Crawlspace Conversion vs. Garage / ADU Addition

[Kyler J Sloan]

Assume that you have a 1100 square foot cabin renting on Airbnb that you want to incrementally improve over time and later take a HELOC to reinvest.

You have the following two options (below). Which would you choose to do first, and why? 

(1) Convert its crawlspace -- which is half filled with dirt -- to bring the square footage up to 2000 square feet

(2) Build a garage with an upper-level ADU on an existing pad

Although (1) would be the obvious choice in the abstract, the latter option would allow me to continue renting the main unit without disturbing guests, considering that the pad is located a comfortable 75 yards away from the main unit.

The crawlspace conversion would put all rent on pause, which I would really like to avoid. 

I would appreciate any feedback; thanks