Episode 5 Homes Under the Hammer

Hello and welcome to the show. Now, for many people, investing in

property is a good way to look after your money, but there's

-always risks along the way.

-Yes, it pays to be cautious,

especially if something seems too good to be true.

But one place where you might find

a real bargain is at your local property auction.

Well, buying property at auction is surprisingly simple and

pretty straightforward and yet,

lots of people are intimidated by the whole process.

Yes, it does help when you learn from your successes and your

failures as well. That's where we come in.

Let's find out how the people on today's show got on at the auction house.

First up, in Beeston, and you could call this one a fixer upper.

What an absolute mess! What on earth has gone on in here?

Whilst in Dulwich, London, Lucy is being pushed from pillar to post.

A little bit tight. You can literally bounce off the walls.

The size issues continue in Godalming, Surrey,

where a property described as a two bed is stretching it somewhat.

You can't get a bed in there, so it's not a bedroom.

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 at 60, thank you.

We now head to Beeston, a popular and busy town that lies just

three miles south of Nottingham city centre.

Already a favourite with property investors,

it's really on the up, thanks to the addition of a tram system.

Well, those are tram lines and that is a new development for this area.

Basically a tram which leads all the way into Nottingham city centre and

that's really bringing up all the properties around here,

so somewhere to look for a bit of a bargain with potential and

that's certainly what this is.

Former commercial unit with residential above.

I certainly like the half timber look.

Let's hope it's as good on the inside as it is on the outside.

Ah.

Right.

Floor's an optional extra then.

What an absolute mess! What on earth has gone on in here?

My guess is nothing, for a very long period of time.

Um, it's falling to pieces, isn't it?

Now, just imagine...

Just imagine that you'd seen the picture from the outside in

the auction catalogue and thought, "I'll have a go at that.

"How bad could it be inside?" Ha!

What horrors are in store around here then?

How much?, I hear you ask.

Guide price £75,000, but you might be asking yourself...

# What in the world can I do?

# What in the world can I do? #

But someone will take this on.

At the back here, there's some toilets and what looks like,

under all that mess, a bar.

But no time for any light refreshments.

So, where do I start with the

clearly big problems of this property? Well, you know,

you don't need to be a rocket scientist to figure it out, do you?

We've got structural issues. There's no floor in this bit.

There's a bit of timber holding up

one of the major structural beams there.

We've got damp. I guess it's a catalogue of all sorts of rot.

So, does that mean it's a non-starter for ten?

You'd just like to forget about it? Well, possibly not because this

would have put a lot of people off. I mean, you stepped in the front

door and straightaway you think uh-ah. However, you know,

a good builder and a reasonable budget could sort this place out.

But for now, a lot of imagination is required.

I can just imagine that I'm sitting on the dock of a bay right now.

Cue Otis Redding.

# Yeah

# I'm sitting on the dock of the bay

# Watching the tide roll away... #

It's going to take far more than sitting on the dock of

a bay to get this place ship shape.

Anyone taking this project on needs to be realistic with their

ambition and there is of course another hurdle to navigate.

Well, one problem we haven't talked about with this place,

in our long list, is the potential for finance.

Now, not only is the state of the place going to give you

a bit of an issue, when it comes to talking to a lender about giving you

money to do this place up, but the fact it's mixed use,

as in residential upstairs and a business premises downstairs,

will limit severely the kind of lender who will actually lend

you money on this. However, as with all these things,

if you present them with a spectacular enough business

case, you might find somebody who just goes, "Oh, yeah.

"I can see what that could become," and give you some money.

But I wouldn't, ahem, necessarily hold your breath.

# I just can't rely on you

# Just can't rely on you... #

Yeah, you'd better make sure your finances are in order before

you visit the auction,

otherwise you could land yourself in hot water, which is ironic,

because I don't think the flat upstairs has any of that.

So, round the back of the property, there's a little courtyard,

up some steps on to this flat roof and you can gain access to

the flat that's above the retail unit.

However, warning, enter at your own risk. I don't think so!

However, Russell, cameraman, good lad!

# Don't say a word, don't say anything

# Don't say a word, I'm not even listening

# You better watch your step... #

Now, of course, no camera person was harmed in the making of this film.

We took sensible precautions, so don't worry.

Anyway, up here, and despite the obvious problems, it is a good size.

There's a kitchen and a bathroom, plus attic space.

Now, this could be one large two bed, or maybe two one beds.

Either way, it's going to take

someone with vision and determination.

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

property, guided at £75,000.

If this was my property,

and based on if I can get the appropriate planning consents,

I would downstairs convert it into two separate shops and

upstairs look at the avenue of trying to have two separate

apartments of have one apartment of a very high standard.

OK, that sounds like an option,

but how much would something like that cost?

I'd probably be looking and it's very approximate within the

region of around £100-125,000.

What about valuations if you did convert the upstairs?

A two bedroom apartment in Beeston city centre,

you're looking within the region of around £150,000.

If you're selling a one bedroom flat in Beeston town centre,

you're looking within the region of around £100-125,000.

OK, that's that.

But how much would you be able to rent a commercial unit out for?

With regards to downstairs, two retail units, you're looking at

a projected rental income within the region of around £17,000 per annum.

And what about selling the unit as a whole?

