It is amazing that "a few blocks" can make such a difference in price. Don't expect that you can increase the value of a home beyond the neighborhood value, no matter how great your rehab may be. Historic tax credits can help, and sometimes there may be other neighborhood preservation credits, but expect gut rehabs to cost at least $100/sf. A scrape & paint might be as little as $25/sf. The idea of restoring a grand home to its original condition is very romantic but unless you are a very experienced investor and builder, I'd recommend starting with something a little less complicated. You may find that buying 2-4 family investment properties in thriving neighborhoods will provide better cash flow over time.