First Investment - Residential/Commercial - Should we do it?

[Avi-Gil Chaitovsky]

Trying to get into real estate (buy and hold) in our local Bergen County (northern NJ/metro NY) market.  Had a short sale under contract but it just fell through.  (Made offer in August, right after seller dropped asking price from 299k to 275k, we offered 260, bank countered today with 380!)

Found BiggerPockets around the time we made that offer, and I've been learning a lot from the forums, blog, and podcasts.  We just looked at another property that we've seen on the market for a while.  Owner is a retired physician, house is both a residence and office.  The office is firewalled off from the residence, and owner got a variance when he sold the practice to allow a non-resident to continue using the space as an office.  Current physician uses the office only 2 days a week, has 4+ years left on the lease and pays $3300/month plus utilities and 50% of snow removal/landscaping.  Owner is no longer living in the house and renters are month to month paying $3k.  Agent showed us the residence, not the office - it's a large split level (6 bedrooms, including a master suite with master bath) but not in the best shape.  We estimate putting 20% down and financing the rest, with monthly payments around 3,000 and taxes around 2k (at current assessment it's $25k/year).

Using the 50% rule, we're not doing too well, but wondering what others think about this idea.  Current renters have been in the house a while and have been willing to pay at that level despite the condition of the house.  If we keep them as long as possible, we can defer major renovations until they eventually move out, then renovate and raise rent significantly.  One other factor is that there is a hospital 3 blocks away that also owns a building next door and has expressed some interest in acquiring this property down the road (or at least that's what the agent told us).

Is this a pipe dream?  Too many what-ifs?  A little concerned about what would happen if the office went vacant.  Anyone see any potential here or have any ideas on how this could work, or do we just move on and look elsewhere?