I'm a new investor looking at a 3 unit building to purchase that already has 3 tenants. Each unit needs rehabbing, so my question is: each unit is rented with the current owner month to month. I want to purchase the property and start renovating one unit at a time to not only increase the rents to market value, but also add overall value after the purchase. What do I do with the current tenants?
Do not renew them. Give them 30 to 60 days (look up your local laws). If they give you a hard time, offer them cash for keys.
Move swiftly. The absolute soonest possible (depending on your local laws) you can have them out from a non-renewal is August 1st. You have until the end of June to issue them a 30 day notice of non-renewal. Then, if they DON'T move out.. which you SHOULD plan for.. you either have the option of "cash for keys," or eviction. Get a lawyer to handle the eviction. It's worth it in my opinion.
I agree with giving them proper notice of non-renewal.
I agree, mostly.
I would give all three of them notice of your intent. See if any of them are willing to move out in 30-60 days and start renovating that unit. Keep the other two on notice that they're next and try to negotiate a mutual agreement on when they vacate so you can spread the vacancies out.
I don't know why you would even consider cash for keys. The tenants may be willing to leave voluntarily. If not, you give them notice and move them out. If they refuse and try to stay, you evict. Rewarding them with cash for violating the law is terrible advice and should only be used right before sending three burly cousins with baseball bats.
Get one tenant out, renovate that unit and see if one of the tenants wants to move in to the upgraded unit at a new price. If they do, then renovate the second unit and repeat the ask.
If none of them want to do that then I would follow some of the advice above.
Thanks everyone for the responses; this question alone with the ideas given was already worth the price I paid to upgrade my account at Bigger Pockets!