Episode 3 Homes Under the Hammer

If you've ever been to an antiques auction, you'll know how exciting auctions can be.

It's one thing buying a teapot there. What about buying your house at auction?

Today we meet some people who all decided to take the plunge.

Let's see how they got on buying their homes under the hammer.

-Portsmouth is home to HMS Victory,

-but who will be victorious in the auction battle for this house?

There's potential in this south London terrace.

Potential to extend, convert into flats,

and I think potential to make somebody quite a lot of money.

These properties have been sold at auction.

We'll find out who bought them and what they paid when they went under the hammer.

Being near the sea means that land and property in and around Portsmouth is always at a premium.

The Fratton area of Portsmouth is no different,

so finding a reasonably priced auction property in this area

feels like my ship's come in.

When you're doing research for any property,

it's always wise to check out your neighbours or, at least, how much their property sold for.

Now, a quick search online and I found out the last five houses

that sold down this street sold for an average of £120,000, which makes this house not a bad buy.

It's got a guide price of £100,000 to £105,000.

Let's have a look around first.

One of Byerley Road's selling points is that it's just a short walk to Fratton Station,

but the downside is that the trains run right behind these houses.

It's definitely not for someone who's looking for a bit of peace and quiet.

So let's have a look around, then.

It's a little bit cramped in here.

The reception room's quite small

and it looks as though somebody's already started a bit of a dodgy paint job.

Got a corridor leading through to the second reception room, much bigger.

I've got to say, it feels quite roomy in here.

A lovely area under the stairs.

You could put some doors there, you could store away your vacuum, all your coats, I quite like that.

Somewhere to, perhaps, put a nice fireplace,

you've got double-glazed windows, which is good.

But what I really like is the fact that, through here,

there's an extension and it goes quite a long way back.

One of the rooms housed in that extension is the kitchen.

It looks rather spartan, but there are plenty of work surfaces.

It wouldn't take too much to rip out the old units and put in a new kitchen.

The services are here.

However, it's the other room in the extension that I'd like to change more.

Now, this is the downstairs bathroom.

The good news is there's a white suite, the bad news - it's stuck between the lounge and the kitchen.

Now, Martin and I always say if you can get your bathroom upstairs it's worth doing.

We always think it does add a little bit more value to your property.

So I'm going to pop up there and see if we can do that.

Upstairs consists of just two bedrooms.

They're not a bad size, though probably not big enough to accommodate a bathroom, unless...

Now I've been upstairs and have seen the size of the bedrooms, they're a great space.

I don't think I'd want to eat into it by creating a bathroom, although you have got a couple of options.

You could perhaps put an en suite through here.

You could push all the way through across the stairs,

encroach into the other bedroom and maybe put a shower and a toilet up here.

You could also put a corridor along here.

You could build on the extension out there, just like the neighbours have done.

But when you take into account the costing

and the time it's going to take, I just don't think it's worth it.

This is a lovely little house that doesn't need too much doing to it.

So let's see who fancies their chances at auction.

145, now.

We go to the terraced house for improvement and that's at 113 Byerley Road, Fratton in Portsmouth.

Walking distance to the shops, two bedrooms and a bathroom.

It's a good property to add value to here, plenty of potential in it.

We've got a guide of 100 to 105.

Anyone going to pop in at £100,000?

£100,000, I'm bid. 100, I've got.

And two? 102? 102 sitting down.

And four, may I say?

104 bid, I have.

And six, now? And six?

At £104,000. Six, James? 106.

106 sitting down, he's too late.

106. And eight?

108. It's still worth it. 108.

108, I'm bid. And 10? Nine I'll take if you wish.

109, I'm bid. 110 sitting down, sir.

110, 111. 112? 112 at the back?

112? 112. 113, madam, can I take?

113? And 14? 114. And 15? And 16?

Just got a few seconds to think about that last decision.

115,000 I've got. Are we all done at £115,000?

I'm selling for the first time. 116, I've got. He won't go 117, I'm sure.

Try it and...

No? 117? £116,000 by the bar. You've been with me for a long time, sir.

For the first time. £116,000 bid, I'm selling for the second time.

116 for the third and final time. All done. Yours by the bar, sir.

116, thank you very much. 3148.

For 116,000, the new owner of the two-bedroomed terraced house in Byerley Road, Portsmouth is Murray.

