Adding a third bedroom to a rental property vs converting a shed

[Gayle Eisner]

Hi all:

Thank you in advance!  Im wondering whether I would make more money converting a large shed on my rental property backyard to a grandmother unit or add a third bedroom to my rental property in Los Gatos hills.?  Not thinking of getting permit for shed. I had a $52k bid for conversion of 700 sf shed.  I do not know how much a permitted extra room would be, but square footage added to the house might be a good investment?  Thoughts? Experience? Thank you kindly!