How to decide between a renovation, gut rehab, and rebuild?

[Christian Silva]

Hello, I am a newbie at real estate investing... I bought a 2 flat in Chicago in an up and coming neighborhood (Logan/Avondale area) about 10 yrs ago. Newbie because I bought it as a primary home at first, but now want to turn it into a 100% investment and rent it out fully.

I have lived in the property since then (just moved out), and was renting the garden unit to a friend for most of the time. During that time, the neighborhood has become a hot place to live however, the house is really old (over 100 yrs old) and recently had a flood in the garden unit that destroyed the kitchen. Anyways, over the years I have seen properties on my block get bought, tore down and rebuilt making the neighborhood look really nice. Currently there is a 2 bedroom garden unit, a 3 bedroom first floor unit, and an attic that I would like to turn into a studio if possible.

I was looking for some advice on how do I determine whether I should do a regular renovation, do a gut rehab, or do a full tear down and rebuild? Most newer places are open concept, while mine is not. I would like to add that the house has a lot of equity built in (doubled the price in 10yrs), but I want to refinance after I renovate so that I can purchase another real estate investment property, and increase my portfolio (BRRRR). I plan on using a combination of savings, and a rehab loan to get this project financed. Any advice would be greatly appreciated!