Quick Fix or Major Remodel for rental home in Berkeley

[Frank Wheeler]

I'm working with the owner of an almost 100 year old small (<900 sq. ft) craftsman bungalow with small rooms typical of a home of this vintage. The house is now vacant and in need of renovation (bathroom and kitchen had dry rot issues, two bedrooms had partial wall removal due to mold on the plaster). I've gotten different suggestions: either conduct a basic remodel of the kitchen and bathroom, or undertake an extensive gut and remodel and convert the kitchen + living room to one large open space (that came from one of the GC's who does flips in the area). 

However, this home is in Berkeley and I am concerned about destroying historical elements and potential added structural engineering costs that could make the house attractive to a buyer in future years, along with the opportunity cost of construction now versus getting rental income from the house in the next few months. 

The house is fully paid off, so any construction work will need to be financed with a new HELOC or mortgage. What are your thoughts?