All Forum Posts by: Todd Kelly

Sang, not sure if this helps any, but here are a few ideas. Convert the garage to an ADU to generate some rental income. Close the Bank of Mom & Dad, and have the 2 grown college graduates living at home pay them rent. Find a good accountant to get both the business and personal taxes in order for this year, and going forward. Then, talk to a lender about refinancing now that they have rental income numbers, and a business plan with more reliable revenue and income projections. If all else fails, then selling before all the moratorium housing stock hits the market is still an option. Best of luck to your family!

There’s no place like home! There may be opportunity in the LA Southbay area by the 2nd quarter of next year as @Victor Ong indicates. We got in back in 2009 and have done well with cash flow and appreciation on our Lawndale units. Hawthorne and Inglewood near the new stadium may have some potential COVID-19 and airbnb fallout possibilities. Look to Lawndale for impacted duplexes, Gardena and Torrance for value SFR's, and Lomita and San Pedro for newer areas of speculation.

We’ve been really blessed and extremely lucky to get payments for March, April, May, June and now July from 5 of our 6 tenants. Our 6th tenant should be able to pay late this week, and then we’ll be at 100%. One of the tenants paid in cash, half on the 1st and the other half on the 15th, the other tenants handed me money orders or checks, and we had our 6th tenant pay weekly through Zelle so he wouldn’t get behind too far. I still hold my breath on the 1st of the month til all the rents are received, but I collect it personally and check to see how all the tenants are coping.

Being an absentee landlord created challenges for managing this historic, 160 year-old farmhouse, so I sold it. I was able to close the sale on 3/31/20 just as the COVID-19 restrictions were starting to hit. We had good cash flow and tax advantage over the years, and the appreciated cash-out should help weather this storm. However, I did sell to my brother-in-law’s brother, so our nieces are still potential heirs.

I was retired prematurely after getting laid-off first from WorldCom, and then Cingular Wireless, both as a result of corporate mergers. Fortunately, I received severance each time which I was able to bank. Then I started a new career as a teacher here in Los Angeles. In 2017, I was offered an early retirement package with a small, teacher’s pension, and my wife still works so we have health insurance.

My existing two-flat back in Chicago, along with 25% down from my severance, helped qualify us for multi-family property here in California. In 2009, we picked-up an REO duplex with 3 bedrooms and 2 baths in each unit. And in 2010, we acquired a second REO duplex. My summers off from teaching were spent with my sons painting and performing routine maintenance on our rental units.

Being an absentee landlord created challenges for managing my Chicago 2-flat, so I sold it. I was able to close the sale on 3/31/20 just as the COVID-19 restrictions were starting. We had good cash flow and tax advantage over the years, and the appreciated cash-out should help weather this storm. My oldest son graduates college this year too, so we get a raise from our monthly rental cash flow used to put him through school. We’ve been blessed with good tenants, and March, April and May rents were all paid, but I still hold my breath each month until all the rents clear.

NIce job Martin, the place looks really nice. I know that area, and there is great value left in many of those old brick bungalows. You might want to look at some of the 2-flats mixed-in with the SFR's for your next project and get double your rents. Or live in one and rent the other to get conventional financing.

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Chicago.

Purchase price: $28,000
Cash invested: $38,000

We purchased this property in 1985 directly using owner financing. We paid interest only with a balloon payment due after 2 years. Then we totally gutted it, relying on our credit cards to finance the renovation. We covered the balloon payment by selling MCI stock, and getting an interim loan from the bank of Mom and Dad. Later, we got a 15-year Bank mortgage and cleared our other debts. It’s been paid-off over 20 years, is cash flow positive, and the market value increased substantially.

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Chicago.

Purchase price: $28,000
Cash invested: $38,000

My brother and I purchased this property for $28k in 1985 directly from a family using owner financing. We paid interest only with a balloon payment due after 2 years. Then we totally gutted it and converted it to a two-flat, relying on our credit cards to finance the renovation. (that was back when credit card debt was still tax-deductible, and the interest was comparable to mortgage rates.) We covered the balloon payment by selling MCI stock, and getting an interim loan from the bank of Mom and Dad. Later, when the tax laws changed, and mortgage rates went down, we got a 15-year Bank mortgage to pay-off Mom and Dad, and the credit card balances. It’s been paid-off for over 20 years, is cash flow positive, and the market value has appreciated substantially.

Based on location and opportunity, how often does the property right next door to you become available for you, at market value, to choose your own neighbor and control how the property will be used?  Accounting aspects from expenses, refinancing and depreciation could help mitigate any potential cash flow losses given different property use and management options.  Bundling the two properties with some rezoning and repurposing plans is a calculated risk that could enhance the present and future property values.  Good luck on your venture!