If you're looking to sell the downstairs units,

and take into account it's one large unit or two separate units,

and you've got a large two bedroom flat upstairs,

you're looking within the region of around £250-275,000.

Well, look, let's be honest.

It's not a project for the uninitiated, is it?

However, I do think this place has potential.

-DOG BARKS

-Thank you, dog. And it all comes down to the price

that's paid at auction. Let's see what happened when it went under the hammer.

It requires some upgrading, repair, and improvement,

but has got lots of potential. Start me where you like with this

one, ladies and gentlemen. 70,000 for it, may I say? 70,000.

70. 65. 65,000.

60,000 to start me. Renovation project with potential.

60, I've got. Thank you.

Bidding was slow to start, going up in £1,000 bids.

It looked as though it would struggle to reach the guide price,

but then things got interesting.

We rejoin at an amazing £155,000.

155,000.

Your bid. 56.

156. 57.

157.

Throwing the towel in?

157,000.

All done? Definitely? Going down.

8. 58.

159.

159, now. Nice round figure, 160.

£159,000. Is that a definite?

Or a maybe?

A definite.

-All done?

-BANGS GAVEL

Sold at 159. Thank you.

Bought for over twice the guide price for £159,000,

the successful bidders were brothers Jamil, here on the left, and Manir.

I met the pair back at the property to find out their plans.

-Jamil, Manir, lovely to meet you both.

-Hiya. You all right?

-Congratulations.

-Thank you.

-You've taken on quite

-a challenge here then.

-It is a big challenge.

Tell me why you wanted to buy it.

We did some research on the area and there's

no retail properties available on this stretch of road and it's

also up and coming as well because the tram works are finished now.

In fact, there's a tram going past, as we speak.

That then was a major part of one of the reasons you wanted to buy it,

the tram that's literally outside the door.

It wasn't just the tram. I think we just found this are was just starting to be a bit more

upmarket, starting to come up with a few bars opening up, small

delis and restaurants, so we thought this would be a good location.

So, then, the idea is to keep it as a retail unit, is it?

We're thinking about separating two separate units and have two

-flats upstairs as well.

-OK.

-But keeping it commercial.

-Yes.

-Yes, keeping it commercial.

-Right.

With a view to using it yourself or renting it out or what?

-No, we're just going to rent them out.

-Right.

While Jamil and Manir's full-time jobs are as postmasters,

they have done a couple of property renovations before,

so they're not novices.

To create two flats upstairs,

they're hoping to get planning permission to extend out onto

that flat roof and twice the flats means twice the rental potential.

What kind of rent have you been thinking you might be able to get?

Well, we spoke to a local estate agent.

-Roughly, for this size, 6-7,000 for one shop.

-For a year.

For a year, per annum.

-OK.

-And upstairs flats, two bedroom, anything between 5-550 per month.

OK. Just to tot it up then, approximately, 12,000,

6,000 for each of the flats, that's 12,

-and then 6,000 for each of the retail units.

-That's right.

Approximately. So 24 grand on your 160,000-odd,

by the time you've factored in cost purchase.

-So a good return.

-It is, yeah.

That's why we were looking for this area and this location.

-Definitely upcoming and definitely potential here.

-Right.

Now, of course, I worked that out without working out how much it's going to

cost to actually do these places up, so that is a really important point.

-So, we're estimating roughly between 30-40,000.

-To do the whole building.

-To do the whole building.

-Oh, wow! That's pretty good.

-We will be doing a lot of stuff ourselves as well.

-Right.

So I'll be doing a lot of the DIY work myself, sort of thing.

Right, OK. You'll be into it for about 200,000 by the time....

-That's right.

-Yeah, round about that figure, yeah.

So if your income is 24 grand, that's still pretty impressive, isn't it?

-Yeah.

-Wow. So, what's the timescale?

The timescale, looking about 4-6 months,

so depending on the council for the permission.

-It will take eight weeks to get a reply.

-Great.

-So we'll take it from there.

-Well, listen, congratulations.

-Good luck with it.

-Thank you very much.

-We look forward to seeing how you get on.

-Thank you, Martin.

Well, Jamil and Manir have certainly got a few challenges ahead of them with this place.

However, they don't seem too daunted.

And when you listen to the potential in terms of that amount of

money coming back in rental, well,

you can see why they're very excited about it.

How will they get on? You can find out later in the show.

Now, we wind the clock back to 2014,

when Lucy visited the very popular London suburb of East Dulwich.

Along a pretty tree-lined street, close to local amenities,

Lucy looked around this semidetached four floor

property that had been split into three flats.

One on the ground floor, one on the lower ground,

and the third comprising the top two floors,

all for a hefty guide price at £620-650,000.

It's not as huge as I would have expected.

The hallway is just, well, look - a little bit tight.

You can literally bounce off the walls.

You've got some stairs leading to the upper flat.

And through here, again, you know, tight spaces.

# Don't stand, don't stand so

# Don't stand so close to me... #

The ground floor flat had a kitchen and a small bathroom,

plus a bedroom with the dreaded textured wallpaper.

But that was the least of the problems here with this

bizarre layout.

It's tight, you've got a big slope here, it's all a little bit,

you know, get round.

Not an ideal place for the fridge, so I would relocate that.

But you have got a really nice spacious lounge through there.

