Inherited Tenant Lease Termination?

[Cory Benhardt]

Hey there!

Looking for some advice with my soon-to-be inherited tenants. For a little bit of back story, My wife and I are about to close on a 4-Family house. Rents are HALF of the current market. rented between 600-725 and market is going for 1,300-1,500. Unfortunately, all 4 units just renewed on a 12 month lease on Jan 1st. The property is still profitable for us at these current rents so we are fine with keeping these tenants for the next year, but ideally we offer them an out and at least one of them take it. 

So here is my question- how would you offer this? We did speak with a Real Estate Lawyer who looked at all of the leases (they were one page leases written by the old owner, nothing official or state approved) So we had hope that we could get out of them, but we are stuck with them until December. They all know their rent is way under market value so we assume they know come December, we will choose to put them on month-to-month leases and rotate them out while making renovations. But, we do not want to say something too soon, and then them get upset or angry and take it out on us by not paying rent or destroying the property. 

The one option we have considered is offering them cash for keys. I would like to offer to pay their security deposit at a new place or somehow make it worth their while to leave their lease early. 

How would you offer an early lease termination? Or do we stick it out until the end of the year?