My mother-in-law owns her single family home outright in Hoboken NJ, bought it 30-something years ago when it was a slump town. Obviously it's worth a lot more these days, but she's not willing to let go of the house. Those who are familiar with the area know that single-family houses with a driveway are hard to come by in Hoboken. This house hasn't really been taken care of, especially since both her sons moved out and her husband passed away. She now wants to do a complete gut job or even tear it down and rebuild it into a 3-family house. She plans to rent out 2 units while living in 1.

She consulted some local architects and they came back with a ballpark of 1 - 1.5mill to complete the job with a 2-year timeline. That seems really high and I'm not sure if the numbers make sense to me. Upon rehabbing, she would probably get perhaps $2700 - $3500 rent per unit. Currently her property taxes are at $14k/year, it's going to be a heck lot more once she converts it into a 3-family residence.

I guess my question is, for those who have done similar projects, can you share your experiences/costs of completion? As a little retired lady, how would she be able to secure a loan to do this? She's saved up a good chunk for retirement + pension and wants to use it against her rehab project, but I don't think it's a good idea and I can't talk her out of it (neither can her sons).

Any advice? Thanks!!