Flipping a mixed use row home back into two units

[Jordan Miles]

Hello all,

I am looking into purchasing a mixed use "Double Wide" Baltimore row home. It was previously a bar in its past life with the first floor interior walls knocked open and the stairs to upstairs removed and an outdoor access staircase installed. The plan would be to purchase this blighted property and turn it back into two separate row homes, complete rehab closing the walls and starting from scratch as far as floorpan and ideas. The current owner stated that the demo cost would be around $20,000 for permits, dumpster and labor. I feel that thats pretty high for something that at least sweat equity could take down most of the variable cost and just leave permits and dumpster rental and take away. Price currently sits at $200K for the whole property and when split each row home in this area goes for roughly $200-250K. If I decide to use a 203K loan to finance the work and purchase, am I allowed to do any sweat equity? 

thank you for reading this far and thank you for any thoughts and opinions.

Jordan