You should always terminate any existing Rental Agreement at the earliest lawful date when you acquire a new property; inspect every unit (brief walk through, checking for potential leaks, housekeeping issues, verify with tenant no outstanding repair issues, and ownership of appliances), documenting with photos and notes; require existing tenants to complete an application which you vet thoroughly and approve/deny as appropriate based on ALL of your findings; and have all adult occupants sign YOUR new Rental Agreement,with your terms and conditions.

If a similar facility ten miles away sold at a 13 cap, why in the world would you entertain a 6.5 cap?

I currently manage all of my rentals, and have always entertained the idea of starting my own property management company.

I had entertained the thought of utilizing their program last year when they came to my area but decided ney after the initial conference....just a feeling idk.

If this is a 2-1 within walking distance of a train station or a high college population, then adding a bathroom might be the key to getting more income as you're likely to attract far more roommate situations (young adults, professionals, etc.)  

Bite the bullet, renovate, keep only the best current tenants if they are well qualified for the new rate, and screen all adult residents thoroughly.

I've spent my adult career in the Air Force (11 years, medical equipment repair) and then transferred into financial services (5 years, Risk Management / Program Management / Data Analysis). 

I don’t know your situation personally but this is what I tell people who come to my investor meet up group in Mesa, Arizona, “if you don’t have any money, and you are an adult, and you believe real estate investing with solve you problem of not having money, then you are confused about what your problem is.

As a result, my intention at this time is to seek buy-and-hold deals, but I am willing to entertain other types of deals if they fit my risk and time profile.

That sounds like he might be a young person who just finished school and hasn't really had a financial life as an adult yet, right?