3 options 1 house... what do you think?

[Aaron Mund]

My wife and I are about to close on our first house. It is in need of a lot of work. Mainly updating, no big issues. I personally enjoy renovating. I am trying to figure out what my plan of action should be. It is located within 15 blocks from the local college, blocks from the hospital, close to the mall, overall great location. I am pretty sure we are going to rent it out after our time at college is done and we no longer need to live there to keep from paying back the tax credit. It is a split level with a walk out basement, so when you walk in you can go to the main floor or to the basement. It is currently a 4 bd 2 and ½ bath.
Option 1;
It would be easy to make the basement into a one or two room one bath apartment. And then have the main floor be a 3 bed 1 1/2 bath apartment. To do this I would have to add a kitchenette to the basement and add laundry to the top floor, and block off the main basement access. And get the proper zoning for multi fam. Is this a good Idea?
Option 2;
Add a kitchenette to the basement and allow those who live in the basement to access the basement through the front door.
Option 3;
Fix it up and update to sell and not rent. Nice counter tops instead of laminate or nice tile rather then linoleum.
What do you think?

Rents average $300-350 per room and my mortgage will be under $850.