What to do with existing tenants.

[Mark White]

Hey BP community I hope everyone had a good thanksgiving. 

I have been looking at properties in Bridgeport and surrounding areas and I think I've been getting better because in the past month and a half every time I saved a property on Realtor.com it goes under contract soon after. Or maybe the market is still hot and it's still a seller's market, either way, I see another property that I like and I think it's a good deal the only problem is there are tenants. 2 are on a month to month and one lease expires in May. I want to upgrade the properties and bring the properties to market rates. What's the best way to proceed?

[Ryan Howell]

I've dealt with this multiple times and about 50% of the time the tenants don't work out, but even with some really bad tenants, it wasn't that bad.  If the property cash flows like it is, I would do a modest rent bump, but not put them on a long term lease until I know I want them to stay.  If things go well, then you can put them on a longer term lease.  

If the place is unsafe to live in or you can't cash flow like it is or you know the tenants are not going to pay, then I would give them notice so you can go in and rehab and get new tenants at market rent. What I've found is unless I have to, the turnover costs generally don't justify getting rid of good paying tenants. I've done it so I could BRRRR out, but I try to avoid it if I can.