I agree that it's obviously not your fault.

It would be helpful if I could pick your brain to understand the total cost of owning and operating this kind of business. 

750sq ft total?  

At which point I would have to come out of pocket ($18k additional for $80k total renovation) to succeed in renovating the property to its full appraisal potential. 

A $110k prop in one market could be a solid B/B+ (Birmingham) and be a total nightmare in another market (good luck finding anything decent for that price in Seattle, for example). 

So instead of renting out one side at $600 you could rent out (lets assume there's two bedrooms) each bedroom at $400 each (obviously utilities will play a factor in how much to charge per room). 

Without looking at it for big problems and obviously not knowing the area it is hard to say, but overall if I was going to take a chance on something that one has a lot of room for error.

Following is a description from the realtor selling the house: This is actually 2 totally separate, complete homes with one common wall!!!

A duplex with the same total size, beds, and baths as a SFR in similar condition in the same area is going to appraise at about the same value as the duplex.

I do plan on keeping the acreage regardless of what I decide.Some of the numbers:  I bought the house and acreage for a total of $125,500.I currently have an ARM which the rate is at 4.125%.