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'Ghetto' cleanup turns ugly for out-of-towners

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  • 'Ghetto' cleanup turns ugly for out-of-towners

    An interesting follow-up to this thread from 2 years ago:


    An Aucklander who vowed to clean up a Paeroa street dubbed a "ghetto" is facing eight mortgagee auctions and his retired parents, the guarantors, are considering bankruptcy.
    Remuera man Laurence Pope bought eight houses in Paeroa's Porritt St and Edwards Place in 2008, promising to clean up the area, but two years on he said the "scum of Paeroa" had ruined his venture.
    "We tried to show people they didn't have to live in the Bronx but all we got in return was stuff stolen and tagging."
    Harcourts Thames owner Alaine Hedges, who had been managing the properties, said the area was "the pits". "It's a ghetto, it really is," she said.
    Mr Pope used his parents, Harley and Lilian, as guarantors to get finance from Westpac to buy the former State houses for around $120,000 each and refurbish them.
    The family owe Westpac in excess of $1.2 million in mortgages and penalty interest. His parents, in their 60s, are considering bankruptcy after they failed to get tenants who could pay the rent.
    Bayleys is marketing the houses, suggesting someone may like to play a real-life game of monopoly and buy up a whole street.
    The properties will go under the hammer on April 22 but Mr Pope said he couldn't see any buyer succeeding in the area.
    Mrs Hedges said it was the worst area to buy in.
    "It was a good idea but it's all about location... and he picked the worst," she said.
    Hauraki Mayor John Tregidga said the labels were absolute "rubbish". "Did he go in there with the hope of making things better or just for monetary gain?"
    Mr Tregidga said the area had undergone a vast improvement. "I believe the community really got behind him and started to clean up their properties."
    Paeroa police sergeant Phil Caldwell said there had been fewer calls to the area and there was a supportive community living there.
    "I guess all towns have a street or two that aren't that flash and Porritt St was that one for us but, after their work, that improved."
    He said residents would be upset at their area being labelled bad and there was good community support.
    Mr Tregidga said he would be contacting Housing New Zealand to investigate if it was interested in taking over the properties.
    It is not Mr Pope's first failed business.
    In 2004 receivers were called in to take over a computer business, PCXChange, he was running in Hastings.
    Receiver Grant Reynolds said creditors were owed about $100,000. Mr Pope disputed the figure, saying the two matters were not related. He had gone into the Paeroa venture with his mother and she had secured the loans, with his father joining later.
    His father is the director of Nexa Property Ltd which owns the houses.
    Laurence Pope, who also runs a television hire business and a paintball importing business, said he was the project manager for Nexa Property.
    Link to article



  • #2
    He did a good thing, even if he cant see it now.
    It only takes a couple of stupid selfish people to damage the surface of what is a good and daring project.
    Sounds like the core of what he did was a success.

    A few kids with a twisted sense of ego (and spray cans) and a few mean spirited crooks, can seem to spoil the surface of hard work.

    But the in the long run, underlying success survives through that momentary rippple.

    Comment


    • #3
      Wrong property manage I'd guess. Needed a gorilla like Glen.

      Comment


      • #4
        Originally posted by Viking View Post
        Wrong property manage I'd guess. Needed a gorilla like Glen.
        It looks like they were being managed from Thames. Not sure how far away that is but with a street like that, they probably need very active management so having someone very close would be important.

        It also looks like they were excessively debt ladden. 8 properties @ $120k = $960k yet the mortgage was for over $1.2m. Even at 100% debt, that is a lot of unpaid interest. It looks like he must have recycled the equity out.

        Comment


        • #5
          Even the best property manager will struggle if the houses are in a ghetto.

          Ghettos tend to attract ghetto tenants.

          Comment


          • #6
            It's funny how the property cycle goes.

            One minute this guy is on telly being depicted as a hard working rich young man who owns 8 houses.

            Next thing it turns out he's got more money borrowed on them than they are worth and it's all been done with the help of mum and dad as guarantors. And they have been taken down too.

