Yes, this is very wise!

Condition wise both will start to degrade but the market appreciation will likely outpace this condition depreciation.The BRRRR unit (assuming good rehab) is likely to rent for more than a small new ADU.So the BRRRR after refi will cost you less (especially as a percentage of total value), will result in more rent, and likely appreciate similar to the RE with the ADU.The key is to do the BRRRR right starting with finding the good candidate RE at the right price. 

A wise investor will not try to get rich quick with shortcuts.

It's up for renewal and I'm 50/50 on whether it is a wise "investment".Home is 100 years old but in relatively good shape (few inspection issues).

But, always wise to double check.Mathematically speaking, if your interest rate on the mortgage is 3.5% and you invest in index funds instead, you are likely to generate an 8-10% return over the next 30 years.

Some properties just lend themselves more to one approach than the other so this combination approach may even be a wise long-term strategy.In order to grow your rental property, you need to generate cash and house flipping can be the means by which you do that.Experienced investors caution against focusing only on house flipping because it requires constant attention, time, workers and employees, and energy.This can lead to a lot of cash but no passive income.

Bottom line is real estate has a significant amount of risk in the US .. so choose your markets well.. make sure you have LOTS of reserves for the unknown.. other wise there are much safer investments out there frankly. 

A wise man once said “I will tell you how to become rich.

A wise investor will not try to get rich quick with shortcuts.

I believe it is not easy to invest wisely out-of-state as it presents a lot of obstacles, but it can be done.