They carry the a portion of the expense of hospitality investments while having an increased revenue.

Usually a good thing when income increases are outpacing inflation over the course of a decade and a half, typically means the local economy is doing good.

Embrace being young, you have time on side! 

If they're month-to-month then you just need to give them 30 days (or whatever your state/local laws require) notice of the rent increase, however seeing as the current owner has not increased rent and you're the "new guy" coming in, don't be surprised if the increases are met with anger/hostility.

That worked really well to keep cash flowing while still getting things updated and renovated to increase rents overall.What @Mike Dymski said is also spot on.

Also many unqualified tenants will do this to increase chances of getting the unit and borrow to do so, it is a big red flag, but if you have done the background check it may be okay if he just doesn't know these things.

I do also question why he cannot get an increase in existing loan.

How do we go about increasing the rent?

My lease has a built-in rent increase every year but it's still possible to get behind on Tenants that stay 3+ years.

The added value is coming from the rehab as well as increased rental rate as a result