Fully paid off OLD property, need advice

[Greg Betza]

The property is a 3/1 approx 1200 sq ft from the early 1900s and needs many updates, kitchen, a second bathroom, windows, etc. It's not falling apart as it has been minimally maintained over the years, but it needs work to make it a viable rental and to maximize its value. It also sits on a nice size corner lot in a decent neighborhood.

It's current zillow estimate is 347K, while the property next door, same size with very little property, is estimated at 500-600K.

I have a few questions...

1) Is a major renovation a smart move? Is there a way to calculate how much $ is too much for the reno? Is a home equity loan the best way to pay for the reno?

2) I acquired a 50% stake in this property through an inheritance. The other 50% owner wants out, a buyout or by selling the property. I don't have a lump sum to pay, so is there a strategic way to buyout an owner, perhaps a long-term payment plan? 

As this property is fully paid off I feel like the upside could be tremendous if I use the equity correctly. Ideally I'd like to rent this property and use the equity to acquire more properties. I've done some research, but as this would be a first for me it is a bit overwhelming. Any clarity would be greatly appreciated.