mjrocks brings up an interesting point, which is that this question may be slightly ill-posed. You will be looking at a different set of potential renters if you remodel into a 2-BR situation than you would if you stayed in a 1-BR situation; the question, then, isn't "what would you prefer" but rather, "given the current market in Davis, would a 2BR with a small kitchen get better rent/better renters compared to a luxurious 1BR with a large kitchen?"
Which I think might be a question for a real estate agent to answer.
My gut feelings on the situation are that a 2BR place is typically rented to at least 2 (if not more) people. Would the rooms be somewhat evenly sized? If you have one room that is much smaller than the other, you'll find it harder to rent to students - they'll have to divide the rent unevenly amongst themselves (which they can do, but it gets trickier). You'll find it slightly easier to rent to a couple with a child (or planning a child); the nursery is pretty sweet. If you have a 2BR, you should model your kitchen such that its big enough for at least two people to use it comfortably; is there enough room to store food for 2 people? Is there enough counterspace for 2 cooks working simultaneously?
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Which I think might be a question for a real estate agent to answer.
My gut feelings on the situation are that a 2BR place is typically rented to at least 2 (if not more) people. Would the rooms be somewhat evenly sized? If you have one room that is much smaller than the other, you'll find it harder to rent to students - they'll have to divide the rent unevenly amongst themselves (which they can do, but it gets trickier). You'll find it slightly easier to rent to a couple with a child (or planning a child); the nursery is pretty sweet. If you have a 2BR, you should model your kitchen such that its big enough for at least two people to use it comfortably; is there enough room to store food for 2 people? Is there enough counterspace for 2 cooks working simultaneously?