I think that adding to it will also change its value and possibly higher than what you spent on it. One of my family members purchased a 200,000 house and it's now worth 500,000 due to his 50,000 dollar modifications.
If you have the money then I don't see anything wrong with upgrading the house, especially if it's that old already. If things are already looking dilapidated then all the more that you should upgrade it. If you guys think that things are an eyesore then don't settle for less and do something about it.
I once thought that it was a good idea and almost bought a house in a cheaper area but after revisiting the area 2-3 times I found out that the downside of buying that property would have cost me more than what I had imagined initially. The lack of facilities available there would have increased my travel time and I would have ended up spending more than normal.
