My question is: is it possible to raise the rent up to market rates if a new tenant is placed, or does the unit need significant upgrades to justify such an increase?

I think would like to renew, but they've occupied the property for some time and the rents in the area have probably increased.

The key was SEO, simple processes, very targeted and directed keyword marketing, automated payment and enforcement.

I want to keep it simple.  

I have about 150K to invest with the same amount in reserves (but could be used to increase my position).

A LLC will not provide any better protection at your point in investing and will only increase your operating costs and make it more difficult to get financing going forward.Insurance is the real protection, LLC is more for psychological protection.

It is easier to learn what is involved starting with simple small properties that are near you rather than to jump right into advanced investments like distance, 5+ units and high crime areas.

@Mike Watson just made a post about seller financing.https://www.biggerpockets.com/forums/311/topics/486688-some-ways-i-make-my-seller-financing-deals-simple-how-do-you

It will end up saving you both a lot of time and increase efficiency.

I have a duplex that I am currently house hacking, which should cash flow about $400/mo when I move out, but am looking at the possibility of adding another bedroom or bath to one of the units, as well as possibly adding one or two units which could potentially increase the cash flow.