Advice on 1st real project

[John Joyce]

Ok BP crowd, a new guy needs your advice/perspective. This is a long one, so please advise if I should split it into more specific forums or posts.

A family member has a run down property that he owns outright. 2 separate buildings (1- 2000 sqft, 1- 800 sqft) both 2 stories on a single lot. Both currently rented by family about half the market rate. Both also need major rehab/ likely tear down. My idea is tear down and build a single "L" shaped building, 2 or 3 stories split into 3 or 4 units. A neighbor recently pulled off a similar project, so I believe the town will allow it (fingers crossed). The goal is rental income, possibly a single unit short term rental. Location is right on a New England beach, so good for airbnb/vrbo in the warmer months. Ideally I manage the project and pay for the loan to carry it, while the owner provides the land in exchange for income or product. He will never do anything productive with the buildings or land, so I am hoping to be the catalyst to turn it around. The owner is a General Contractor and I have worked for him in the past, so we are both very familiar with building in the area. But I don't think we'll build this project because my other job is currently paying the bills and he is easing into retirement. Also can't be your own GC on a construction loan.

Here some of my questions:

Do I go for a commercial construction loan, because I can't satisfy the owner-occupied requirement of most other loans?

Pre-fab or stick built? Never done pre-fab, but I like the idea.

How would you analyze these 3 options 1) He sells it now and moves on 2) Build and sell units 3) Build and rent units? I like the rental option, but I want to present him with an analysis of all of the options.

What are some other creative financing moves to make a project like this happen? I don't have much money so I would need a loan. He has plenty of money to finance the project, but then I'm not really needed. I don't have much money, but I think I want to borrow money and take on that risk in exchange for some future income and experience of doing my first "deal".