We are currently on AEM 6.3 SP1, planning to upgrade to SP2 soon and then by February we are targeting to upgrade to AEM 6.5.
What is the best practise for this upgrade.
If it is in-place upgrade, please provide the necessary steps to be followed.
The best approach for upgrade is in-place upgrade just like you said.
Please review the all the links of doc - > Upgrading to AEM 6.5
The main upgrade steps are mentioned here Performing an In-Place Upgrade
In addition to what Vishu mentioned also its good to check the following document:
Post Upgrade Checks and Troubleshooting