He lives just along the coast in Southampton with his wife and three children.

I've been buying and selling property now for about five years, mostly with a partner.

We've probably bought and sold about 20, I would say.

We had up to about a dozen in a rental portfolio.

Sold a few of those over last year or so, just so we can get some cash back out

to do more buying, refurbishing and selling on.

Are you a full-time property developer?

No, I've got a day job, a fairly busy day job.

I work in a bank and have done since I left school, so 25 years ago.

So that keeps me pretty busy, so this is very much weekends, evenings and so on,

but I've got a very good builder so I don't get too involved in the day-to-day stuff.

Murray's banking background gives him a good insight into the property market

and, importantly, how to find your purchases.

This is an area that many people feel uncomfortable about,

especially when spending - and perhaps borrowing - over 100,000.

People often say, "Have a good relationship with your bank manager."

-Now, what does that involve? Taking them out to lunch?

-That helps!

Keep them informed of your business, really, good and bad,

and make sure that if you do need something then you give them plenty of notice.

Let's talk about this property now, Murray.

Are you going to keep it?

Yeah, this one I will keep for a short period, 12, 24 months,

so I'm really just going to do a fairly minimal spend.

So what do you call a limited spend?

Probably get away with about between 6 and 7,

depending on what we finally do with the bathroom and how that scrubs up, really,

whether we need to replace it.

The bathroom was my initial disappointment.

I was like, "The bathroom's downstairs,"

but you do kind of expect to see that in a terraced house like this.

Are you going to move it upstairs, keep it downstairs?

No, I think just given the terrace and the way the houses are here,

there's an acceptance of a downstairs bathroom.

You could put it upstairs but there would be cost, it would be time,

and you would almost spoil the two good-sized bedrooms up there.

Murray will project manage this renovation

but rely heavily on the builder he uses for all his properties.

This is key to allowing Murray to do two jobs at once.

-Murray, you're a busy man - you're a banker, you've got property, do you ever have fun?

-Yeah.

I've got a family, I've got three children, two boys and a girl.

They keep me busy. The boys play football and rugby, but they're interested in property.

They'll often come down, have a look at the properties with me and help clean up.

-Is it something that you can see them doing in the future?

-I hope so.

I hope that I can build it up over the next few years,

but who knows with children?

-So it's a family business, really?

-Yes. Yeah, yeah, that's the intention, yeah.

Like most bankers, Murray is organised.

He's one step ahead of the game.

He's got his builder and he knows exactly where he's going next.

He won't have any problem with the finance, but he's got to stick to his budget.

The margins are so tight here. Let's see what happens later on in the programme.

I'm in Tooting, southwest London, between Wimbledon and Streatham.

This is Southcroft Road, about half a mile from Tooting High Street.

We're here to see a three-bedroom mid-terrace with a guide price of 245,000 quid

which for round these parts sounds a bit of a bargain to me.

The exterior doesn't give away much, but once inside, it's just as well.

The front reception room is a good size with an original fireplace, but the decor is tired.

There's a second reception room at the back with this hideous light

and a bizarre corridor leading to the only bathroom in the house

with separate WC and the stairs.

Through there is a kitchen in dire need of replacing.

I noticed a smell permeating this house -

damp and lots of it, probably rising damp, but it needs sorting.

Upstairs, there are three good size rooms with more signs of damp.

They are bigger than I thought, so you could move the bathroom up here.

There is planning permission to build a two-storey extension at the back of the property.

It will reduce the garden to almost nothing,

but it opens up the possibility of converting the house into flats.

But there's still a lot of work involved in renovating this house,

especially if you wanted to move that bathroom upstairs.

This house isn't without its problems, but it's not gonna cost too much to get them sorted out.

Then you're left with a place that's got great potential to extend, to convert into flats

and to make somebody a lot of money. Let's go to the auction.

So, Lot 18, Tooting. I like Tooting. Where will I kick off on this?

How much...? Yeah? 250?

Yeah? You in the front, yeah? 255, just behind you.

260? 260. 265.

270...? 270.

271. Yeah?

Two-seventy... 275.

280. 285.

285, standing up.

286 at the back? You're gonna lose it.

285, standing up. Anyone else?

First time, second time... 286. 287.

288, sir.

289?

Yeah? 289. 290? Round it off to 290. 290.

291, yeah?

