Turning Small 3 bed house into nicer 2 bed?

[Steve Q.]

I've got a property in Warwick Rhode Island with a small separate single family home on the lot.  It's got parking and its' own basement.  Nice quiet street near the water. 850 sq feet.  3 beds 1 bath.  Cramped and shabby inside and currently rented for only $1000 to an inherited messy tenant. 

One bedroom is decent sized, the other two are 9x9 kids rooms with small closets.  I'm planning to redo the kitchen and all the flooring.  To me it would be more appealing to take the wall out between the two small rooms and make it a two bedroom with two good sized rooms each with nice closets.   

Is this foolish? Am I definitely going to lose rent value going from cramped 3 to nice 2?  One plus for the 3 to 2 conversion is a I might get easier/cleaner tenants like a professional couple or retirees rather than a family with kids squeezed into small bedrooms.

Thoughts?

Anybody done a 3 to 2?  

[Dennis M.]

Less bedrooms equals less money plain and simple .no I would not do this , but  I’m in business to make money.. not lose it so that’s up to you .