Raising Rent on Inherited Tennant

[Grant Hasting]

My wife and I purchased a duplex a few months ago to house hack and inherited a tenant that has lived here for 10 years. He is very low maintenance, pays on time. and I don't believe he has intentions of going anywhere. Perfect tenant, right?! However, he is currently paying way below market rent at $1400 (water and garbage included) for a two bedroom/ two bath/ and a garage in Everett, WA. There is a comp next door of similar size without a garage that just rented for $1700. I'm debating between raising his rent to $1550 (marketed as $100 increase with $50 fee for garbage/water) and including a 3% raise every year in the lease or not renewing, do about a $15,000 renovation, then rent it at $1800 a month. Any advice would be great!!