Well done. 291. 292.

292.

You had a crack. 293?

293. 294. 295.

296?

296. Well done. 297.

298?

298?

297, with you.

First time, second time, third and last time, are you all done...?

Sold, 297, well done.

'The successful bid was made by first-time auction goers Satis and his wife Lourdes.

'I had to meet them at their home in Surrey, rather than Tooting. I wonder why?'

It's lovely to meet you both. Why are we meeting in your home?

We were supposed to have completed yesterday, but there's been a small hiccup.

We went to auction and bid on the property. We were successful.

We had 15 days to complete after auction,

but because our mortgage offer hadn't come through within the 15 days, we couldn't complete.

But we were served notice after the 15 days

with an additional five days in which to complete,

but we thought we had an additional ten days to complete.

Because we hadn't completed in five days, they withdrew the contract.

'Once you've bought at auction, you pay a 10% deposit and the rest after an agreed period of time.

'In this case, they didn't have a mortgage approved which could mean losing the house.'

What's gonna happen now? What is the vendor saying?

There's probably gonna be an increase in the price.

-He's gonna put the price up?

-Yeah. But we don't know by how much.

-They said £20,000.

-£20,000?!

Yeah, they said 20 and we're gonna negotiate with the solicitor to reduce the amount.

We don't know when they're gonna write the new contract.

-And start all over again.

-And you'd paid deposit money, had you?

-Yes, we paid 10% on the day.

-Which would be about 20...?

-£29,700.

-£29,700?

-Yeah.

-Theoretically, you could lose that, couldn't you?

-Yeah.

-Yes.

-So, to clarify then, you either pay an, at this moment, unknown amount of extra money,

-possibly £20,000...

-Possibly, yeah.

..for being a day late

-or you lose your £29,700 deposit?

-That's right.

I can't believe you're smiling. You poor things!

-You obviously love this house.

-Yeah.

-Why did you want to buy it?

I know the area quite well.

I grew up there. We've been looking for properties around that area.

This one caught our eye because it had planning permission

for a two-storey extension.

We thought that was a good idea and that's why we decided to go for this property.

-Are you buying it for personal use or for investment?

-For investment.

-You'll rent it out?

-We'll be looking at letting it out initially.

Then once we get some money in, we'll do the extension and then sell it on.

Our main idea is to sell it on.

-How much will it cost?

-About £15,000.

'The couple currently run a shop and have been in the retail business for five years,

'but have decided to do more property development.

'They're both used to hard work, so the damp and renovation work shouldn't faze them.

'That's if they get the house!'

-How soon will you know what's gonna happen?

-In a couple of days.

Probably by the end of the week.

What's the best-case scenario?

That hopefully the vendor comes to an agreement with the price.

How much do you think would be OK?

Possibly another 10,000? I still think it's a lot.

-Just for a day.

-But we don't want to lose our deposit.

-I hope it turns out all right. I really do.

-Thank you.

-We'll come back in a few months and hopefully you'll be in there.

-Yeah.

-Hopefully, yeah.

Well, Lourdes and Satis have got themselves into a bit of a pickle

and it proves how important it is to read that legal pack.

It seems they will be faced with more expense than they anticipated.

Quite how much and whether they end up buying this place, we'll find out later.

It's been a few months now since those properties were sold.

Have the new owners made progress or do they have regrets?

Let's go back and find out.

We're back to the Fratton area of Portsmouth.

Here, just a stone's throw from the station,

part-time property developer, Murray, had bought a two-bed house for 116,000.

As managing partner in a bank, he wanted to see what it was like on the other side of the tracks.

Downstairs, the fireplace has gone

and the place is generally spruced up with fresh paintwork and new carpets.

Also, the dining room at the back has been given a new lease of life.

We have completely redecorated the property,

put in a new kitchen and new bathroom, new flooring

and completely redone the garden which was an overgrown jungle, really.

We're finished and ready to go.

Murray works full time in a bank, which is useful for sorting out the finances.

He doesn't do any of the work here himself, so key to all his property development is his builder.

Because I'd been working with Robbie for about five years now

and he's done maybe 20 properties or so, we can pretty much say to him, "The usual job, please, Rob,"

and he'll deal with it, which is great. I don't have to give up too much time myself.

Clearly having a reliable builder is critical to any development.

