Interested in a property, but current tenants' rents are way under market. Suggestions?

[Corey Demuth]

I am interested in a 2F property upstate, and everything seems solid. However, my numbers are based on MARKET rents for that area. Initially I did not know whether the current tenants had leases and/or what they were paying in rent.

I just found out they both have leases, one is up in August and the other ends in November. They are both paying the same rent... which is about 67% of market rent for the area! Naturally the deal doesn't work so well at those numbers.

How would you handle this? I am checking with my lawyer, but I am fairly sure there is no rule about increasing rent in the area where the property is located. Assuming that is the case, what would be the best way to go about this? Just increase them to market price when their leases end, or some other more diplomatic way?

The timing of the leases is a bit awkward as well... if not handled correctly, this could lead to a vacant property for several winter months.