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He's wanting to build townhouses at a loss so that he can rent one and live in one... if he's PPOR is worth enough, he might be better off renting it or selling and just buying a townhouse. Net end monetary result is much better and he still ends up in a townhouse.

It really depends on where it is and what other costs are involved, eg what did the block cost you, what did the splitting up cost you and what did the building cost you?