Addition or build apartment

[Jason Hirschfeld]

I have a 1926 bungalow rental in seminal Heights that is a 2bed 1bath 1000sqft. It rents for $1500 per mouth.

Should I make an addition making it a 3/2 and increase sqft and charge more in rent? Or should I build an apartment in back and add another door on same property? Per code the max sqft for accessory structure is 750sqft. The cost of both is very similar.

My thoughts are the apartment would give me more income. However, not sure about insurance on two units on same property? Would I lose renters in bungalow if they have someone else live in back of them? The home would be separated by approximately 20 feet.

If I go with appointment. What should I do: studio, 1bed, or 1bed with bonus room (possible home office)?

Thank you in advance for any feedback.