"This is an armed hold-up. We know you have drugs and money," they said.
The confused victim was then hit in the leg and lower back with the blunt side of the weapon and grabbed by the ear.
"We'll cut your ear off. Don't f... us around," one of the assailants said.
"If you f... us around we'll be back and we'll kill you."
While the pair focused their attentions on the man, his partner fled to get help from neighbours.
Ablett-Kerr said it was significant her client did not give chase or inflict further violence on the victim.
Instead, they left in a car at speed.
Judge Emma Smith said it was clear the victims found the experience "chilling".
The man who was being threatened with the machete thought he was going to be killed, the court heard.
Ablett-Kerr highlighted Nelson's "troubled background" and the psychiatric issues that had plagued him for some time.
She said his case provided another perspective on the cannabis debate.
The class-C substance had exacerbated Nelson's mental-health issues and led him to experience drug-induced psychoses.
Judge Smith accepted this was likely to have been a factor at the time of the aggravated burglary.
Ablett-Kerr stressed Nelson's remorse was genuine — he was truly horrified at the ordeal to which he subjected his victims.
"If there's to be hope for the likes of Nelson, it is that they understand consequences, not just for them ... what they're doing to other people," she said.
"That's the real hope for society."
Nelson was sentenced to three years, two months' imprisonment.
Ablett-Kerr opposed the Otago Daily Times' application to photograph the defendant.
"He will presumably get parole in due course and be employed.
"It would be most unfortunate if there was any hiccup to that."
Judge Smith declined the application.
