Rehab on an efficiency unit?

[Greg Clark]

I've got a potential deal on a 3-structure/4-unit sale (5% down conventional). It's one SFH, one "efficiency unit" and a duplex. The duplex rents will basically cover my mortgage and the SFH rent will cover other expenses plus provide some cash flow. But the efficiency unit is a 16x10 foot nightmare. The toilet is in the bedroom area. The sink is in the living/entry area. The shower is in the basement under the stairs (yeah, this tiny structure has a basement) and there's really no kitchen.

I had a contractor eyeball it and he said he guessed it would be about $15k to redo the place (move the shower/sink into the bedroom, convert the upstairs entry area into a tiny kitchen, consolidate the furnace/water heater with smaller units and move them to a corner, and then have the basement be the living area. 

I think he's probably coming in a little low. So it might be closer to 20k. I don't think I could rent this unit for more than 300/mo, so is it even worth trying to fix it up, or should I just move on? 

The property is listed for $229k and has been on the market for a few months now. I figured I'd offer about 200k. 

Any thoughts on this? If it costs 20k to repair, and I only get 300/mo in rent should I put that money elsewhere? Or would the net cash flow be higher since there's almost nothing that I would have to repair for at least 5 years?