** Keep in mind while reading this that the LA market is crazy. The 2%, 50% and most other rules don’t apply. :-) **

Six years ago my husband and I bought our first property - a run down duplex in a transitioning part of Los Angeles for $550k. We spent 5 years and about $200k fixing up our upstairs unit while living in it. Despite the fact that our inherited rent-controlled tenants were paying only $1k per month, we were able to refinance at $1.1MM and took out money for a down payment on the next property..

Last November we bought a $1.1MM 4plex in Pasadena. Rents were $6,285/ month. After six years of landlording we had our first vacancy in April. We spent 2 weeks making cosmetic improvements to the unit and were able to re-rent it after 1 open house to a wonderful tenant at $1,775 - $300 more than the previous tenants / 1 months lost rent.

This experience emboldened us and, when we started having problems with a tenant in another unit (multiple domestic violence calls, set a small fire inside, etc), we were eager to flip it. The tenant left graciously and we spent the next 2 months remodelling down to the studs. All the work below was done by me and my husband with the exception of the plumbing, drywall, and tile.

Once again we were able to find a wonderful tenant in the course of a single open house and will be collecting $2150/ month - 54% more than the previous rent of $1395. Total cost of renovation was $27k including soundproofing on shared walls but not including 2 months lost rent. Overall payback will be just over 3 years but we’ve attracted a much higher caliber tenant and created a better living experience for the whole building.

So excited to tackle the next 2 units! 

Living/ Dining

Kitchen/ Pass-through Window

Bathroom

(Moved the toilet to add a laundry space)

Bedroom 1