It could be quite a nice little flat.

Let's check out the upstairs one.

Split over two levels, the top floor flat was more spacious,

with a decent sized kitchen,

along with a reception room and good sized bedroom.

But it was the upper level of this flat where things got interesting.

I'm just wondering...

Yes, you could potentially knock through here, apply for

planning permission, you could put a nice dormer window there.

Really open the space up, so you've got a great master bedroom.

You could put an en suite shower room in the corner.

I really think that would work well and then this would be a fantastic master bedroom.

On the lower ground floor was the one bedroom flat with its own

separate entrance and access to the good-sized garden.

Inside, it was pretty spacious, but dated, and along with the

rest of the property, not really achieving its potential.

A lot of work was needed to all three flats, but then,

once complete, it could be a very sound investment for the bidders on auction day.

96, we're moving in to East Dulwich. Semidetached building. Three flats.

Subject to addendum. I've got phone bidding. Start me at 600,000.

Opening bid of 6, please. 600,000. Straightaway, gentleman there.

610 anywhere? 600, I'm bid.

So, the bids built slowly and steadily.

We rejoin just at the point where it's about to meet

-the £1 million mark. That guide a distant memory.

-995.

Your pleasure, a million in the bank, sir.

£ 1 million I'm bid and 5.

Passing the £1 million mark, we rejoin again at £1,030,000

£1 million and 30, is that right? I think that's right.

So £1 million and 40. That's 35, is it, sir? 35.

And 40, sir?

And 40. And 5?

45. And 50.

And 50. And 55?

No, so I've got £1 million and 50.

55.

60, sir. I'm bid. 65.

No. £1 million and 60, first time.

Second time. Third and last time at £1 million and 60. All done?

BANGS GAVEL

Yours, in front of me. £1 million and 60. Thank you.

It was bought on the day for £1,060,000 by professional

pianist and violinist Edgar.

He bought it on behalf of a property

and music company owned by him,

business partner Paval,

and Edgar's father, Slava.

This was the company's fifth property purchase in just its

first year of trading.

Lucy met Edgar and Paval at the property to find out the plans.

Why did you want to buy this property?

My dad is involved in the property development business for the

last 15 years.

We've done some research, spoke to Paval, show him this property.

I went to the auction and won this lot.

Had you set a limit for this building?

-It was actually £1 million, so we paid 60,000 more.

-We overpaid a bit.

However, it was a strategic decision because this house

has a lot of potential.

Edgar and Paval were in two minds as to whether to convert the property

into one large family home or renovate the existing three flats.

But they were keen to extend out the back and make the most out of

the property's potential.

We're going to do some loft conversion as well in the rear garden side.

-That'll be fantastic. There's a lot of spare space in the roof if you extend.

-An extra bedroom.

-So, if I ask you, what is your budget, can you answer that question?

-Yes, we can.

We are looking around £40,000 for each flat.

-And if you convert it into a house, into a family home?

-£140,000.

If you renovate the ground floor flat and you get an extension, how

much do you think a flat downstairs like that would be worth on

the open market?

I think it'd be worth about 500,000.

You're hoping £500,000 for the flat downstairs.

I think this flat, we are looking for £450,000.

OK. £450,000. And what about the upstairs flat with lots of stairs?

We are thinking about 550,000.

So, really, you do hope to have a decent profit at the end of it.

Yes, we are looking ideally for £300,000.

Fast forward 11 months later and the exterior of the house was

much improved.

Inside was a work in progress,

with the decision made to renovate the existing three flats.

Whilst there was plenty of work to be done on the ground floor,

and lower ground floor flats, they were starting to take shape.

When Lucy met Edgar and Paval, they were keen to maximise profit

here and that desire had now taken on a new angle.

You can see we have quite a large garden.

So we have several options.

The initial option was to split the garden in three parts,

so each flat would have a separate garden.

But obviously that would get much more value if we would be

able to develop a house at the back.

Yes, adding a property at the back could be a real money-maker,

but they also needed to complete their existing property.

They'd secured planning permission for an extension to the

ground floor flat and also for the rear loft conversion,

turning the split level top flat into a three bedroom property.

As well as an extra bedroom, they'd created a handy laundry room.

By combining bedroom one with the kitchen,

they'd made a modern and slick kitchen diner.

The front reception room became the master bedroom,

complete with en suite.

With such a high-end finish to this flat,

the estate agents felt it could generate a sale price

of £600,000, but as ever, Paval was setting his sights higher still.

We are looking to get 700,000 and irrespective of some other

lower forecasts, we are quite ambitious about this flat.

You can't say much about the properties downstairs,

as they are still being done, and once they are done,

we can predict more specifically.

# But he's got high hopes

# He's got high hopes

# He's got high apple pie in the sky hopes... #

Well, the estate agents did feel happy to predict the value of the

remaining flats and the average for both flats combined was £950,000.

Plus they estimated that should they get the planning permission for

the large family home,

that could generate a sales

valuation of around £875,000.

So, did they get the planning permission for the extra

property and did the remaining two flats get finished?

Join us later in the show to find out.

# But he's got high hopes

# He's got high hopes

# He's got high apple pie in the sky... #

Still to come in Godalming, Surrey,

you learn all sorts about yourself when renovating a property.

I'm a little bossy!

