Demo current home to build duplex?

[T.J. Isaacs]

We own a 2/1 house which is over 100 years old. Still in good shape, but have an idea to demolish the home and build a duplex on the lot, which is large enough. 

Current Value: 197,000

Mortgage: $133,000

Current Rent: $1,300

I do not know if we could get a construction loan, but would build a duplex as a 2/2 on each side. In the location, could realistically get $1,500+ for each side. 

Need some assistance on how your would go about doing a project like this? I know there would a demo cost, permits, etc, but would it be worth considering?