House Hacking remodel- Appreciation Question

[Eric Kelly]

I recently just closed on a house in Point Pleasant NJ and am currently house hacking it. I am renting 2 bedrooms out and living in the other. The house is on a hill but I have a room on the first floor(basement) that is currently not being used for anything and needs to be re done either way. The room looks right into the backyard.I have two options, make it an additional bedroom or blow out the room and make it a sun room with access to the backayard and make some sort of entertainment piece in there. (I am planning on re-doing the backyard to increase the value of the house by adding a hot tub, an above ground pool that is built into a brand new deck, re do the fences and add artificial grass along one side of the back yard where I have a putting green and then adding a sand pit area on the other side with a fire pit that will be next to the pool.

The house is located about .75 miles from the beach so in the summertime this entire house could poteintally rent for about 10-20k per month. If I ever decided to do a short term rental and then winter rental in the off season.

 In terms of the cash flow if I added the additional bedroom downstairs I would be able to Create more cash flow while living here and classify the house as a 4 bedroom which I would assume increase the value of the house. However, I am at fork in the road on wether adding that 4th bedroom will increase the value more than re doing that backroom and making it easier access to the backyard for and the amenities that I plan to add to the abc to increase the value.

My exact question is given the situation and the circumstances which makes more sense to do from an appreciation standpoint. Any insight or feedback is appreciated.