tenants moved out of rent control area. To sell or re rent

[Kevin Velarde]

Hi every one 

I am am not sure what to do. I am currently house hacking a duplex in San Pedro CA near the port of LA. This duplex consist of a 3 bedroom 2 bath front house that has a court yard that leads to a 3 car garage. Above the garage is the second unit that is a 1 bed one bath. I live in the rear unit above the garage. I have a 30 year fix at 4.7% and owe $530,000. House was in escrow to be sold for $960,000 last year but the deal fell through due to tenants inability to move due to COVID city ordinance. Taxes are about $8000 a year. This is a Solidly B area and in an up and coming neighborhood(i think). The city has put 1 billion into the port complex to retro fit and attract tourism. This is a heavy rent control area being that is in the city of Los Angles and in California. The tenants in the front house moved out last month. I am having a family member do the turn over and the construction project has gotten a little out of hand. Its going to cost $40,0000 that am going to have to borrow from my HELOC to pay for. When this is done I should be able to rent out the front unit for $3500-$4000.

Now that i am able to deliver the property vacant in a rent controlled area and the cost of construction has gone up more than expected. i am not sure if i should sell, pay off my dept and take my proceeds and invest in a similar property and possibly get another one. Or should i just keep it and try and rent it out,  Bank on appreciation and hope the Rent control gods smile on me and i screen well and get good tenants. No covid or city ordinance get jammed down my throat :).

Any thoughts are greatly appreciated. I go back and forth every day and any insights or opinions would be very welcome. 

Thank you very much. I hope every one is have a great week. 

Kevin