Inherited Tenant Problems at my first property- need advice!

[Emily McCabe]

Hi, I just bought my first rental property 2 weeks ago (I'm in Maryland), and I'm feeling a little overwhelmed with my inherited tenants- any advice would be greatly appreciated!

The property is a 3-unit building. 2 of the units came occupied, 1 was vacant. After purchasing the property on the 12th, the seller was supposed to send me prorated rents for July. I received a check for 1 tenant's rent, along with a note indicating the other tenant had not yet paid. The seller told me before the sale that this tenant had been there 5 years and always paid on time, and in the Estoppel agreement, it was indicated that he had paid July rent on July 5, which was not true. I knocked on the tenant's door to address this issue, and found out there was more to the story than the seller had told me (surprise, surprise.)

It turns out, the original tenants were the current tenant's parents. They lived there for 5 years and paid on time. At some point, they had let their son, who was homeless, move into the common laundry area in the basement. A few months ago, they moved out, and the son moved into their apartment and took over the payments. There was never a written lease. This tenant only makes $1200/month and the rent is $710 (which is also under market). He clearly cannot afford the apartment, but he's convinced he can afford it, even thought he missed last month's rent because he was apparently in the hospital, or something. Also, I ran a background check and found a court date coming up soon, which I asked him about. Apparently the police searched his apartment and found a crack pipe? He claims that he's a recovering addict and the pipe was "old". These tenants also never paid a security deposit.

Before I found out about the crack pipe and some of the other issues, I had told him that I would waive July's rent if he agreed to sign a biweekly lease with auto-pay on his paydays, starting August 4, and the rent would be raised to $380 biweekly. I told him he'd need the first 2 weeks rent, plus a security deposit, and that he'd need to pay $250 on August 1 with the remainder on the 4th, at which point he could sign the lease. I regret telling him that... I'm new to this, and I know I made a mistake. I was trying to work with him because I didn't want another vacancy right now while I'm renovating the 3rd apartment, and I also don't want him to cause problems if I try to get him to leave.

Anyway, I'm just wondering if any more experienced landlords have advice on what the best course of action would be from here. I have not taken any money from him yet. If he doesn't pay me the $250 tomorrow, do I give him a notice to pay or vacate, or a different type of notice since we never even had a lease? If he does have the money, can I back out of what I told him and tell him he needs to leave? Should I try cash for keys, and if so, how much time should I give him, and how much cash? Thanks for taking the time to read, sorry for the long-winded explanation :)