This will be costly in today's market and interest rates, but might be worth a shot if they can afford to stay.If they don't want to stay and you want the the townhome to rent to someone else and just want to assume the loan, well then she can call the lender and see if the loan is assumable. 

In other words, you will incur the cost of demolition just to get the raw land.  

I assume a higher upfront cost as far as land purchase and the actual build but you would have a brand new house, instant equity and hopefully maintenance free for quite a while.

Alternatively, if I can find a lower cost single fam home where I can cash out 100% of my investment I would do that but those have been harder to find recently. 

You can use your own funds, use a HELOC or do a cash out refinance to cover the costs.

EDUCATE YOURSELF - yes, it will take time, but will lead to a selection that better meets your expectations & avoids potentially costly surprises!

A friend of mine, Ryan, who invests heavily in Baltimore, realized his interest costs were eating into his cash flow.

So I almost “broken even” with the cost of construction vs. valuation aspect.

Usually you can negotiate it for a few thousand and buying new costs about $20/ft. 

How much should I estimate this will cost?