Creditors appear to be struggling to sell a South Auckland house, trashed by its infamous property manager, Augustine Lau.
Lau is responsible for last year doing earthworks at the Otahuhu property that essentially saw a dangerous landfill created on a steep slope close to a stream and the Tamaki Estuary.
This landed him and the property’s owner - Chen Hong Co Ltd - in the Environment Court, and resulted in them being made to pay Auckland Council $127,500 for the costs it incurred in the saga.
The 88 Fairburn Road property was put on the market in August.
In October, Chen Hong Co Ltd’s creditors - Best Capital Ltd, Hyun Bin Kim and Duk Young Lee - issued a public notice calling for the company to pay $331,947 by November 13 to avoid having the property possessed by them.
Come December, Chen Hong Co Ltd has been put in liquidation, and realtors are advertising the property as a mortgagee sale.
When interest.co.nz wrote about the property in October, it was marketed as being the ideal place for an investor or someone with an “eye for the future potential development”.
Today, Harcourts’ sales pitch is: “Mortgage sale! Hurry!”
It didn’t sell at auction last Thursday and is still on the market.
Creditors could be left millions out of pocket
Property records show the property has two mortgages on it; one securing up to $1 million in favour of Best Capital, Hyun Bin Kim and Duk Young Lee, and the other securing up to $2 million in favour of a person by the name of Jialing Mao.
The director of Best Capital is also the director of a company that’s written Lau’s other associates short-term mortgages in the past. Lee is the owner of a number of ‘Bruce Lee’ sushi shops around Auckland.
It is not known how much has been drawn down on these mortgages or how much is still outstanding.
While QV data indicates the company bought the property in August last year for $1.68 million, its capital valuation was only $650,000 at the time. It is currently valued at $1.08 million.
Interest.co.nz believes Chen Hong Co Ltd doesn’t own any other properties in New Zealand, but its sole shareholder, Hong Chen, does.
The bigger picture
The situation is interesting as a number of other investors, whose Auckland properties are also managed by Lau, are walking away from their creditors - many of which are banks.
In most cases Lau sources properties with development potential, promotes these to overseas investors (mostly in China), and agrees to manage the properties on their behalf.
While Lau says he manages up to 20 properties, interest.co.nz is aware of 10, as they have featured in the Environment Court or have been security for mortgages that have been defaulted on.
Eight of these have been contemporaneously settled, or bought and sold by a number of parties in one day.
Of these, QV data shows most have been on-sold for at least twice as much as they were bought for.
Lau says the price escalation accounts for the subdivision and renovation work that had been agreed to be carried out on the properties. Yet it’s this work - often aimed at cramming more tenants onto the properties - that’s seen Lau and his associates end up in the Environment Court.
In the case of the Fairburn Road property, it was bought in August 2016 by a company Lau was the director of, and then sold to Chen Hong Co Ltd, on the same day.
According to QV it was bought for $858,888 and then on-sold for $1.68 million.