I've been looking around in NYC and those rent-stabilized properties seem pretty attractive, but my realtor friend is telling me that they're not worthy of investment due to the headache with tenants and the renewal process. 

Do i have to honor the old lease until it is up for renewal? 

You'll find lots of content there from investing in turn key properties (I have have 15 REI Nation SFRs) to passive multifamily (have a $3M+ stake in 1500+ units) to renewable energy (energea.com).

If they are on a term lease, give proper notice of non-renewal. 

If they are on a lease, don't renew it.  

I simply email my tenants and let them know the rent will be $X for the lease renewal and to let me know if they have any questions...yes the email is 2-3 sentences and that's it.

Who is going to do all the paperwork, like keeping the LLC renewed?

I live in the mountains of New Hampshire and none of my properties are anywhere near a water source and I’m seeing an increase of 40% this year in my renewal rates compared to last year.

You might get lucky.I'm dealing with my own issues right now as I have a 5 plex that is not nob and tube but is screw in fuses and the insurance company (auto owners) threw a fit and demand the fuse boxes all be replaced with breakers or they will drop me.I'm right down to the wire and they have issued a do not renew order until fixed because it has taken 7 months to get all the paperwork and consumers on board with the update.I have a really good electrician coming in two weeks now that he finally has his permits, parts and pieces, electrical company ready for the work to be done.The electrician warned that he was only doing this because he was friends with my PM.

When the lease comes up for renewal, fix it then; but honestly a good tenant shouldn't care what it says and pay on the 1st.