keeps the heat in, keeps the cold out and then you come straight into

a hallway here.

First reception room just here, it's a good-sized room.

Nice high ceiling.

Big bay window, but I have seen a little bit of damp just above that

bay window there. Doesn't look too bad and it's not alarming me at the moment.

Down the hallway and you've got your stairs up to your bedrooms into

the second reception room.

It's a decent size again.

There's lots of rubbish and rubble

that needs to be cleared out of here,

as like the first reception room as well.

Central heating here, which is good.

This doesn't look in great condition.

As you can see, that's falling off the wall altogether.

So, if you're looking to rent this out,

put some brand-new radiators up and get a nice new boiler.

Just keep it nice and safe.

Kitchen's just here.

It's a galley kitchen, nice and long.

Not in great condition though, so that would have to come out.

Same goes for the bathroom, which is right at the end of the property.

Saying that, apart from the radiators, all the rubble and the rubbish...

there's potential here, definitely.

# Pick up the pieces and we'll throw them away

# Throw them away and replace them... #

Step one - clear everything out.

Bear in mind, this job can sometimes be a health hazard,

so you could get a specialist company in to do it.

I'd certainly recommend some safety measures, though,

like protective gloves.

But so far, I'm not seeing any reason for that low guide price.

Maybe upstairs might shed some light on it.

Right, there's two good-sized bedrooms up here.

The one at the front more or less mirrors this one.

So there's lots of space.

As you can see, there's a lot of floorboards missing in here,

which is very dangerous.

I would suggest get the basics done, get it nice and safe.

Get those floorboards back in and you'd have two good-sized bedrooms,

either to rent out or to flip it and sell it, and see what kind of profit

you could make. On the other hand, I'm thinking,

you've got the university, which isn't too far away.

Is there an argument that this could fit the student market?

That's three markets, three choices I've given to you.

I love options, I really do!

# I can't choose

# It's too hard when your mind's a big

# Bruise Dida dida, should be this guy... #

Two things are not an option. First,

resolving the damp both upstairs and downstairs, and secondly,

clearing all this stuff out.

Let's see what a local estate agent would chose to do with this two up,

two down guided at £14,000.

This is a great property.

Yes, it does need scheme modernisation,

the windows need addressing,

the kitchen needs an overhaul, as does the bathroom and then after that,

really just a general tidy through.

I think you could probably spend sort of £6,000 to £8,000 on this property.

That's more good news for potential investors.

So what's the best option in terms of the area?

It's very much a student let area.

You know, these houses will be converted into three,

possibly four bedrooms, depending on the size of the property.

But, yeah, there's definitely a very strong student rental market in this area.

We would turn the front room into a bedroom and then, the room which

we're stood in now into, obviously, a bedroom and across the corridor

another bedroom.

That's one option and the agent thinks as a student let it could bring in

at least £55 per room, per week.

With three rooms, that's £660 per month in total.

He also thinks it could be a lot more depending on the finish.

But what could it rent for if it was kept as a two-bed house?

If we were looking to rent this as a two-bedroomed house

it would achieve £350 per calendar month.

As a final option, what would it sell for if you got it for anywhere

near the guide price of £14,000 and spent £8,000 on it,

as the agent suggested,

investing a total, somewhere around £22,000?

The property could be placed on the open market at £45,000.

This is one not for the faint-hearted.

There's a bit of work that needs to be done in there -

new bathroom, new kitchen, not to mention all the windows as well.

On the positive side,

it's in a good location and don't forget that low guide price of £14,000.

I'm sure that's got to create some interest.

Let's go to the auction house and find out who the last person was standing.

This is a two-bedroomed, mid-terraced property.

Start me if you will. Five again.

Five again. Do I have ten?

Ten. Thank you, sir. Ten.

15? Say it again.

11. If we must.

12, sir.

The £1,000 increases had the bidders interested,

so we rejoin the auction looking for £27,000.

27 in the room?

27 with Ian.

27 and a half in the room.

27 and a half in the room. Is it 28 anywhere?

28. 28. 28 and a half, sir.

28 on the phone and being sold...

With Ron, then. Sir, do you want 28 and a half?

You do? 28 and a half.

29.

Being sold, then. Gone, gone. Gone is gone, I think so.

It's with you. 28 and a half.

Are we all done? One, two, three.

That's yours. Well done, sir.

Good contest.

# You might find it cheap

# But you're never gonna find it free... #

The successful bid of £28,500 came from property developer Mohammed.

