Before buying into a neighborhood that you describe as "not the best", have your realtor do a thorough analysis of the subject and surrounding properties. Also check crime statistics, historical property values, and the city plans for this area. You may be able to get some history of the subdivision on the internet, from your realtor, the library, and maybe the county or city records department.
10 years is a fair amount of time. Is this a neighborhood that is on it's way up or down?
What amenities & attractions are in the area?
How are the schools?
What is it close to ?
Who wants to live there?
Is there a strong neighborhood association? If not and you decide to buy, form one and make it strong.
As for Investing money into updating and remodeling, find the answers to the first questions first. You do want to improve your property but you don't want to price it out of the neighborhood. It's better to buy the smallest, shabbiest house on the block than the largest, grandest house.
Ask your realtor why they think this is a good investment for you.

I wouldn't assume anything. Bottom line, if you like the house you are buying and feel you are getting a good deal don't worry so much about the vacant property unless it attracts crime. Stake out the property during the day, a weekday and a weekend, and at night and see for yourself what's going on. 10 years is a long time to be in a property so do everything you can to find these things out NOW and not once you buy it and live in it.

You should consider all the options before plunging into this house. One of them that it's obvious: No one wants the house?. . that why is vacant!. The only way I see why someone will buy the house is with the price. The way Real Estate and the future outlook. . 10 years may not be enough time to shake such a burden on your future equity.