,Real estate pricing is very localized and while Santa Clara County is seeing pricing lower than expectations, homes in the peninsula and SF are still rising.

I have a lease agreement which outlines what is expected from both parties but I wanted to know if there are any specific things I should be doing to make sure this goes as well as possible.  

This house is the only 5 bedroom in the immediate area, so should I expect to charge rent at the high end of the spectrum?

If you buy a small multifamily, they’ll count some expected income from rents, but the purchasing power you’d get for renting out half a duplex will be pretty small.

The bank the is loaning most of the money also expects to be in 1st position.

You can’t expect him to agree to accept the terms/price in an agreement he hasn’t reviewed first, right?  

Banks will not typically lend for a home such as this for various reasons, and I do not mind as I do have the cash for it.On the negative side, I do not know what to expect in regards with initial repairs, and being a 100 year old home there are bound to be more problems down the road.

(he owed more than they were worth)   Any buyer that expects some real price for his or her property is going to realize that you are not willing to your money where your mouth is. 

Even new has a certain life expectancy. 

@Sam Ojo this sounds like a broken condo deal—which is a situation where an apartment complex has a condo map and some units were sold but not the rest.