Rehab with tenants present?

[Tatiana K.]

Hi BP, I'm proud to say we finally took the plunge and bought our first property! It's a 1920's craftsman duplex, 2/1 + 1/1 with one vacant unit and a 15-year tenant in the other (luckily no rent control so they're near market rate). It's not much on paper, but we're in Los Angeles, so starting where we can. 

Our game plan is to fix up the place, live there for a while, and refi out of our FHA as soon as humanly possible because the PMI is no joke. We need to increase the property value by about 60k to hit 20% equity and be eligible, so the reno needs to count.

If it weren't for the looming refi putting a squeeze on us, my initial instinct would be to leave the tenants alone and make updates to our unit and the general structure only, then update the other unit either gradually or once they leave. However, updating both kitchens and bathrooms would certainly net a higher appraisal. Also after the reno we should be able to get about $500 more for the 2/1. 

Question is: how do you work in updates around people living in the unit? I think they'd be cooperative if we offered to update their place, but working around all their things and furniture would make the process much harder/longer. How do we get them and all their stuff out while the work gets done, or do we even need to?

Thanks in advance!!