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So it all depends on if you want to change zoning or not. I don't believe adding an ADU will require a zoning change, but making it a multi-family will require a zoning change. Also, if you have a mortgage, changing the zoning may require you to refinance that note, or your lender will call the note due. Multi-family loans typically have higher rates than a single family with an ADU.
I would talk to a contractor then. They would be able to give you an idea of what would make more sense. I would imagine just extending it into the backyard would be less expensive. If you don't have the cash on had to do the project, you can always do a construction to permanent financing loan or 403B loan.
Just depends on what you want to use it for? Is it actually an extension of your own home for regular use or are you building an in-law unit / need privacy for separate home office / pool house/ etc.?