-Yes.

-But he likes it.

And in Dulwich, London, have Edgar and Paval been able to turn what was

a building site into desirable flats for the demanding London market?

Back to Nottinghamshire now and the town of Beeston.

It was on a busy high street,

complete with recently added tram lines,

I looked around this former commercial unit with residential

accommodation above that had an attractive guide price of £75,000.

Well, I certainly like the half timber look.

Let's hope it's as good on the inside as it is on the outside.

Ah.

Right.

Floor's an optional extra then.

What an absolute mess! What on earth has gone on in here?

# You're in a bad way and I can't help you through... #

Yes, the term "room for improvement" fell a little short here.

This unit was in a horrific state and needed a huge amount of work.

# Just dial my number, I've got some plans for you... #

Out the back and up the stairs to the residential half and the

signs weren't good. Literally.

Looking beyond the mess up here though and it was

a good size with potential for one or maybe even two flats.

# Oh, yes, wait a minute, Mr Postman

# Wait, Mr Postman... #

Two people who weren't put off by the mess were brothers and

postmasters Jamil, on the left here, and Manir.

They paid over twice the guide price, at £159,000.

So I was hoping their plans would be first class rather than

return to sender.

We're thinking about separating two separate units and have two

-flats upstairs as well.

-OK.

-Yeah.

With a view to using it yourself or renting it out, or what?

-No, we're just going to rent them out.

-Right.

The brothers hoped to extend on to the flat roof,

in order to create two two bedroom flats, as well as two retail

units downstairs,

all for a budget of £30-40,000 and in a timescale of 4-6 months.

So, do we have two retail units and two flats by two brothers?

Let's see.

# It takes two, baby

# It takes two, baby

# Me and you

# It just takes two... #

I know I do say this a lot, but this is truly unrecognisable.

The brothers have done a sterling job,

turning this building site into two smart, spacious units.

They will make a great blank canvas for any retailers.

Out the back and it's looking so much better.

And if you cast your eyes upwards,

it looks like they got planning permission for the extension too.

# It takes two, baby

# It takes two, baby

# To make a dream come true... #

Thanks to the extension on to the flat roof,

there's now two two bedroom flats.

Both have living spaces with open plan kitchen-diners,

with modern, clean lines.

What's more, they've extended into the attic,

to create bright and spacious bedrooms in each property.

There's a separate second spacious bedroom downstairs in each flat.

There's also brand-new bathroom suites and a general sense of

space and freshness that just didn't seem possible 12 months ago.

I think the biggest work that we've had done is the extension part at the back.

It's definitely made the property much better, much more open,

and much more let-able, I guess, and resell-able.

Commercial units, we changed the frontage on them.

Also, we raised the ceiling height.

As you probably see, we've now got a floor at the front as well,

which wasn't there before.

So we've got a floor, we've had to put new joists in and put new floor

in and then raise it up to make it level with the rest of the floor.

We actually found a structural beam that wasn't actually resting

on the wall, but was actually resting on a piece of timber.

So that was another major work which we didn't expect.

And now that we've cleared all of that out,

and we've just made it a level high ceiling...

It's worked out really good and we're really happy with the

retail units.

Yikes! Extensions, loft conversions, structural beams,

joists - all big expenses.

Plus they added a shared access entrance out the front for

future flat tenants, so I'm afraid to ask, how's the budget looking?

So, our original budget was between 30-40,000.

-We've gone slightly over that.

-Slightly.

We've gone to 56,000, in total, including everything.

Our original timescale was 4-6 months.

But we got delayed with the council planning permission and also

with the tram line, so the scaffolding was an issue.

The time we had to find out who would be able to put it up, when

they'd be able to put it up, what the cost would be, delayed things.

So it's taken us about a year now.

Well, you know, £56,000 and in 12 months is still pretty good,

considering the amount of work they've done here.

But with Jamil and Manir set on renting,

will their investment of £215,000 make financial sense?

We've asked along two local estate agents for their opinions,

starting with the agent who saw it originally.

You've got two excellent retail units and also two spacious

and contemporary-style flats, so it's an incredible transformation.

The flat upstairs has been finished to a very high standard,

in particular the kitchen

and bathrooms. They're nicely tiled.

Good standard of carpet through.

All lightly decorated and that will make it very popular.

The agents are impressed,

so let's hear what they think the whole unit combined could be worth.

With regards to selling this property overall,

the whole entity, you're looking within the region of £250-275,000.

So, as a whole, I would expect to achieve somewhere around

the £300,000 mark, if we were to market the property as a whole.

That top estimate would mean a pre-tax profit of £85,000.

Very nice.

Rental wise, you're looking to achieve overall

a rental income somewhere in the region of £28,000 per annum.

I would expect to achieve somewhere in the region of £700 per

calendar month for each of the flats.

I would expect to achieve somewhere in the region of £600 per

calendar month for the retail space. Per unit.

So, if they have a combined rental of £28,000 per annum, that

would equate to a yield of nearly 13%, which is a fantastic result.

And whilst they're planning a well-deserved holiday,

they also have an eye on future projects.

I'm always checking my e-mail to see what's coming up for auction, so yeah, definitely.

This is the historic town of Godalming in Surrey.

The weekly market has been here since 1300,

making this attractive town very popular, especially with commuters.

