I inherited a terrible tenant, but don't want a vacancy

[Alex M.]

Actually, I inherited THREE terrible tenants. But one is causing me more of a pain than the other two put together. Here's the summary of my three tenants:

1. The continually late nice guy - artist. living paycheck to paycheck and doing odd jobs to get by. Doesn't want to leave. Grew up in the neighborhood. His lease is month to month. Pays, but always pays in drips and drabs. Finally makes rent + late fee in full by 1-5 days before next month due. Annoying, but on time and adds to income. Rent could be $100-$200 more per month for this unit.

2. The non-computer user. Pays within the 5 day window by money order and/or cash. Usually in two to three payments. Sticks it in my mailbox. Won't email or use a computer or do online payments. This month was $20 short by the 5th, but paid it all by the 6th. Her lease is a year lease that just started in Dec. Rent could be $100-$200 more per month for this unit.

3. The commercial space lessee with a chip on her shoulder. This is the one that's the worst. She pays. On time. Was super nice when asking if I was going to renew her lease. It was a 2-year lease with option to renew for 1 year in June. We both had a 60 day renewal window for notice (on my part and hers). Since verbally coming to agreement - but not in writing - she has totally turned into the biggest PITA I could have imagined. If I could, I would throw her out immediately. 

A little more back story: 

In January, I bought a multi unit. It came with the three tenants above. I'd prefer not to have a vacancy in any of these three units. I definitely made some rookie mistakes, but am looking for advice on how best to resolve given that I let critical time windows slip. 

For the commercial tenant, we got close to her 60 day renewal notice deadline and discussed that she would like to stay but was concerned about rents raising. The rent is currently about $200 below market now (based on craigslist and the next door commercial space). I decided to raise it only 5%, but asked for a 2 or 3 year lease. She hummed and hahed and dragged her feet and let the deadline pass to state anything, but then said ok. I sent her a lease and heard nothing. She then started complaining about every item on the new lease. I was raising the water fees to 50% of the building (she's a hairdresser) instead of 1/3rd. I was asking for her to repay her security deposit. She lost it to the last owner, as she had lots of back fees that she had not paid. We talked through all of this, and I thought we were on the same page finally, until one morning... I saw she had painted the front of the building!!! I also saw she had painted the sidewalk, and tile, and basically made a total mess. Without permission. I called her and told her this was not allowed and that she will need to immediately hire someone to come and clean it. She has not done so yet. She is also back to refusing to sign a lease again - instead asking "what's the rush?"

I really don't know what her game is, but I am very tired of it. It has already cost me more time and stress that I am interested in spending on one tenant. I've also really tried to be accommodating as she is a young business owner and I was hoping to be supportive. I get the impression that every fee outside of basic rent is going to be questioned and debated, and that she is likely to go ahead and fight me over her new security deposit, etc. Given that the 60 day period has passed, I don't think I can just tell her that I am not renewing in June. What are my options???

Things I am thinking:

1. Tell her that I am actually going to raise the rent by $200 more, as I have done more market analysis - is this allowed if we do not yet have a signed lease for the new year? ...when do I have to give notice of rent raises by and how?

2. Bill her for the sidewalk paint cleanup and move forward with eviction process if she is late with the rent + fees. Downside is that this could take time and energy and end up leading to a number of months vacancy, as well as a bitter tenant who is likely to cause problems/damage to the property.

3. Use Jedi mind tricks and convince her I am a great landlord and that she is getting a bargain and all she has to do is stop complaining and pay her bills on time and communicate about desired improvements and all will be good.

Any other options?????

Thanks in advance!

p.s. I am in the building my portfolio stage of my REI career, and very early into it. Every penny counts right now, and I would rather have a vacancy in this property one year from now when I have the ability/bandwidth to deal with rehabbing units and showing the property and getting a new tenant settled - plus the location is changing quickly and will command much higher rents in 1-2 years than now.