Long time renter in home being bought - need suggestions

[Sonu Sharma]

Not sure if this message belongs in this forum but if not, please forgive my ignorance. I am looking to buy a wholesale deal in DFW that has a renter who has been in the home for multiple years paying below market rent. The home is in a good neighborhood and can fetch higher rents. I need your advise on a few things: 1) the current owner has the renter on a month-to-month VERBAL lease - I was told that this is legal in TX. Is this true ? The seller said he can attest to the rent and his verbal agreement as part of the closing. I never heard of this before. 2) The rents in the area show around 1500-1600 depending on the finish out while the tenant is paying 1100. To get a higher rent I would need to put in 10-12k in cosmetic repairs. The home is in a generally good shape with bad carpets and some worn out paints and stains in bathrooms. Not sure whether I can go into conventional the way it is in now. What do you folks suggest I do ? Ask the tenant to leave, rehab and rent it out to new folks or leave the renter, spend nothing on rehab and collect lower rent ? This is a catch 22 situation for me. 3) What does a conventional refi appraiser look for to determine the value ? Do some stained carpets, older A/C, furnace, stained bathrooms affect appraisal values ? There seem to be no foundation issues. Thank you all for your help and advise. -Sonu