Looking for Simple Answer to Complex Issue

[Joshua Nash]

Hello, Everyone,

I just started on Bigger Pockets and I wanted to see if anyone around these parts can lend a hand giving a new investor some advice. My dilemma described below is actually what got me interested in real estate investing. I have read lots of books on the subject and have also recently become a real estate agent. 

Here is my issue...

I bought my home in Manville, NJ in 2012. It is a single family home, but it was originally built as a duplex in the 1920's. The goal was to learn DIY work, and then rehab the property myself. This plan isn't going to work because I found out the hard way how difficult it is to do MAJOR renovations as an amateur. I have decided to hand it off to the professionals. An architect has drawn up a nice plan for me, however... I did not know in 2012 that the property is zoned as 1 or 2 family, but the lot is way too small to allow for a two family unit. I would need a variance to get the 2 family approved. I spoke with a lawyer and he confirmed this to be true.

The problems are:

1) No variance yet

2) I am uncertain what loan options I have (based on conversations with banks/loan officers)

3) The home needs a COMPLETE remodel (gut, electrical, plumbing, sheetrock, new windows, and more including probably a new roof)

The last thing I want to do is abandon the 2 family option in favor of a single family option. If I rehab as a single family, the ROI will be low, zero, or possibly even negative. I also will not be able to start out living in one of the units.

Amount Owed: $130k (VA Loan, single loan, no HELOC or anything)

Renovation Costs: $120-160k (est. depending on 1 or 2 family)

Two Family Rent: $3,000-3,500

Current Taxes: $7,394 (will go higher obviously with 2 family and renovations)

Does anyone have experience with these issues and have some advice to offer? I need to figure out the variance, the loan, and also the work itself (dealing with contractors and whatnot).