There is a very old door intercom and buzzer system that needs upgrading.

When I purchased the house, the second unit was already occupied, and I decided to keep the tenant.The tenant has been living there for the past 3 years and had not missed a rent payment until a few months ago.

Sounds cliche but always best to reach out to a trustworthy loan officer and fill out an application because there are too many things to look at before determining how much you can qualify for. 

I am worried I will do all of that and it will still smell in there.

There's not enough interest rate arbitrage to be had to make it worth the hassle of shifting debt around.

All that to say, what you desire is out there.

Perhaps a stupid question but is there a way to like parlay this into a type of themed Short term rental or vacation rental type thing? 

The value add is the way to appreciation there.

However many times they won't tell you that, they'll just deny coverage and act like they fought so hard to get it approved but the coverage is just not there (when it certainly is).A good public adjuster will more than pay for their fee with the extra $$ they'll get you.

There is an abundant amount of deals beating the 1% rule there.