I give a gift card at Christmas time of 5 dollars everytime the rent is paid on time. 30 dollars =6 months on time.

If you have a charity that you love, you might consider making a gift of an appreciated asset(s).Especially if you are already in the 25% bracket - that means your looking at a maximum federal tax increase of 18.4%(14.6% + 3.8% surcharge).

I suggest you offer upgrade as part of a lease anniversary gift.

I don't want to gift them $300,000.  

Yes you eventually have to take chance on them, but when they do well, tell them, buy them a $25 gift card to starbucks, take them to lunch.

I drive a 2004 Expedition White, 171,000 miles, I run Amsoil, and have no plans of upgrading my paid for  sled that helps me take long romantic drives to the bank!!!

Additionally tenants expect to pay market rent you are simply gifting them $50/month.The value of tenants money is the same whether they like their landlord or not.

This is literally the worst advice you could possibly listen to.Being gifted a free San Diego home and selling that equity to buy equity in lower quality markets is a sucker play.Greg's funky math above:- Subtracts opportunity cost from actual cash in order to validate his claim that this property is "negative cash flow"- Does not consider rent growth.  

I was thinking of a gift card for a dinner or maybe a place like Target for supplies in a card or gift basket.

If you want to help them, consider doing it in a way that doesn't jeopardize your investment: offer to pay their moving expenses, provide their security deposit, or gift them a months rent for their next property, Aside from that, I think something you may need to be weary of is the possibility that the seller gave you an owner-financed property at a 20+ cap because he, too, has been put in a bind by these tenants; and likely could have even known that you were inheriting an essentially built-in problem.