Newbie Apartment Owner - Sell - Fix Up - or Do Nothing?

[N.A N.A]

I am new to being a landlord as I inherited a building out of state in Beverly Hills CA. I have a few questions as to strategy - I am new to owning a commercial building and have no clue as to best strategy, market appreciation prospects etc.

Here are the facts of the case -

7 unit apartment Building in Beverly Hills, very desirable neighborhood,(Appraised at 1.9m - Market cap 3.5% built in 1956. Rent control issues = one of 7 units title 5 rent control tennant approx $600 under market - aged 82. Five of 7 units rented - most tennants have been in bldg for years - rents are 15% under market for current condition (pretty bleak and original dreck) raised them max 10% last April - all complained but stayed. One of 7 units I just spent 30K renovation including $5500 for electrical rewiring of unit ?? (ripoff?) plan to move in for 90 days as part of relocation to california) Put new roof and windows on bldg in 2012 (plus reno = 100K spent total) Building looks dated needs new facade, laundry room make over, and and 35-50 K for change out plumbing in addition to renovation of 6 apartments to make perfect. Landscape is really nice - done in 2011.

Since I do not plan to live within 1 hour of BH long term - thinking I want to maximize this opportunity before 1031 exchange in future. Handyman expenses cuts into Cap rate otherwise I manage. (note - BH rent control allows 10% annual increase, 2.3% on the one title 5 units- other leases can be terminated but no rent increase due to termination is allowed)

QUESTIONS

1. What are the upsides to holding - how best to achieve ? What are the prospects for this type of investment with such a low cap rates.

2. I have cash to invest in the building - is this a good investment? Would you do the plumbing (not critical but needed) Would you rewire the entire building? Would you do the facade and laundry? What is the order of battle?

3. If it makes sense to renovate these units - do I lipstick the "pig" or do I aim for the yuppy tenants in the future, what budget?

3. The tenants are used to having a great location, below market rents, and having little or no improvements done to units. I can raise rents until they leave and fix up apartments - or do I do "nothing" raise rents until they leave, paint and then sell in 2 to three years.

My goal is to maximize this opportunity, and realize the best combination of appreciation and income. I have the income and cash on hand to do what is smart - so I am interested in the best solution based on selling in 2 to three years - unless a long term strategy is "best".

Thanks

[Uwe S.]

Thats the topic I meant.

-Uwe