After a few years of receiving cash flow from the multis, and perhaps borrowing against them to acquire more income-producing properties, we could eventually move into the house in South Pasadena to take advantage of the schools, while the in-laws would get to retire on the cash-flow from the multi-families.

Any assistance or ideas would be greatly appreciated thanks in advance.

.$18,000 of cash should allow you to purchase an investment property for $60,000 - $65,000 in Allentown(20% + closing costs).Pulling equity from your home should allow you to have more purchasing power.Ultimately - you should reach out to a lender to see how much you can borrow.

If I understand the story correctly, unless your jurisdiction says differently, these are your tenants and if they don't turn the property over to you, you will need to seek an attorney's assistance in evicting them both. 

In 3 years, the equity had grown in a positive direction and it becomes possible to borrow agains the first one or two to buy another.

A good Realtor should know your particular market inside and out, help you analyze the cost effectiveness of buying certain properties and assist you in offer negotiations while guiding you through the entire REI process.

Luckily, I chose the time I did to sign up for all those cards knowing I wasn't going to be doing any bank borrowing for awhile and within a couple months my credit score was back up to the mid-to-high 700's. 

I would however assist the present owner in removing the tennat.

If you want to do one deal a year this may work if you have a lot of cash. if not then you will need to start finding deals with a little bit more margin and finding inexpensive money to borrow so you can scale your business.

However, we only have about 7k saved up, and would prefer not to have to use all of that on buying a house so we would probably have to leverage a first home buyers type loan and maybe a down payment assistance type loan.