These days, you can travel by train into Waterloo in under 50 minutes.

The property I'm here to see is about half

a mile from the train station.

So, we're just down the road from Charterhouse School,

which has lots of famous former pupils.

Lots of politicians, members of Genesis, including Mr Peter Gabriel.

That's enough of the pop history.

We're here to see this ground floor two bedroom flat,

with a guide price of £150,000.

Let's take a look.

# I wanna be a sledgehammer... #

The first bit of good news, there's already off-road parking at the

front of the flat, but also, there's a garage in the block at the back.

Right.

I like the fact that there's a bit of a porch here.

Yes, it's not the prettiest looking,

but it's somewhere to put your coat, your wellies,

and your dirty shoes,

so you're not dragging the mud into the main part of the property.

OK, you've got a small room just there to the right of me.

I'll get back to that in a minute.

But then you come into this really good-sized lounge,

living area, big window, lovely high ceilings, central heating as well.

There's lots of space in here to put your TV and your sofas and

everything. Come up a step, into this part of the flat,

you've got a big good-sized bedroom behind me.

And you've got as well a kitchen and a bathroom just to the left.

The kitchen's a really good size, in good condition as well,

which I think you'd be able to keep.

Possibly think about changing the bathroom in there.

It's a bit tight, but I'm sure you could rejig it.

But I'm a bit baffled.

There's your bedroom, which is a good size, but that's only one.

So that, over here, has got to be the second bedroom.

Now, there's no hard and fast rules

on what size a bedroom has to be.

There's guidelines, but there's no rules.

But there is in my head. You can't get a bed in there.

So it's not a bedroom.

# I have no space, no room to move around

# And this box is getting smaller, I'm trying to get out... #

It's more of a boxroom than a bedroom.

You might squeeze a baby's cot in here or it could be a study,

but really, it's not working.

So, how could you rejig it so it works just a little bit better?

The bedroom, for me, the small bedroom isn't really a bedroom.

I would get rid of that.

And I'd knock it through into one big lounge.

I would look to move this kitchen into the lounge area,

so you'd have like a kitchen lounge area.

That would leave this room completely free.

This could be your second bedroom.

Don't forget, the family bathroom's just next door there and the

other bedroom's on the other side of that wall.

So you've got your sleeping accommodation on this side of

the property, living accommodation on that side of the property,

and for me, that works so much better.

Of course, there is a cost in moving all the plumbing and electrics.

On top of that, you would need to get the freeholder's

permission to make such a major change.

So is it worth it?

We asked a local estate agent to get her opinion on the property

that's guided at £150,000.

This property would really benefit from being revalued as

a one bedroom property.

It's not a bedroom. It's a child's cot room.

Or it would be good for a study. A very, very small study.

I would get rid of it completely.

Take away that small area and turn it into an even brighter

style living room.

The rest I would say would be cosmetic.

We are all agreed the small bedroom has to go,

but the jury is still out whether it should remain

a two bed with some re-jigging, or a spacious one bed.

Perhaps the valuations could give us an idea of the best way

forward for this flat, which is guided at £150,000.

If you kept it as a two bedroom and perhaps moved things around,

made the living room open plan, into an open plan kitchen area,

it would be worth between £250-255,000,

on a resalable value.

If you were to keep this property as a one bed,

I think you would only be taking it under to say £245,000.

OK, for just a £10,000 uplift for the second bedroom,

it might not be worth the hassle.

Given it might cost you a lot in rewiring, re-plumbing,

gas and water and perhaps drainage to move the kitchen.

It could well suck up any difference between these valuations.

This flat is in a good location,

property prices in the area are healthy.

It just needs a bit of a tidy up and that second bedroom,

would you keep it or would you get rid of it?

Let's go to the auction house and see who fancied it.

Unfortunately, we weren't able to catch this particular lot

on this occasion.

But the successful bidders getting a house for 186 grand

were Erica and her husband Hamid.

They already have one rental property and whilst Hamid

entertains their daughter Ellie, I found out from Erica

what the plan was going to be.

-Erica, nice to meet you.

-Nice to meet you.

-Congratulations.

-Thank you very much.

-Are you happy?

-Yes, yes.

What was it about this place that you liked, then?

I think it was the window and the open space. It was the location.

The road is beautiful. And it's just a lovely area.

Do you know the location well? Is it your area?

No, actually we just came here on the day of the viewing

-and we just loved it. We just fell in love.

-Really?

Yes, we just love the area.

So were you looking for something like this, this kind of size, a flat?

Yes, we were looking for maybe one or two bedroom flats

to renovate so it was kind of what we wanted.

And your day job, what do you do? What is your day job?

-I'm a full-time mum now but...

-Nice.

-Yeah, thank you.

We've run a chauffeuring company for ten years...

beforehand, so I've been on maternity leave for almost a year now.

And we decided to get into this.

Check your records for me cos I might have been in the back

-of one of your cars at some stage.

-Possibly.

If you'd allowed me in, that is!

So you wanted to get into property now, away from that?

-Yes, that's correct.

-Why is that?

We just wanted something a little less stressful

than what we were doing and also give us a bit of flexibility

with our daughter so that we can be at home

and switch between working and stuff.

Whose idea was it to go into property?

It was actually my husband's.

