Update the units- take care of the building and add value to what was a poorly managed situation.

Prioritize the essential updates, like the floors.

If they are a good tenant that takes care of the property, doesn't cause headache for you as a landlord, and still pays rent at a rate which gets you the return you are looking for, then I'd say keep it where it's at2) Look at your underwriting numbers - if you bought the property based on the current rents, and those rents get you the return you are looking for, then that is a great position to be in.3) Communicate your plan in advance to them - if you do decide to raise rents, then I'd communicate your plan in advance to them and give them ample time to decide and find another place if they aren't OK with the raised rents.

We are cash flowing 1k a month, with all units updated and occupied.

If you want to live in these areas find a property that offers a little bit of ad value projects- like updating kitchens and bathrooms.

So, do the math $120 / $20 = 6 hours/month.How much time do you think it takes to process rent payments, update software, send you your funds, answer tenant calls & emails, answer your calls & emails, followup with tenant if they don't pay on time, etc?

@Esther Tama and others,   Yes Esther I've heard of local credit unions offering good terms on commercial/rental loans and not being DTI (fannie under writing).Update on my cash out refi progress;- finished 2 of the 3 REFIs I started with FinOfAm, they where the worst, most painful lender / underwriting I have ever done, including bank/fannie under writing.  4 months, FOUR months to close each of 2 loans. 

In order to do that I would need to put mini-splits in each unit, currently have window ac,  get new windows, new roofs (already ordered) update kitchen, bathrooms, furnish the units, and will have to do 1 by 1 because I need to wait until the tenants move out, etc.  

Will likely do a forum post of the outcome when I move out and make all necessary updates to the property.

Update: Just got a notice from the city that we (the owners) need to remove the trash by a certain date, because it's a public safety violation.