Rent to not ideal tenants?

[Chris Brenner]

Hello! My wife and I are new to the REI scene and actively looking to make connections, deals and grow our portfolio. We just recently bought a duplex and am owner occupying. The tenant side was already rented out and since closing, a few red flags have popped up. 1: the day rent was due, I received a text asking for rent to be delayed 2 days for personal reasons(I accepted because after 7 days there was an official late fee). 2: The condition of the unit is clearly not kept very well (ruined carpet with holes from dog, pee and poop literally on the floor), and 3: most recently I learned that they habitually pay electric upon notice of shutoff.

The dilemma we're running into is that we have long cold winters (Fairbanks, Alaska) and cant afford at the moment to pay for the renovations and carrying costs (cash), that will be required to make the unit to my standards. My wife and I think we should keep them for 6 months til summer when it will be easier to get the renovations done. They still pay the bill and arent "technically" late, and they clearly are okay with their current conditions. I guess my question is, should we ride out the winter with them, or give them notice and carry some costs for a few mo this to get the renovations done with credit? I appreciate everyone's time and help!

[Jeremy Bartlett]

The damage is done already, why accrue additional expenses by vacating a source of income now? If renovations have to get done either way, wait until you’re in a position to handle it more effectively. How they are living in their unit has no impact on you now. Just be sure to keep their security deposit and work that into your operating budget.