I’ll give my two cents.

First point to note is that a subdivision will give you capital to work with in the future where a dual occupancy typically will not.

Secondly, as stated above, the selling of the new lot will often give you a higher yield when you use the profits to pay down the mortgage.

Finally, the additional equity you have after doing a subdivision will allow you to get into the next cash flow positive deal so that you can get even better returns and you’re left unable to move after using all of your equity in the first deal.