We've got a friend who is an electrician and he always had

a plan to maybe go into business with him.

He should hopefully help us with this, so he had this plan

-about two years ago and it took a while for us to get going.

-It does.

You've got to do your bits of planning,

your bits of research and find out what you want to do.

We have family in this business as well so we thought it was

-a good way to start.

-Bit of a head start then?

-Yes, little bit.

So, now you've got it, what are your plans for it?

Well, we were thinking that because the small bedroom is very small...

-Very small.

-Yes.

..we were thinking of knocking that wall down and possibly bringing

a kitchen into this area, so making it open-style kitchen-living area.

And converting that kitchen into a second bedroom.

Ah, so Erica and Hamid were thinking what I was thinking.

I know on the face of it, the maths don't look great but I can't

help think it will make this flat more appealing to the market.

When it's all done, are you looking to sell or rent?

I think we want to sell it.

If the market is good, we want to sell it but let's see what happens.

-Exactly. Have you done your research on what properties cost...

-Yes.

-..around here to buy, to sell, to rent?

-Yes, we have.

We've spoken to a couple of agents as well about what the potential is

in this area so hopefully we can make a good profit

and then maybe move onto the next one.

You've got a little bit to do, not an awful lot. I know you want to

-move the kitchen this way which is probably the biggest job.

-Yes.

How much is that going to cost you? What is your budget?

We said maximum 20 but we're looking about 15.

-OK.

-So something like that.

We've just been advised that it's a bit of a big job -

things we want to do - so maybe 15 maximum.

-A bit of pipework and all that kind of thing....

-Yes, exactly.

-..got to be moved.

-The boiler as well

cos we've got a water tank in there and it's a separate boiler

so we want to get a combination boiler

-which I think is a bit of an expensive job.

-OK.

Does your husband know people that can do that for you,

professionals?

Yes, we have got some friends so hopefully they will give us a hand.

-Are you looking for mates' rates?

-Yes! Of course!

-So you are hoping a £15,000 budget hopefully?

-Yes.

-You've got 20 if you need to go to 20.

-Of course.

And how long is it going to take to finish?

We're hoping within three months,

-if we get all the approved plans through from the freeholder.

-OK.

-Are you worried about anything?

-Just... I think just the boiler.

Just about moving that cos we just wanted to move it either

into the porch area or just into the other side of the wall

-so just with the permission to move that.

-OK.

And what kind of finish can we expect? Is it going to be your eye

-that's going to be doing all the interiors?

-Oh, yes, definitely.

-Oh, you say that. Not for Hamid!

-No, not at all, just me!

We're just thinking wooden floors and high-spec finish.

Hopefully we will get a good job done.

Will you get involved yourself in regards the painting or stripping?

Possibly, yes, I've done some painting before so...

-When I was younger so maybe I'll do that.

-So you are project manager?

Yes, of course.

-Wow, and he'll just be your assistant.

-Of course, as always.

-Hamid's taking a back-seat!

-Yes.

-He might like that.

-I think so, yeah.

After a few years of stressful work, I think he'll like it.

-I wish you good luck.

-Thank you very much.

-I hope it works out for your first project...

-Thank you.

-..and you make a few quid.

-Thank you.

-That's what it's all about.

-Good luck.

-Thank you.

-Wish you all the best.

-Thank you very much.

So, Hamid and Erica have sold their chauffeuring company and taken

their first steps into the property developing world.

And I think they've got themselves a good little flat

but will they get the freeholder's permission to rejig the layout?

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

Time has passed since we visited our two remaining properties.

I hope they've been busy completing their renovations.

Yes, all sorts of problems could have occurred, though,

so let's find out what's been going on.

'It was back in 2014 that Lucy looked around this handsome

'semidetached property that had been split into three flats.'

'Sitting in the popular London area of East Dulwich,

'the property had a guide price of £620,000 to £650,000

'and on first entry, it didn't really impress.'

It's not as huge as I would have expected.

The hallway is just, well, look, a little bit tight,

you can literally bounce off the walls.

'All three flats needed serious rethinking but there was

'scope for an extension to the ground floor flat and extra room

'in the top floor flat.'

'Two people who could see the potential here were friends

'and business partners Edgar - here on the left - and Paval,

'who along with Edgar's father, Slava, had bought this property

'at auction for an eye-watering £1,060,000.

'They planned to extend to the back of the property

'and convert the loft into an extra bedroom,

'all with an eye on some ambitious valuations.'

If you renovate the ground floor flat and you get an extension,

how much do you think a flat downstairs like that will be

worth on the open market?

-I think it will be worth around 500,000.

-Really?

I think this flat, we are looking for £400,050.

And what about the upstairs flat with lots of stairs?

We are thinking about 550,000.

So, really, you do hope to have a decent profit at the end of it?

Yes, we're looking ideally for £300,000.

'We returned 11 months later and the good news was,

'the exterior of the house was much improved, plus they had been able to

'convert the top flat into a highly desirable three bedroom property.'

'Unfortunately, though, the bad news was,

'that the other two flats were very much a work in progress.

'Although that hadn't deterred Edgar and Paval from making fresh plans.'

As you can see, we have quite a large garden

so we have several options.

The initial option was to split the garden in three parts

so each flat would have a separate garden.

