Raising under market rents while also trying to upgrade

[Jim Kaufman]

I am getting ready to close on a six unit building. As soon as I close next week, I will have to work with four of the leases expiring at the end of July. There is little consistency in the rents running from $500 to $595. My long term goal of the building is to refurbish all units, convert the dining room to a second bedroom and finish splitting out all of the utilities. The splitting of the utilities needs completed from the basement up so it would be best to start on the first floor. With one of the first floor units at $500, it makes sense to me to not renew this lease (giving them a month or two to find a new place) and starting with that unit as our first rehab. I would then renew the other leases, looking to keep five of six units leased at all times. One thought is to give the current tenant an option to move into the refinished unit as an option although the difference in rent could be $100. There seems to be a fine line between managing turnover and maximizing the potential of the building, which I plan to keep for many years.
Is this the best strategy or am I missing something? Any input is appreciated. Thanks, Jim