What is better? A 3/1 or a 2/2?

[Kat Malkowski]

Just looking to get opinions on what would be the preferred route to take for a 1000 sq ft single-family ranch home - one with three small bedrooms and one bathroom (which is the current set up), or converting it to two larger bedrooms with two full baths (specifically, creating a larger master bedroom with a master bath). (Note: There is no basement so no option to add space that way). I am considering either rehabbing and selling, or rehabbing to rent out - is there one set up that would work better for one option versus the other? Obviously every market is different, but if anyone wants to share their personal experiences or preferences!