He lives and works in London, and is a builder by trade.

I caught up with him to find out what his plans were for his new acquisition.

-Mohammed, nice to meet you, sir.

-Nice meeting you.

-Congratulations.

-Thank you.

-What made you buy this property?

The price was low, so...

that's the reason I just came and

plus, it's closest to town centre and the big uni around here.

So that is the only reason I just went for it.

So were you looking for a property this size in an area, like, near a university?

Yes, I was looking for quite a few months.

-Were you happy with what you paid?

-Yes, definitely.

-I'm happy.

-Because you're a London lad, aren't you?

Yes, I live in London.

And, yeah, I saw it through the internet and I found this place really cheap.

Good-sized bedrooms and a good-sized property.

So what are the differences then, Mohammed?

You've got a house of this size up here, up north -

what would it cost you down south?

Yeah, I mean, the price which I paid up here,

you can't even pay the deposit out there.

So it's about ten, 15 times more higher than this.

-Are you moving up north?

-No, I'm not. I'm not, I'm sticking in London!

-Sticking in London.

-I'm sticking in London.

But I'm buying properties up north.

OK. So now you've got this property, it's now yours.

What are your plans for it?

Probably I'm going to do HMO for students

and I'm going to rent it out.

I'm trying to capture the student market basically.

OK. So how many bedrooms can we expect when it's all finished?

It's going to be a four-bedroom,

-because it's two bedroom upstairs already.

-Yeah.

So it's two reception rooms on the ground floor. One there, one here.

So I'm converting that one as bedrooms as well.

So it's going to be good, three king-size bedrooms,

and one is going to be a double bedroom.

So in order to change this into an HMO, do you know what is required?

Yes. You need to have heat alarms, smoke alarms, all over the rooms.

Plus, you need to have fire doors.

It is all about fire and health and safety checks.

You have to put in some signs and this kind of stuff.

And what about financially for you?

What are you looking to get back from this property financially?

I had a word with a couple of estate agents as well.

And the advice which I have is £125 or £110

to £125 margin per week.

-OK.

-So, for example, if there's four rooms up here,

I'm getting about £450 per week.

-So times four...

-Yes.

It's decent, isn't it?

It is a really decent return.

The yield is about 18% yield,

which is not bad either.

That is an amazing return.

But to get to those mental figures,

Mohammed is pushing the boat out in terms of quality.

He'll need to watch his budget and have a very tight team.

I have six, seven people.

-Wow!

-They work underneath me, so I'm going to bring them down here.

So they're going to have their holidays while they're working here

as well! It is going to be away from London where it's a hectic life

down there, so it's going to be away from London.

Plus, after the work, it's going to be all party going on here.

-That's the plan.

-So tell me how that works, then?

You've got a team of six to seven builders.

Will they be up at the weekends or for the week?

Where are they going to stay?

We're going to rent a house down here.

We're going to go after one or two weeks, after two weeks,

spend the weekend back in London, come back fresh on Monday again.

-Ready to go again.

-Then start again.

So when your team get in here, when they get into this house,

what's the first thing they're going to do?

First thing, need to get rid of this wallpaper, all over.

Taking these carpets out, kitchen, everything going into the skip.

So then we start doing all the plastering and new flooring,

and new tiles in the kitchen and the boxroom.

So basically renovating everything.

What's your budget going to be to turn this place around?

The budget is going to be about 10,000.

How long is the work going to take?

About three weeks, max.

Really? Turn it all around?

-Like I said...

-HMO?

-Everything.

-So you're ready to go?

-Yeah.

-And happy?

-Very happy.

-Good man. Listen, good luck.

-Thank you very much.

-Can't wait to see how you get on.

-Definitely. Thank you.

-Pleasure.

So Mohammed has got his heart set on making this an HMO for students,

which I think is a very good idea.

The university is just down the road

and if he touches those impressive yields, it'll be money well spent.

But will he pass his test with flying colours

or will he be university challenged?

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

It's been a while since we visited our remaining two properties.

Have they got all the work done or did they make a mess of it?

Has it all been plain sailing or rough waters?

Let's go back and find out.

Back now to the town of Chatham in Kent,

where Lucy saw a small studio flat at the end of a private road guided

at between 50,000 and 55,000.

There was a rather nice communal foyer,

but inside the flat was a different story.

It appeared to have been empty for some time.

There were some problematic areas of damp

and it was covered in textured wall coating.

Yes, it was small.

But for a studio flat it was to be expected.

