Historical median home prices increase 5.4% annually, so while we are currently tracking above that rate I don't think prices will go backwards again like 2007. 

Note that the prices and rent are at their current cost because those locations historically have not appreciated faster than inflation. 

I used to work with Victorians in Grant Park and historic items like fireplaces and original windows and plaster walls bring good money.....and you'll lose potential value by tearing them out.....also, building inspectors don't like that. 

you need leverage to scale however I would use cash flow to accelerate pay downs on your rentals your not going to get 3.75 on investment property debt.so if they are making 100 to 200 a month and you have a good job I see no reason not to snowball those amounts.but I do think you have to BRRRR and snowball the two is where the wealth generation and scale meets.. as you get older you will appreciate advice of being cautious with debt.you need to value add to create equity.. 20 to 25% equity in markets that historically have not or do not appreciate is really no equity at all if you were forced to liquidate.

Buy it at a historical low-average, and you are looking at a headache free pay-cheque quarterly. 

The drawbacks are that repairs/modifications are expensive due to the house’s age and that I have to clear everything through a historical society as a result.

Choice #2 historically is by far the best choice.  

The numbers are tight, offsets are low but are historically accurate representations. 

Because of your building's age, there are many pros that do pointing work who would recommend that only a "historic lime mortar mix" be used when pointing that cellar.

@Mike Terry Historically, when interest rates go up enough, they push down prices because fewer buyers qualify.