But obviously, that would get much more value if we would be able

to develop a house at the back.

'Here we are, then, 18 months down the line,

'since we last visited and the exterior of the property

'has had further improvements and is looking very classy.

'Hopefully inside will be more chandeliers and champagne

'and less dust sheets and debris.'

'Ground floor flat first, I think.'

'The wall between what was the bedroom and kitchen

'has been knocked through.

'The compact kitchen area is partially closed off from the

'living area, which is great to contain noise and cooking smells.'

'First of all, the bedroom has excellent traditional proportions.'

'The once cramped hall is now open and fresh

'with a little laundry space created under the stairs.

'Good thinking.'

'And the bathroom, complete with stone tiles and high-end fittings

'completes this one bedroom flat.

'So, along with the top floor flat, that's two out of three - not bad.

'But what about the basement flat?

'Last time we were here, it was more of a building site.'

'Well, the extension to the back of the lower ground floor

'has transformed what could be a rather dark space.

'Bifold doors bring in a lot of light and allow direct access

'to the garden.

'The master bedroom to the front of the property

'is a great size and even boasts a walk-in wardrobe.'

'The hall is bright and spacious and again,

'the travertine tiles give the place that luxurious spa feel.

'Bedroom two - well, it's definitely a skinny single

'as a guest room or study would be fine.

'After almost two and a half years, Edgar, Paval and Edgar's

'father Slava's original investment plan has reached fruition.'

'These three flats are in a popular area so the top flat

'has already sold while the other two are currently rented.'

'It all looks so simple, but when it came to that other plan

'for a house in the back garden - well, not so simple.

'After two attempts at getting the house off the ground,

'they've changed their minds.'

That would require involvement of more solicitors and more

paperwork and more waiting time, unfortunately.

We have quite a lot of new orders that we have to work on

and we've been quite busy with that.

So, unfortunately, we didn't...

We couldn't take advantage of that opportunity that we probably had.

'Of course, not building the house means the flats have

'a valuable and prized asset.'

This building has three flats and each flat

has its own piece of garden which is a bit unusual for London,

which is good and the three bedroom flat

has a garden at the rear side, the one bedroom flat has the

middle garden and the two bedroom flat has the garden behind me.

# One, two, three. #

'Doing this means each flat can be marketed as a garden flat,

'making them more desirable.

'Another good idea.

'But how much have all the renovations in total cost?

'Paval initially believed it would be £40,000 per flat.'

So, altogether,

we spent about 240,000 for refurbishment of all the flats.

And that includes natural wood flooring,

quite high standard appliances and furniture as well as

a better quality finish on all the walls and ceilings.

We're really happy,

seeing new tenants move in here and we are trying to keep them

happy as well which is what gives us as much pleasure.

'All in all, they've invested £1,301,000 here,

'and whilst all the flats are spoken for, it'll be interesting to hear

'the thoughts and opinions of two local estate agents.'

The ground floor flat is done to a very high specification.

It's very modern, sleek, simplistic but works.

There's an open plan layout which works very well for

first-time buyers and it's a good property.

I think the developer's done well with the basement flat given

that they're always restrictions in terms of light and clearly,

the second bedroom suffers from that but what the developer's

done really well was with the main reception, opening it out, extending

and putting bifold doors in which really have transformed the area.

I think the possibility of building a house

in the rear garden is not that high.

The plot is only big enough to house three flats at a maximum and provide

decent garden spaces so at the moment, all flats work really well.

Had they built in the rear garden,

the plot would have been overcrowded and overdeveloped

and would have lost its curb appeal.

'The top flat was sold for £640,000.

'So the remaining investment of around £638,000

'is in the rental market.

'So what do the agents think they could achieve there?'

I think the ground floor flat would achieve £1,650 per calendar month

and the first floor, one bedroom,

would a achieve 1,300 per calendar month.

For the rental market, the one bed flat will achieve somewhere

between £1,250 per calendar month to £1,300 per calendar month.

The two bedroom flat will achieve somewhere between £1,500

per calendar month and £1,600 per calendar month.

We already are getting 1,400 a month for this flat, one bed,

and we're already getting 1,700 for the one downstairs.

So, we're quite confident and it's already a fact

that we are renting at that rate and therefore,

we are thinking about an even higher price next year.

'Those current rentals, they are achieving mean a yield

'of 5.8% so will they be better to sell the two remaining flats on?'

On the sales market,

the ground floor flat would achieve in the region of £675,000.

The first floor flat would achieve in the region of £450,000.

On the sales market, the one bedroom flat should achieve somewhere

between £450,000 and £475,000.

For the two bedroom ground floor flat,

I believe it will achieve somewhere between £600,000 to £625,000.

We believe that this flat costs in the region of £465,000

and the two bedroom flat costs in the region of £690,000.

Reasonable prices, we believe.

If they were to achieve these prices,

that would mean the two flats could be worth £1,115,000.

Add that to the flat they have already sold at 640,000,

that's a grand total of £1,795,000.

I'm running out of fingers to do the counting here but that would

mean a lot of profit.

£495,000 minus taxes and expenses.

They are content to take in the £37,000 in rental for the moment.

Either way, this is a property

that has proved to be very profitable indeed.

Time now to return to the market town of Goldalming in Surrey.

It was here I first found this ground floor flat

guided at £150,000 plus.