At least it had a separate kitchen.

Oh, my goodness me! Look at it!

Yep, so we need a skip and we need to get all this stuff out

and it needs to be dumped in there.

But good things often come in small packages,

which was the case when part-time property developer and local celebrity

Mary bought the flat at auction for 60,000.

So, Mary, tell me, what's been happening since we last saw you on

Homes Under The Hammer?

Loads of people have recognised me.

Over 20 people on the street have recognised me, all over the place.

-I can't believe it.

-So complete strangers have been coming up to you

and saying, "We recognise you from Homes Under The Hammer"?

Today, a car stopped and said, "Oh, have you been on Homes Under The Hammer?"

I said, "Yes."

With more than 20 renovations under her belt,

Mary was certain she could get this studio flat into pristine condition

for £4,000 to £5,000 in a matter of three months.

So when we returned seven months later,

was the flat ready for its close-up?

The flat is looking much fresher and brighter.

That icing, cakey wall coating has gone

and has been re-plastered with a lovely smooth finish.

The unsightly water tank has been tidied away in a smart new cupboard.

And that large damp patch has been treated and looks good as new.

The kitchen has been ripped out and replaced with much more functional

fittings in neutral creams and greys, with a space or two for a tipple.

That grotty bathroom has also been given a new lease of life with a new

suite and is now sparkling.

It's quite a transformation!

The wall was in a terrible state.

There was damp all over this bit here.

The kitchen was a complete wreck.

The bathroom was a complete wreck.

Just about everything was a complete wreck!

SHE LAUGHS

This is no comparison now.

I just can't believe it's the same place.

The builders have done a smashing job, but I must say,

I'm a little disappointed.

It's not as colourful as Mary.

This is always the safest shade to have.

Nobody in their right mind would have red!

SHE LAUGHS

Some people like it,

but not if you're...other people coming to look at it though.

The neutral colour palette seems to have done the trick,

as Mary has already secured a tenant.

So everything has worked out nicely,

but it did take longer than her three-month timescale.

Well, there was hold-ups along the way,

because unfortunately with builders,

they start a job and then they go off to something else,

and then they have to come back again.

So unfortunately, they don't do it all straight away.

The job probably could have been done in maybe a couple of weeks,

really going straight out,

but with these hold-ups, it took longer than that.

So the project overran,

but how did Mary fare with the £4,000 to £5,000 budget?

Oh, well, originally I thought maybe be about 4,000 and 5,000,

but it went over.

But this often happens.

Unless you can do it yourself.

Mary ended up spending 12 grand on the build,

which takes her total investment to 72,000.

But will that overspend be worth it?

What will two local estate agents

make of the changes to the studio flat?

I think my initial thoughts is they've done a very nice job to it.

It's very cosy, very nice and warm with the heating.

I think its disadvantage is the access to it. For some people,

they're not going to quite like going up the back there.

Although the size is on the small side,

I do feel that it does have everything that you would need.

It has been freshly painted. You can see that it's got new carpets.

The kitchen is fantastic

and so is the shower room there.

So to have a brand-new apartment in this area is quite sought-after.

I think the selling point of this property is where it's located.

It is very close to the town

and if you don't drive, parking is quite difficult around here,

then it's ideal to be able to walk to work or to a station.

The agents are right.

There's a strong demand

and Mary is already letting the flat out for £500 per calendar month,

which is within the range the agents recommended.

This gives her a healthy yield of over 8%.

Mary does want to sell the flat at some point,

but what would her £72,000 investment make now?

I would suggest placing it on the market in a guide price of £75,000 to £80,000.

I think if I was putting this on the market now,

I would be looking at offering it out at say offers in the region of

£80,000.

It's not the best I've had,

but as I said, as I've gone through quite a number of properties,

to me it's just another property, you know, you get through.

It's still a potential profit of £8,000 minus taxes and fees.

But for Mary it's onwards and upwards.

Does she have any advice for any budding property developers out there?

There's quite a number of things.

You can make a lot of mistakes along the way.

It's not exactly a doddle.

But you've got to be prepared to risk it, basically.

You know, if you're too scared to risk it, you'll never do it.

It seems like only ten minutes since I was in Middlesbrough

looking around this two-bed mid-terrace.

It had plenty of floor space,

except it didn't have any floorboards in place.

Where there was floor, it was covered in lots of damaged items.

This probably contributed to its low guide price of 14 grand plus.

Central heating here, which is good.

This doesn't look in great condition.

