Tear down and rebuild

[George Firn]

Hi BP,

I have a lead on a property in Canton Michigan that is in a great location surrounded by newer homes that have sold from 296k up to 425k. The house on the property is small and not in very good shape so I think the best option is to tear it down and build new. A realtor friend of mine did some checking and fully fixed up it would only sell for 100- 130k tops. I've never done anything like this so I would like to hear what you think. 

What are some of the options for going about something like this? Are there builders out there who would build on the property and share the profit with the owner or would the property owner need to fund the build? 

What does it actually cost to build a house that would sell in the 300-400k range? What other costs are involved? The house is on public utilities so that wouldn't need to be added.

What other questions should I be asking? 

Thanks for your input! 

George (from Ypsilanti)