Tuesday, June 19, 2018
Business

Chinese investors call St. Petersburg a gourmet paradise but some of their houses leave a bad taste

ST. PETERSBURG — More than 75,000 times, viewers in China have clicked on the website of a company touting investment opportunities overseas. And one of the best places Chinese citizens can put their money, the company says, is St. Petersburg, Florida.

Beijing-based Meiaoju lauds St. Petersburg as "A Gourmet Paradise by the Sea" — several Beach Drive restaurants are prominently featured — and calls it a seller's market where multiple buyers compete for available homes.

It's combination that makes St. Petersburg one of the world's "golden areas… for high profits" in real estate, Maiejou tells prospective investors.

But the pitch from the Far East is clashing with the reality on the ground here.

Angry neighbors say that Meiaoju's backers, who own dozens of houses in Historic Kenwood, Shore Acres and other parts of St. Petersburg, are using some of the homes as illegal short-tem rentals. Code enforcement authorities have started cases on several properties and cited others for overgrown yards or unsecured entries.

"There's a potential adverse impact to neighboring property owners," Rob Gerdes, head of the city's Codes Compliance Assistance Department, says of houses rented on a transient basis. "You have people coming on vacation so there complaints related to noise, trash, parking. Neighbors get frustrated."

Flush with cash from a real estate boom in their own country, Chinese are among the most active investors in what they consider the far more stable U.S. market. While the West Coast remains the most popular place to invest, Chinese make up an increasingly large share of foreign home buyers in Florida — 3.5 percent last year compared to less than 1 percent in 2008, according to the National Association of Realtors.

As the Tampa Bay Times reported in December 2015, a Chinese internet pioneer named Bo Wu had begun buying houses and vacant lots throughout the Tampa Bay area. Since then, Wu has focused almost exclusively on St. Petersburg, snapping up at least 65 properties through limited liability companies including Crystal Moon, Frozen Magic, Kind Reputation and Rich St Pete.

Altogether, his companies have spent more than $6 million cash since early last year on property in St. Petersburg, most of it within a short drive of the city's vibrant downtown waterfront.

In an interview Thursday night by phone from California, where he has a home, Wu said that he used computer programs to analyze real estate markets around the world to see which might be most suitable for Chinese investors.

"Then I go to see it," he said in heavily accented English.

As a result, St. Petersburg, California, New York and Australia turned out to be the "golden" areas now touted by Meiaoju, which calls itself "China's largest e-commerce platform for overseas property." Wu is partners in the company with Xu Xiaoping, well-known in China as the co-founder of New Oriental, that country's largest provider of private educational services.

Meiaoju's website, which is entirely in Chinese, has color photos and exact street addresses of more than 25 St. Petersburg houses, described as "investment and development projects, low risk and high return." In a question and answer section, Maieaoju outlines the investment strategy (translated here):

Each house "will be rented at first to get the rent money and when it reaches a certain market value, we will renovate it and sell it to maximize profits. It is a seller's market and multiple people will make offers to buy."

Wu said investors actually buy the houses, but that his companies manage them as rental properties and then help with plans and permitting when it comes time to renovate or rebuild. About 20 already have been sold to investors, he said, and are rented to long-term tenants.

Others, however, have been advertised on Airbnb or on Craigslist as "vacation" homes, available by the month, week and even the day. The ads say to "contact Terry" and give a phone number. But he did not return phone calls seeking comment.

Among the houses that have been on Craigslist are a two-bedroom home "a short walk from Crescent Lake Park, shopping, restaurants and downtown" that goes for $109 a night; and a house in Historic Kenwood that rents for $99 a night.

"If they are renting for anything less than a month, it is unacceptable," said Scott Willis, former president of the Northeast Park Neighborhood Association. In his area, neighbors of a Wu-owned house say there has been a parade of short-term tenants, including one woman who arrived late at night with a screaming baby.

Eileen Crowningshield lives next door to a three-bedroom lakefront house in Shore Acres that one of Wu's companies bought at a foreclosure sale last summer for $213,000. A "For Rent" sign briefly appeared in the yard, then was removed.

"Terry," who sometimes stops by the house, said "they thought they could get more money renting on Airbnb," Crowningshield recalls.

After a couple with three kids moved into the fully furnished house for a few weeks, Crowningshield expressed concern to the city about short-term rentals in a neighborhood where the vast majority of homes are owner-occupied.

Wu, who came by once, "seemed very nice," she said, but "just smiled" when asked about his plans for the house. Temporarily vacant, it has a lockbox on the door. The lawn, once so overgrown that the city paid to have it cut, is just dirt and leaves next to Crowningshield's own green and well-maintained yard.

At another of Wu's houses, on 39th Avenue N just off Fourth Street, police have been called about loud noises, "a suspicious person" and trash piling up outside. Based on complaints from neighbors, St. Petersburg's codes compliance department is opening cases against that house and several other Wu-owned properties.

City codes say houses in residential areas can be rented for less than 30 days only three times in a 365-day period. "Persons could rent out a house for the Super Bowl or something like that but you can't do it more than three times year," said Gerdes, the department's director.

If the city finds evidence of a violation, the owner is sent a notice and given 20 days to comply, which means removing the ad from the web site and stopping short-term rentals. Non-compliance can result in a lien against the property and fines of up to $500 a day.

The city also has filed liens against at least 10 Wu-owned properties to cover its costs of lot clearing, securing property and, in the case of one particularly decrepit house, demolition. In only a single case has the lien been satisfied, records show.

Wu said "only a few" of his houses are short-term rentals and that they comply with city codes. He blamed long-term renters for overgrown lawns.

"In some of the leases, tenants are supposed to take care of cutting the grass but sometimes they don't," he said.

Wu's companies generally buy houses costing under $150,000, but a year ago he paid $350,000 for a 1920s-era bungalow in the Old Northeast. A petition drive with more than 320 signatures urges that it be saved from demolition.

"Our neighborhood is currently being attacked by real estate investors who care more about profit than the history/fabric of a neighborhood," the petition says. "115 13th Ave NE is a beautiful 1925 bungalow in great condition that 5-6 families tried to purchase when put on the market… Instead, (it) was purchased by Rich St Pete IV, LLC for $35k above asking price in April of 2016 with the intent to demolish the house. Since the purchase date, the house has been vacant with little to no maintenance on the interior or exterior.''

Wu did not comment on that house specifically, but acknowledged plans to tear down some existing homes and build new ones. Among the 81 companies he has incorporated in Florida is Paloalto Home Builder LLC.

Several of the Chinese who have bought houses in St. Petersburg through the Meiaoju website have traveled more than 7,000 miles to visit the city, Wu said, though none has moved here.

"That's because there aren't many Chinese," he said.

And asked if he will continue buying in St. Petersburg, Wu sounded like many others in today's torrid real estate market.

"Only if the prices don't go too high," he said.

Times staffer Yieli Zhang contributed to this report. Contact Susan Taylor Martin at [email protected] or (727) 893-8642. Follow @susanskate.

   
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