As you can see, that's falling off the wall altogether.

The kitchen is just here.

It's a galley kitchen, nice and long. Not in great condition though,

so that would have to come out.

Same goes for the bathroom, which is right at the end of the property.

Apart from the radiators, all the rubble and the rubbish...

there's potential here, definitely.

The man who saw that potential at auction was London-based

property developer Mohammed.

He paid £28,500 for the property, just over double the guide price.

-Were you happy with what you paid?

-Yes, definitely.

-I'm happy.

-What would it cost you down south?

Yeah. I mean, the price which I paid up here,

you can't even pay the deposit.

It's about ten, 15 times more higher than this.

Being close to the university, his plan was to convert it into a HMO,

a house of multiple occupancy.

So, for example, if there's four rooms up here,

I'm getting about £450 per week.

The yield is about 18%,

which is not bad either.

Not bad if the work can be done economically.

Mohammed had a plan to use his trusted tradesmen from London who'd

worked on his portfolio of rental properties before.

I have six, seven people, so I'm going to bring them down here,

so they're going to have their holidays while they're working here as well.

It's going to be away from London where it's a hectic life down there,

so it's going to be away from London, plus, after the work,

it's going to be all partying going on.

So, was it all play and no work when it came to attacking his ambitious

three-week timescale?

Well, we're back, 27 weeks and one day later.

The rubbish has been cleared and in the first reception room,

in the first bedroom of what is now a two-bed downstairs flat.

Looks like the long-distance working has worked out.

What used to be the rear reception room is now the second bedroom of

the downstairs flat.

The new radiators I was hoping for are there and a number of safety

features have been installed, along with fitted wardrobes.

It couldn't have been much of a holiday for Mohammed's team of builders.

The rest of the downstairs tour starts with the hall.

Very nice.

In the new gallery kitchen, there's a new boiler, toaster and kettle,

and all the mod cons.

The wreck of a bathroom has new fittings and tiles.

Heated towel rail, neutral tones will make bath times a little more appealing.

So, to the upstairs where the old back bedroom is now a studio flat.

It's amazing these days what you can fit into a small space.

But I don't fancy my chances in that small shower tray.

There's another studio flat where the front bedroom was.

But was it all worth a 24 week and one day overrun?

What does Mohammed have to say about that?

It took me a little while to find the good builders to come into the property and

just sort out everything for me,

rather than me coming around and sort it out.

Hang on a minute, you told me you were going to use your London-based

-team.

-Bringing them here,

it was costing me a little bit more, so I was thinking, rather than bring them here,

just give a contractor a job to finish it off for me.

The local builders took care of...

well, building. They also did acoustic tests,

electrics and gas certification.

They even sorted planning permission,

which also didn't go to Mohammed's plan for a HMO.

I told my builders to find out what exactly can we do

and ending up having three flats into the property, which is all good.

He believes he'll make a much better return with the property as three

flats, but how long did it really take?

Everything from start to finish, they'd done in four weeks,

as you can see, so I will 100% prefer them.

His local builders have really pulled it out of the bag,

allowing Mohammed to concentrate on projects closer to home.

I just came a couple of times, especially to come here to make the payments basically.

Let's find out from two local estate agents if Mohammed's payments were

wisely invested.

First, the agent who visited before work commenced.

First impressions, I think the owner's done a fabulous job.

They've used all the space available.

Really well done with a great finish.

So, the market that this property will be primarily aimed at

would be the student market.

It would be really popular with students in the area.

In fact, one of the agents told us the council were converting another

terraced house for student lets at the end of the street.

Good news for the local market.

The university is expanding, so that's good for the area as well,

so we are seeing more activity in the market at the moment.

The agents predicted an average total rental income per calendar month of £1,340.

Mohammed spent £28,500 at auction and budgeted a £10,000 spend for

refurbishment. He says this increased to £30,000 because of the extra work

required for the unforeseen conversion to flats.

His business model is to rent and you can see why, because the potential yield is 28%.

Of course, he could have empty rooms during the summer period, but

nonetheless, nearly a 30% yield is very impressive.

30% yield you cannot get from anywhere in London, definitely, first of all,

but it's a very good return and I'm happy with that.

And so he should be.

And I'm glad to see, for a change,

a great return on capital from outside the capital.

Well, that's it for today's show,

but there's always something new to learn in the world of property,

so make sure you join us next time.

Yes, please do, right here on Homes Under The Hammer.

-See you.

-Goodbye.