Keep 2 small apartments or convert to 1?

[Care Anne S.]

Hi BiggerPockets!

We've been looking for our first investment property for over a year, and think we have finally found it! 

It's currently a 3 unit with one very large apartment on the bottom and two small ones upstairs that share a bathroom. Our options are to add another bathroom upstairs and separate the apartments better, making them both around 350 sq. ft., or combine the two into one large unit at about 700 sq. ft.

I think we could make more keeping it 3, but that's if we could find two people who would want that small of an apartment. So my question for you is: do you have any 'micro apartments'? Are they marketable? Or should I save the headache and convert to a duplex?

Thank you!