To keep a current tenant or not???

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I am in process of purchasing my first investment home. There are tenants in the property right now, they have been there for 4-5 years and they are asking if i would consider for them to stay. Their current rent is about $500- $600 below what the average rent is going for but i am planning on raising it. I was planning on at least replacing then flooring as good faith and to justify the rent increase but seeing their living conditions (not the cleanest) my wife is worried that if they stay they will destroy any upgrades we do on the home. My wife would like for us to just remodel the house and find new renters. One of the main reasons why i am considering them to stay is according to the current homeowner, who is a family friend or ours, the tenants have never missed a payment and if they were late they always paid the late fees. If i keep them I could possibly avoid having to do a lot of repairs/upgrades to the home right away and immediately cash flow.

my question/options are

1. Should I keep them and do no upgrades on the home

2. Keep them and do flooring 

3. Remodel the home and find new renters 

I hope this makes sense any feed back would be much appreciated.