Buy-and-hold or buy-and-build for next investment?

Hi all,
I know similar questions are asked and I've a good search on the forum but I guess I'm just feeling a bit stressed and overwhelmed. I follow property and the market keenly and my partner and I are just at the point of gaining a finance approval for our next investment. The issue is we are not sure whether to buy a place and just rent it out or try out our first knock down and rebuild to sell or rent out. We're in Bayside Melbourne.

I'd really appreciate your time..what would you do?

Our situation:
Household income is 397k. We are late 30s.
Debt on PPOR is 991 (valued at 1.45m)
250k in offset.
Debt on our only investment IP (Bray Park Brisbane - 292. Valued at 480).
2 children and no other debts. Apart from the children

I began this research interested in buying an old house in southeast Melbourne to knock down and build a dual occ - I would really love to do this - BUT I don't think we could afford it, assuming our maximum borrowing capacity (as broker advised) is 1.03m. So I wonder what others might do in our situation?

Thank you!