Buying duplex, inheriting tenants and how to increase rents?

[Cameron Schmahl]

Hello all,

I am currently under contract for my 2nd investment property and closing at the end of the month. My question is the tenants are long term (19 years & 9 years) They take nice care of the property and the previous owner has had very little issues. I am planning on keeping them and having them sign my lease agreement ( month-to-month) I'm sitting down with them this weekend. They are aware prices are going up 200-300 a month by the previous owner because he knows he was charging to little and has had the property paid of for many years so didn't need as much to cover expenses ( it was more fun and hobby to him) The current tenants have said they do not want to leave.

How would you recommend increasing rents? Market rent is $750 Down ( 2+ bed and 1 bath) $700- Up ( 2 bed, 1 bath) Downstairs take cares of lawn and snow, all downstairs utilities. Upstairs takes care of all upstairs utilities. 

The previous owner has them both paying $475 a month and has only increased it 1 time since they both have lived there ( they started paying $450) 

I am planning on upping to market rents but know I need to give a 30 day notice. So my thought it to accept their payment at $475 for the first month (Oct.) and then up to market rent from there. Is that how you would take care of it or should it be done more incremental? They are both aware of the deal that they have been given for so many years but this is a business for me and I need to cover expenses and make a little. Located in WI, my break even is $1,100 a month.
 

I want to be nice but need to make money, Do I give them the first month at what they are currently paying because I can't give them a full 30day notice and then go full market for the following months. Or do I slowly increase each month up until market, say $100 additional each month, while not making much extra money for a few months?

The market I am in is booming (Sheboygan) and 2bed1bath are anywhere between 650-900 a month. I think 750 & 700 are fair for the property and will still allow them to stay at a deal.

I think I know what the right way to do it is and how I feel best but want to see what some more experienced investors/ landlords have done or experienced.

Thanks in advance!