Renovate or develop?

I have a 3/1 IP in Orange NSW, purchased in the low 200's and renting for $310p/w. The property sits on an irregular corner block, approx 900sqm, and is located towards the back of the block so a small backyard and loads of land at the front. So my options in the future do I a) possibly knockdown and build duplex/townhouse or b) replace the internal garage with a 4th bedroom and 2nd bathroom, do something with the land towards the front to increase the yield? Thoughts?

 

Sounds like an easier way to increase yield would be to pay down the mortgage on the property.

Before you say something like "that's stupid", well it might end up the same or better than the other plans if you haven't properly calculated the costs/equity growth/rent on those development plans.