            I hope this young guy picks himself up and tries again. He's still got age on his side and he must have really learned some lessons!

            David
            Squadly dinky do!

            Comment


            • #7
              8 properties @ $120k = $960k yet the mortgage was for over $1.2m. Even at 100% debt, that is a lot of unpaid interest. It looks like he must have recycled the equity out.

              ------------------------------------------------------------------------------------

              960K would be the cost price of the properties but he has spent money on improvments so that may explain the extra borrowing. one would expect the properties to have increased in value for his efforts. Im sure that was the plan anyhow.

              Cheers Brendon

              Comment


              • #8
                Originally posted by McDuck View Post
                ...A few kids with a twisted sense of ego (and spray cans) and a few mean spirited crooks, can seem to spoil the surface of hard work....
                I think there may be a bit more to the story than Mr Pope and his property manager would have us believe.

                Take a wander down the Porritt St or Edwards Place courtesy of Google Street View. If you look closely, you can spot the odd local on the street, or in back yards, going about their business.

                Find local businesses, view maps and get driving directions in Google Maps.


                Looks like pretty typical rural-town NZ to me. "Come inside, Auntie's got the jug on!"

                An alternative possibility is that Mr Pope paid too much for the houses and/or spent too much doing them up and/or found that the locals didn't want to (or could not) pay the level of rent that Mr Pope required.
                Last edited by Cadmium; 11-04-2010, 09:30 PM.

                Comment


                • #9
                  I think there's more to this story too. He was probably getting around 10%+ returns on those properties, so you'd think he'd have no problem paying the mortgage. Would be interesting to see a more in-depth news report on it.
                  You can find me at: Energise Web Design

                  Comment


                  • #10
                    The problem is in the current enviroment he can't keep getting topups on the mortgages for the "increases in value" thus the fact that itheydoes'nt pay their way means he can no longer afford to keep them.

                    Comment


                    • #11
                      Originally posted by WBuffett View Post
                      The problem is in the current enviroment he can't keep getting topups on the mortgages for the "increases in value" thus the fact that itheydoes'nt pay their way means he can no longer afford to keep them.
                      A brave man to take on a street labeling everyone as scum and then buying their properties and trying to charge them a higher rent for gentrifying them?

                      You either needs big balls or deep pockets, looks like he was short on one of those.

                      Softly softly cachy monkey would have been better.

                      But highlights to all of us that as well as nice yeilds you either need good reserves or to be able to access equity, or other income sources to survive the perils of dodgy tenants and rampant maintenance bills lobbed in like grenades from left field.

                      Comment


                      • #12
                        I grew up in Paeroa, we used to call that area Harlem.

                        From the look of it they planned on subdividing the land as Resource Consent has been granted for the subdivision on a number of the properties.

                        The rental returns seem a bit high for that part of town

                        Link to one of the auctions

                        http://www.raywhitegroup.com/nz/paeroa/338824/

                        Good on him for giving it a go, shame he has had to drag his parents into it as well.

                        Comment


                        • #13
                          porrit street was looking pretty good when google maps went through

                          try street view here

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                          • #14
                            So maybe they spent to much money trying to get them all subdivided at once, rather than one at a time???

                            What are the surrounding streets like. If you got it for the right price, surely you could kick everyone out and start again (are there enough tenants in Paeroa?). Give new tenants assurance that it will be a nice family street going forward, not 'harlem'. I am sure the council would even change the street name for you.

                            If I was from the area, and had more money, I would consider it.

                            Comment


                            • #15
                              Landlords is the home for property and real estate investors. Read news and articles on investing in rental property, subscribe to the NZ Property Magazine.


                              The homes sold under the hammer for between $64,000 and $90,000, yet Pope had paid around $120,000 for each of the properties and improved many of them.
                              Since he was subdividing, hopefully those are post subdivision prices. Otherwise, the parents will take a bath like this guy: http://failblog.org/2010/04/30/epic-...escape-fail-3/
                              Last edited by CJ; 01-05-2010, 01:25 PM.

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