Add Third Unit or expand Duplex?

[Ivan Rubalcava]

Hi all,

My wife and I recently purchased a 4bed, 2bath duplex (2be, 1ba / unit) that has an enclosed, 400 sq. ft. garage.

We are thinking about converting the garage into a 400 sq. ft. ADU to have 3 long-term rentals.

However, I am wondering if this extra space would provide a better ROI if it were divided into a 200 sq.ft. (additional) bed bath, converting each unit into a 3bed, 2bath--potentially to be used as 2 short-term rentals.

Any advice on how to make this decision would be most appreciated!