Rent- Raise or not?

[Dan Kelley]

I'm owner occupied in a duplex. My tenants that live below me in a large 3bd/1ba unit have been there for almost 3 years now. I rent the unit for $700. I've never raised their rents. When I purchased the property, I think the rent was only $600 or $650. I ended up evicting that tenant but I raised rents before I accepted the new tenant. My current tenants are AWESOME. Very rarely complain, pay rent on time, are respectful, are understanding when things need to be fixed. I don't really want to lose them.

Here's my dilemma: The apartment is decent, but the kitchen is getting pretty rough. It's got 20+ Yr old peel and stick tile that's chipping up all over the place. The cabinets are hideous old walnut colored particle board and the corners are chipping. It really needs a full kitchen gut and rehab. I don't really want to do the rehab while my tenants are living there though. The subfloor is somewhat wavy, so I really want to take my time when I do the kitchen and try to fix the floor properly so I don't have any issues in the future.

My question:  Would you raise rents without doing any repairs or improvements to the property? I think this unit could probably support atleast $750-800 even in it's current condition. I'd really like to rehab it and get $900+ out of it. But I don't want to raise rents out of nowhere and lose my tenants either. They're currently on a month-to-month lease agreement. 

What are your thoughts?

I'm also closing on a 6-plex in 2 weeks, so I want to get out of any habits I may have of just letting things slide simply because my tenants are in the same building as me. I need to treat this like a business.