When I was at university, there were only three channels to watch on TV and none aired during the day. I then found myself a job and when that finished I found stuff to do so it’s fair to say that unless there’s some sport involved you won’t find me watching much television during the daytime.
Around this time last year we attempted to buy our first house at auction. We’d done all the preparatory work, a lot of which I will share with you in a later blog but we weren’t prepared for the announcement that “Homes Under the Hammer” were in attendance. As assorted people moved to corners of the room where no camera could film, I made a mental note to enquire further about this programme and vowed if I was successful or indeed if I returned, I would tick the no publicity box!
We did not land the house that night as it went for more than we wanted to spend. Property is a business so avoid getting carried away in the chase for a bargain for if it is more than you planned to spend it no longer is a bargain. Simples! Trust me there will be plenty more along the following month.
We did eventually land three at auction last year and at the last auction in Newcastle, spookily HUTH, as the Luvvies at the BBC call it were once again in attendance. By now I’d done a spot of research and even managed to catch a programme as I waited for the engineers to complete the routine car service. After reading The Journal from cover to cover, a local paper for Newcastle and the North East, wrestling with the sports section of The Times, studying the next auction catalogue, I found myself left watching daytime telly and caught a glimpse of Homes Under the Hammer on the BBC. Very interesting Mr Bond!
The aforementioned auction catalogue contained what I thought was a little gem. It was on the outskirts of the area we mainly invest in, but there were good comparables, good rentals with the potential to easily surpass our target yield of 8%. A viewing was duly arranged along with several others that day. It was the last on our schedule that day and the agent pre framed the visit with “It stinks. I’ll just open the door and let you in!”
She was not wrong: it did and then some! The previous owner clearly liked his pop but found it easier to pee in situ rather than move to the bathroom. It was dark, dingy and generally pretty unpleasant, with filthy carpets, a pretty foul kitchen and a bathroom that frankly was not fit for human occupancy. I surveyed the ground floor on one breath and retreated for some cold sea air (it was on the coast after all). A second gulp and I had the top floor checked out though chose to complete my viewing schedule outside.
James Caan in his book The Real Deal, prefaces it with a comment “observe the masses and do the opposite”. It’s a path that has served him and his father before him well and a philosophy that has made Warren Buffet a vast fortune. It’s also one that I’ve carried into our investing, after some due diligence, naturally, and here was a classic case in point.
Most could smell the appalling house but not the profit. The property had a low guide price and it was worth an educated punt. Now don’t get me wrong, two years ago I’d have joined the masses and walked away but I now had a much better idea on refurb costs, could see through the muck and how it could be restored to a perfect home.
Due diligence completed it was time to attend the auction. Usual preamble, how on the fall of the hammer it was yours, exchange within so many days blah blah blah about the TV Cameras and soon Lot 8 was ready to be auctioned..
Initially very little interest as the auctioneer searched for a value to start the bidding. Eventually it kicked off and edged towards the guide price. Still 5K short of the guide price the auctioneer prepared to sell. At “selling it twice” I indicated an interest. Good tactic that by the way, never declare an interest too early. After a quick spat it was ours still £2.5K below the guide price. It’s a truism on property but you make your money when you buy and we had just made some money.
Contracts exchanged and deposit paid I felt very pleased when I was asked if I fancied being on Homes Under the Hammer.
The answer had to be yes!
In the next part I will share with you the before filming, the joy of the refurb and the follow up filming and yes the final valuation.