That same age is the risk to underwrite honestly. Century-old housing stock generally needs roofing, wiring or plumbing attention sooner than newer construction, so a real home inspection, typically $400 to $600, should be factored into the purchase price rather than treated as an afterthought.
Whether the second unit actually counts toward financing depends entirely on permit status, since only a legal secondary suite satisfies a lender's underwriting under the Residential Tenancies Act, 2006, and an unpermitted unit can rent the same as a permitted one while being worth far less on paper.
Location supports demand here, but the specific property's condition and permits decide the return. Get your hand-reviewed valuation from Joel Dyck.