While it costly to contract out, it's usually worth it for the quality and speed of the work done

and in this case, Murray gets value for money.

Murray might not be hands-on himself but one thing I'm sure he looks after is the cost and the budget.

We initially thought up to 7,000, between six and seven,

depending on how we finish the specification and so on.

Because it's gone very much to plan we've come in at £6,700

and that includes the carpet and putting in a brand-new fridge freezer and washing machine.

We're pleased with that.

The garden's been completely transformed, bringing a little bit of the beach front into the space.

Murray likes to hang onto properties for a couple of years

and, depending on the market conditions, sell on to enable further reinvestment.

This will be property number five in his rental portfolio and he really seems to have got the property bug.

Of course, you make money out of it at the end of the day.

I guess that's ultimately why I do it alongside the main job

to provide more income for the family to enjoy.

# This is all about the money. #

But how much additional income will this house with a train line at the bottom of the garden earn?

Time to ask the estate agents to see if they give this one the green light.

Murray bought the house for 116,000.

With that £7,000 budget, he's spent in total £123,000.

Is his account in the red or in the black?

I think we'd put it on the market at 134,995.

I'd expect less than that for a quick sale, but between 130 and 135.

That's a quick £10,000 profit even with deductions -

that's probably a better return than if Murray had put the money in the bank.

I think from a rental point of view it's probably worth somewhere in the region of 575 to 625.

Something more like 600 would actually be achieved.

Overall, then, this has been a solid, no-frills investment.

A decent short-term profit or a reasonable long-term income.

It's not going to make Murray a fortune but it has made his money work better for him,

plus there are other benefits he gets from his property sideline.

It has helped me with my job as well because I've got to know about values and rents

and how to run a business myself, which has been great.

I've made money as well so that's got to be positive for me and my family.

Pleased to get into property and looking forward to more.

And with Murray's track record, I'm sure there are a few more properties down the line that he can bank on.

Time now to see whether Lourdes and Satis have managed to resolve

their legal problems and get their hands on the keys

to that three-bedroomed terraced house in Tooting.

The couple bid £297,000 for the property at auction, but they didn't check the legal pack.

So, four months on, how have things worked out for them?

Because we had missed that deadline,

we had to pay an extra £20,000 in order to get the keys to the house.

It was pretty stressful at the time.

It's not the best of things, but it all worked out good in the end

and even though we had to pay that extra, we're still pleased that we got the property.

The couple are hoping to get back that £20,000 through legal channels,

but has it left them a bit short?

It did affect our budget because that was some of the money that we put aside to do up the property.

Lourdes and Satis set themselves an initial budget of 15 grand

to tackle the damp problems and refurbish the property.

They fitted in new units and put in a new window to transform the kitchen.

They knocked the WC and bathroom together to form one room with new tiles and new fittings.

They've fitted new carpets and redecorated throughout.

Amazingly, given the delay in getting started,

they've managed to bring the project in on time and under budget at £12,500.

The couple's long-term strategy has also enabled them to save a few pounds in the short term.

Our plans for this property are to rent it out initially,

then a year down the line, we would consider converting it to two flats,

then either sell it or rent it.

So we've gone for just a basic standard.

Once we do convert it to two flats, then we'll do it to a very high standard.

There's already planning permission for a single-storey extension

to convert this property into two single-bedroom flats.

But Lourdes and Satis would like additional planning permission

to convert it into two two-bedroom flats.

How much will this conversion cost?

We would spend, to convert it to two-bedroom flats, around £80,000 to £90,000, to finish it.

So far, the couple have spent around 330 grand on buying and refurbishing this property.

Assuming they can get that extra 20 grand back, that will drop to 310,000.

And if they do end up converting it into two flats, they'll have spent around £400,000.

So how much can they expect to make when they sell up and how much can they get as rent in the meantime?

I invited two local estate agents to have a look.

As a rental property, I'd put it on the market probably in the region of 1,400 a month.

I'd hope to achieve that. Certainly 1,300.

I'd expect this house to be marketed at 399,950 and most likely get around the 390 mark.

We might sell then!

I don't know. No, that's great.

That's well worth all the work we've gone through.

Well, with just a few finishing touches before they can start renting this place out,

it looks like a good outcome for Lourdes and Satis.

We'll see you next time for more homes under the hammer.

-See you then.

-Goodbye.

-Goodbye.

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