If you really like the position no matter what you do your going to have to jump through a few hoops. If the house really has a zero value then you may as well fully investigate demolishing and rebuilding, because the cost of demolishing is going to be similar to stamp duty on any reasonable size purchase.
So go and talk to a builder who will look after the whole process and give you estimates on:
Timeframes
Costs to demo
Costs to build, probably from say $1200 to $2500 per square metre depending on size, quality, fixtures etc.
My business partner has finally finished a reno on a 1960's highset weatherboard over the top of a splitface concrete block dwelling that he thought he would get done for about $275k - $300k, well $450 later he has nearly finished renoing the old pool, which is the last part.
The house looks mint but has taken him 4 years and tears to end up with something with the design limitations governed by the old shell.
Nothing beats starting from fresh if you can, unless its a classic home with exceptional bones.......which by sounds of what you say isn't the case here.
I have always bought my properties in older established streets as opposed to new estates for the reason that most of the older stock have better positioning relative to a number of factors including proximity to town, elevation and aspect etc etc etc.......and have had to knock over, or as mentioned before renovate extensively, and because I am a glutten for punishment am about to do the same to a commercial building
So if you do have what you consider a good block of dirt keep it and demo the house. If your not sure on the value of what you have pick up the phone and speak to the best local agent / principal in your area and back it up with a conversation with a good local valuer. If you need help finding either please let me know and I will find out for you.
If you want to discuss with me the elements of what you want to do I am more than happy to do so. Feel free to give me a call on
0418 780 333, I am more than happy to have a confidential chat. Do the same with GG, even to double check what the local guys tell you.
It will be worth it in the end and its not as big and as daunting a job as you think, and you know that old saying that nothing worthwhile is easy.
Cheers.