Although inside was relatively spacious,

its description of a two bed was a little optimistic.

The second bedroom.

Now, there's no hard and fast rules on what size a bedroom has to be.

There's guidelines but there's no rules. But there is in my head.

You can't get a bed in there, so it's not a bedroom.

But could there be a solution?

The front living space was large enough to accommodate

a large kitchen area which would free up the current kitchen

to convert into a proper second bedroom.

Erica and Hamid bought the property for £186,000.

And it was the first step to a possible change in career.

We ran a chauffeuring company for ten years beforehand.

So I've been on maternity leave for almost a year now

-so we decided to get into this.

-And why is that?

We just wanted something a little less stressful

than what we were doing and also,

give us a bit of flexibility with our daughter,

so that we can be at home and switch between working and stuff.

With a budget of £15,000 to £20,000

and a timescale of three months,

they were ready to go.

But as the flat was a leasehold, they needed to put the brakes on

any renovation plans until they got the freeholder's permission.

So we returned four months later and did they get the green light?

It certainly looks like it.

Their plans have come to fruition and the front room is now an

open-plan kitchen-living area.

The tiny room is gone, opening up the whole space

and making it much brighter and more modern.

They've opted for a contemporary,

neutral colour scheme and grey subway-style tiles.

And they've made use of the porch area by creating

a handy utility space with a new combi boiler.

So by my calculations, moving the kitchen has left a spare room.

Yes, there is now a fantastic dual-aspect double bedroom

where the kitchen used to be.

It really is a clever use of space.

The tired bathroom is a distant memory and there is now

a sparkling new suite with floor-to-ceiling tiling.

Last but not least is the second double bedroom which,

like the rest of the flat, has benefited from re-plastering

and new flooring but not solely for cosmetic reasons.

When we moved in,

we found out there is some damp and the smell was not good.

We asked the company to come and check and they came and they

checked and they reported to us that there is damp,

especially now with the wall outside

and something like 70% of the wall needed now to change.

We just ended up stripping back the walls ourselves, back to the

brick and they injected some damp-proofing course

and re-plastered.

So hopefully it's all going to be sorted.

And they've put air bricks in the property

so hopefully it won't come back.

Unfortunately, evidence of damp is not always easy to spot

and when it comes to property, what you see is not always

what you get as Erica and Hamid have found out.

When we first got the keys for the property, we were given

a key for the garage at the back and we were told when we went to view it

at the beginning as well that the garage came with the property.

However, a couple of months after completion,

we noticed that the garage was put on for auction

and there's four garages out the back so we were quite surprised.

And we delved a bit deeper and we found out that the freeholder

had decided to sell them so we ended up not having the garage

in the end, so that was a bit disappointing for us.

Erica and Hamid attempted to buy the garage but didn't succeed.

Just a reminder,

you and your solicitor have to scrutinise everything.

Not just about the house but the garages, right-of-way,

shared accesses and all those small but very important details.

The next issue they had to address was getting permission from

the freeholder to move the kitchen.

We eventually ended up getting through to him through one of

the neighbours and once we got through to him,

we started work and completed within four and a half weeks.

Tracking down a freeholder to sort permission

or lease issues can be a bit of a headache.

If you can't get hold of the freeholder, as a last resort,

you can go to your County Court and apply for a vesting order.

Luckily, in this case, the freeholder was found

and this allowed the couple to get the work done.

They've managed to overcome a lot of obstacles and only gone

£2,500 over their £20,000 budget

so are they happy with how it's gone?

We loved it and we're looking forward to getting another one soon.

Before you hit the next auction,

let's find out if moving that kitchen and your total investment

of £208,500 is going to be profitable.

We asked two local estate agents what they thought of the renovation.

First, the agent who saw it before.

Outstanding, I mean the changes are absolutely outstanding.

They really are beautifully done.

I think it's a lovely flat.

It's been redecorated to a really high standard.

Nice contemporary colours

have been used and it would suit the local market perfectly.

To create two double bedrooms from a very small project

is very good, very well done.

The agents are impressed so will that translate into profit?

The property re-sellable value would be £235,000.

The rentable value on this property would be £1,050 per calendar month.

I believe that the property could sell for £255,000 and I believe

that it would rent as an alternative for £1,100 per calendar month.

A range of figures there but the top value of £255,000 could mean

a potential profit minus taxes and fees of £46,500.

The top rental value of £1,100 per calendar month could mean

a yield of just over 6%.

So what do Erica, Hamid and Ellie think of those figures?

To be honest, they are a little bit lower than we were expecting.

We've been quoted around 275...

Between 275 to 285.

So, just a little bit lower.

It is good, 1,100. If we can get 1,100, I'm happy.

Based on the values, Erica and Hamid have decided to hold on

to the flat and rent it out, so is there more property in the future?

We definitely want to go for the next one and hopefully,

we will be doing better in the next one.

I think they have done a pretty good job of it for the first time

and it sounds like they have gained some very valuable knowledge.

I'm a little bossy...

-Yes!

-..but he likes it!

Well, thousands of properties are sold at auction every year

and we'll have plenty more for you next time.

Yes, we are spoilt for choice.

-Make sure you join us again here on Homes Under The Hammer.

-Goodbye.

Bye-bye.