First of all, check with your city to see if they charge more taxes for the 2-unit. We are currently downgrading from 5 units to ONE! We used to have 5 little bathrooms, 5 little kitchens and space so broken up as to be ridiculous. Ours was built in 1907 as a single family home, in the 60's it was converted into 5 one bedroom units. We have discovered that we can take anything down (exception: load bearing walls) and out without a permit or city inspection. It is when stuff starts going back in that they want to get their noses into the planning and upgrading so they can tax us accordingly. Our criteria for downgrading from 5 units was when we demolished two kitchens and took down some inside doors so the inspector could see that their was only 3 units. This was the magic number for us in regards to city trash pickup and water usage. After 3 units they start charging double per gallon. This also reduced our annual personal property tax.
Have you come up with a floor plan to suit your family? The main consideration would be to be aware of load-bearing walls when doing the work yourself. Check with a local building inspector with regards to what you need a permit for. Like I said, we can tear down and take out anything we want, it's when we put things back together that the city wants their hands in and Out!