BRRRR or Traditional with existing tenants

[Mike Plass]

Good day fellow investors!
I'm finally purchasing my 1st investment property. A SFH that has been converted in to a duplex, upstairs and main level.
First let's get some facts in place before the questions.
Both are currently being rented.  Both have month to month contracts and only the upstairs tenant has a security deposit in to the owner.
Upstairs tenant just moved in May/June 2019, the main level has been there for 5+ yrs.
The house is in need of many repairs, inside and out.  Also, the main level tenant has 2 great big huge dogs that have completely destroyed the doors/floors/etc.  
So, the current owner admits that this house has been neglected and has grown in to a problem for him. So I offered to take the problem off his plate and I offered him less than half the taxed assessed value and he has accepted it. Unfortunately, he did NOT want to do contract for deed.
As it stands right now, I plan on putting about $8,500 (20%) in to the purchase of this place and letting the bank finance the rest.  I will cash flow about $364/mo or $4,360/yr.  This is before any work is done to improve the place and raising rents.
Now my problem comes in with fixing the place up.  I know I could get this house to appraise (or ARP) at $110k or more.  With existing tenants already providing a cash flow, should I wait with any rehab and put some coin in the bank....waiting for one or both of the tenants to move out and then rehab?

Or do I kick both out almost immediately, rehab the place, and rent out?

I should mention that I do NOT have additional personal cash to put in to the rehab.  But, take note below on financials.

I will also mention that I'm already 4-6 weeks in with the bank and traditional financing.  Still don't have a close date, but should find out this week.  Sometime before Christmas I'm hoping so I get the Jan 1, 2020 rent.
I will also mention that just this week, I found a private investor that is willing to put in $40-60k in to private short term notes.  By short term, he's thinking 6-12 months.
So my fellow investors, what would you do if you were in my shoes?  
I have 2 options...
1. Buy and keep renting as is.
2. Kick them out, rehab with private investor's cash, rent out, refi.

Thanks everyone!

[Tyler Gibson]

@Mike Plass I am not a fan of manufacturing turnover in my rentals. Since they are both month to month the first order of business is a year lease. Inform them both that you are raising the rent slightly maybe 5% and they have to sign a 1 year lease. If they do great keep doing that till they decide to leave on their own then go in and do the work. If they leave now then go in and do the work. That would be my strategy.