I am currently leasing space in this location for the past 2 years.

Her lease is up at the end of March.

I know that it is legal, but is there a problem with me telling the tenants right off the bat that they need to sign a lease agreement?

Listing, applications/screening, leases, online rent collection, and maintenance tracking? 

@Manuel Martinez Yes presuming ground leases are legal in your state. 

Another option would be to renovate the property and lease it to a commercial customer. 

Even with flips they have failed the septic for non-issues which were eventually corrected on their end but caused further delays.A solution to that could be keeping the power in my LLCs name but enforcing through the lease that failure to pay for electricity will result in a 5-day notice and therefore being ground rules for an eviction.

I personally focus on sandwich lease options which I believe is the best option for short term cash flow.

Maybe your laws state that the tenant has possession until the end of the lease even if they say they have moved and haven't paid.

He does not want a subject to or lease to own.