Design Dilemma 1900sf or 1400?

[Christopher Goldie]

So, there's this house on this street in a hot area of town. Ugly as sin, almost beyond rehabbing. It has a 960 SF footprint two stories, kinda. Originally it was a walk in basement that someone half-heartedly convert to rental unit, with a 1 bed studio up top. I'm toying with 2 ideas and wouldn't mind some input. Both include demoing top, raising block walls by 18" to gain 8' ceiling height and rebuilding, reusing existing cmu foundation.((pending approval from structural engineer)

1st, keep footprint, have large master suit on main floor and 2 beds in the dungeon. Lot is sloping from front to rear, and has large tree cover. Would be approximately 2000 heated SF. Problem - most homes on street are 1200- 1500 SF. Due to tree cover and lot configuration, there would be very minimal natural light to downstairs.

2nd, extend foundation by 15' making footprint 32'x45', build 1440 SF open floor plan, 3 bed 2 bath. Matches closer to neighborhood, gives massive unfinished, basement that could be used for income producing unit, especially as its blocks from technical college and near university.

Problem, high expense adding footings, foundation walls, piers, possibly engineered beams, not entirely sure county would approve multifamily use.

For anybody in Columbia SC, the address is 3921 Capers Ave, in Rosewood.