Recently, the city of Inglewood, a small city just South of downtown Los Angeles, and best known as the home of the Forum, former home to the Lakers, announced a series of layoffs and budget cuts, according to the Los Angeles Times. The layoffs affect 27 people, the employees laid off, but they are also having a serious personal impact on myself and my family. According to the article, the city has an 18 million dollar budget deficit and is also laying off part time workers, eliminating vacant positions and offering early retirement to some.
We own a small rental property that sits in Inglewood. Its a triplex, two nice units, each one is three bedrooms, there is a yard, we’ve always rented all the units to local families. In the past 14 years we’ve owned it, we’ve never had any problems. We bought it as a family, as an investment, along with 2 other buildings in other areas of Southern California. Five family members came together, each contributed $20,000 to the down payment for everything, and we have a large mortgage, which must be paid each month. It’s not making us rich, but over the next 20 years, it will be a good investment, and something to pass along to our children. We use a property management company to handle renting and other operations and we pay them a percentage of the income each month.
We bought the property as an investment, and it has been tough after all the ups and downs in the real estate market. When things were up, we were tempted to sell, also tempted to refinance and take cash out. Good thing we didn’t do that, or we would be upside down right now. We have a mortgage on all the properties that must be paid each month, regardless of what’s happening in the tenants lives. The mortgage on the Inglewood building is $3200., each of the three units pays $1250. a month, so we have about $500 a month positive cash flow. That’s not much room for error or problems.
Now we have received a call from one tenant, Miss J, the woman who had been working for the city of Inglewood, that she has been laid off and can’t pay her rent. This affects our family, we must now decide, to trust she will recover quickly? To cover her rent out of our pocket? To evict her to find a paying tenant? Even a basic eviction can take six months, she may have found a new job by then, making it all unnecessary.
Seems easy on paper. But she has two kids. We have known her for five years. What are we supposed to do? Evict her to maintain our cash flow? Is that the right thing to do? But we need to eat and pay our bills too. Business is about ethics too, so this may be a time where we support and help another human being by giving her some time to get back on her feet, and then forgiving some of the back rent so she’s not faced with a mountain to repay. That’s what human beings are supposed to do, help others.
You can see the trickle down effect from the layoffs by the city of Inglewood. We maintain perspective on this as well, as we know this is much more upsetting and a problem for Miss J, as the person who was laid off and must care for her kids, than it is for us. We’ll get through it, we always do. But these layoffs are affecting us as well, in the wallet.
Rick Rojas Inglewood to lay off 27 employees to reduce expenses Los Angeles Times via LAtimes.com