Convert garage w tenants

[Thomas Azoury]

Hi all. Long time BP fan, first time poster. I own a SFH in Santa Barbara County (it's in an unincorporated area between SB and Goleta.)

Ive had wonderful tenants since buying the property in late 2017 and have raised the rent just twice (still WELL under market value rent). They signed an initial one year lease but have opted to go month to month ever since. 

I would like to convert the garage into a one bedroom and rent either to another long term tenant or mid term (30 day min for professors or traveling nurses). 

My question is really around the legality and process of taking back the garage from the existing tenants for this project. Of course I want to minimize as much of the inconveniences possible with such a situation but some is inevitable. 

What legal right do I have to do this? Again they only signed the one year lease back in 2017 and have opted to keep month to month after offering a lease at each of the two rent increase intervals. 

Any thoughts on how I might approach the conversation with them? Ive done all my research (plans, permits, contractors, etc) and feel like it's a no brainer and a fairly streamlined approval process in my area. My heartburn is mostly around how to handle the tenant situation. Thoughts welcomed. 

TA