Old Seattle House - Worth it?

[Allen Clark]

In Seattle Washington.

This 100 year old house is 2,600 square feet and the seller wants $750k which is priced high for the market. I went into the house yesterday and there will be lots of deferred maintenance as the owners have taken a very hands off approach to landlording. They're getting $2,750 a month in rent right now which is much lower than market. With $20k for a light rehab I could get $4k/month. This is still not enough for the deal to work. I know that. 

These sellers have priced it too high and I think it will sit and not sell. I think that with patience I may be able to get them to $650k. Then when I take out my pencil it gets more interesting. The area is zoned such that I could finish the basement and make it a legal duplex. I did this in a house very close by for $200k and the numbers worked out well. 

So, if I can get it for $650k put in $200k and then get rent of $5,000 / month for the top unit and $2,800 / month for the bottom does this deal work? 

Having a duplex in this area means I know the area rents well and my rent expectations are in line. I'm getting $4,500 for a 1,500 sq ft 3br / 1bath upper unit around the corner. 

Thoughts?