Just as you should never rent to family or freinds, they cannot become your family or freinds!
If you are their "freind" encourage them to buy, you do not want the same tenants for ever and if they have made a committment to the neighborhood, area, then why should they not benefit form the increasing market and the joys of home ownership? Tax deductions, appreciation etc. As a "freind' encourage them to buy!
By the first renewal, start speaking to them about buying, let them know that you do not want them for ever as tenants. The second renewal, let them know this is the last renewal. Because after three years there are two major things change in a landlord / tenant relationship: the tenant starts feeling too comfortable and feels that they are almost a "partner" in your property (but without paying the bills!) they will come up with things to "improve" the house and things that they want, but do not add value to your rental property and they just get too comfortable. From a landlords perspective after three years the apartment will generaly need a good "muck out" to keep it up to standard, but also to keep it up to market rent value.
So three years and your out!
That said, never give a tenant more than a one year lease, leases only hold landlords, they do not hold tenants. Tenants are a moving target, Landlords are sitting ducks!
As a Landlord you need to detach, similarly to a farmer, they cannot give their animals names and make them pets and then send them to the slaughter house!
The bottom line is, if they were your freinds they would not put you in the hole!
Kathryn Lilly, Broker
Realty on the Greene, LLC
Right now you may have to lose a few friends and get down to business so you don't get so far behind that you can't pay the mortgage (if you're still paying mortgage). You have to let your friend know if he or she cannot pay the back payments and future payments then you may have to ask them to move or file for eviction. Sounds horrible, but it's either you or your friend at this point. Good luck.