Existing tenant month to month

[Dave Schimmels]

My wife and I bought our first duplex with tenants in place. 2nd floor tenant is on a year lease, but the first floor tenant is month to month and has been renting for the last 16 years. She is older and is on a fixed income. The seller does not have a lease to transfer to us. Her rent for the last 16 years has been $495 for a 3 bedroom, which is definitely very cheap ($850 would be more acceptable). My question is: how do you go about raising rent from $495 to $625 and getting on a 1 year lease after 16 years with no increase. (insurance cost $75 more for a short term rental)?

the tenant being older and on a fixed income also has someone else living in the unit, that may be able to contribute. Being new as a landlord, we are not sure how to go about it.

Do we have them fill out another application? Or do we give them a verbal and written notice of the increase first? In case they decide they want to move out in 30 days.

thanks for any advise in advance