Is this worth it? Vacant duplex in great neighborhood, tricky situation

[Justin Hennig]

Is this worth the trouble?

There is a vacant older Duplex (1920's vintage) in a terrific neighborhood with wonderful schools in Minneapolis; I'd love to buy it, fix it up, and rent it out.  I believe it would be either a good flip or good long term buy/hold. Has now been vacant about 3 years.

I have contacted the owner who is elderly and has owned it for over 50 years, but one bad tenant and a lawsuit by that tenant which cost him over $100k and the city not allowing him to renew his rental license since 3 years ago without paying a ton of fees and required repairs has ticked him off enough he said he doesn't care if it burns down.  

He's on the fence if he will sell (more about that below)...

The roof is older and needs immediate replace of some shingles and eventually complete replacement, driveway needs repair/replaced, trim needs carpentry repair and painting, Estimated Exterior roughly $25,000.  Haven't seen interior yet except peering thru windows but estimating about $35,000 to uncover and refinish hardwood floors, replace some windows, paint everything inside, lite kitchen updates, some new appliances, and light bathroom updates...budgeting to replace one boiler immediately.

It's up/down 3 bed 1 bath on each floor, would rent for about $1400 per side in as/is condition, but could fetch 1750 per side if updated.  

Has Fireplace in each living room, formal dining room w/ built-ins, hardwoods under carpet in living/dining rooms, and hardwoods in bedrooms

Here's what I see as the big kicker: There are $62,000 in back taxes from the last 3 years unpaid, which includes a host of assessments and vacant building fees. the owner is elderly and has early Alzheimer's, so I believe he has neglected these partially due to this and partially due to his being angry at the situation (lawsuit + city issues).

ARV on the house is around $425,000 and I think I could buy it for around 35% of value and would have to pay the taxes and do all repairs/updates which I estimate would be around $60,000 total. With additional miscellaneous expenses like attorney's fees, loan origination fees, real estate commissions on sell-side, I'd be into it around $300k.

Owner has not accepted my offer yet but seems leaning toward it if I get all info from the city and help him navigate what it'll take to get it salable...Left him with the idea that it's better to get him something than walk away, lose the property, and he's left with nothing.  I think he'll go for it but I need to get it for the right price.

Lots more to this picture so let me know what else you need to know to determine if this is worth the trouble, potential pitfalls, upside, risks, etc.  

Thanks!  Justin