Remodeled duplex-tenant on other side is upset

[Jennifer White]

New landlord here! We acquired our first duplex in December with one tenant staying in place and the other one was evicted before we closed for multiple reasons. The side of the evicted tenant was pretty bad and they were heavy smokers so we had to pretty much remodel the entire side with new flooring, paint, and appliances. There was no way someone could have lived there without remodeling it plus we are hoping to utilize the BRRR strategy so we did make it nicer (within reason, as this is a lower income area).

Our other tenant chose to stay and re-sign the lease with us, however, her side is not anywhere near as bad but does require some fix-ups.  Not to mention the previous property manager did a crappy job on a lot of the repairs that had gone into it previously.  The problem is....now that she has seen how nice the other side is, she is wanting her side to be remodeled.  I told her there is no plan to remodel that side while a tenant is in place.  Paint and new flooring is something it needs for sure but she signed her original lease with the unit in that state.  

Has anyone had issues with this previously and how did you handle it?  She actually is a good tenant so I would like to keep her.  We've even considered offering her the other side if she wants to pay the increased rent and sign a new year lease.  We haven't made that offer yet.  Any thoughts to this?  We would have to jump in and renovate the other side immediately but is something we were planning on doing anyways whenever she left.  

[Andrew B.]

"Hi Tenant. The unit you're referring to is nicer because it has been recently remodeled and currently commands a higher rental rate. If you want to move into the newer unit, you're welcome to apply when the unit is ready. The new rental rate is $XXX more than the one you are living in and we would be glad to break your lease, at no penalty, if you apply and are accepted."

Or something to that effect. They think you'll rent it to them at the rate they are currently paying. They'll back off quickly when they find out you want more money for it.