Scrape or Renovate - Highlands Neighborhood Denver

I have a SFH long term rental in the potter highlands in Denver. The home is 3/2 it's small and needs some TLC. It sits on a big 8200 ft lot.
It feels like I am currently leaving some value on the table. I'm beginning to explore options of either scraping and building a duplex or renovating current property and possibly adding ADU. I know the potter highlands requires approvals on design to keep with neighborhood look and that can take time and can be difficult.

Any advice on starting point? Thoughts on costs? Should I even think about doing it? What am I missing?