Hi! I am currently looking at an investment property in Minnesota and am seeking advice on the best option with a list of items I should be aware of.

CONTEXT - The property has a 1948 Residential lake house (1bed/bath cabin) that was grandfathered into a shore land management zone, within city limits. The property consists of 2 parcels, with one parcel high and outside the shoreland management zone. At this time I am seeing 3 suitable options that I may be able to move forward with to use as a short term vacation rental or long term rental.

Option 1: total Rehab of the interior/exterior while using the old foundation (if inspection finds strong/usable) 

Option 2: total demo of the structure and build a larger house on the second parcel outside shoreland management zone 

options 3 (combination): rehab/use as ADU and build larger house on second parcel

Thank you for the help in advance!