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How this rundown milk bar with an outdoor toilet and no heating was transformed into a stunning three-bedroom home with 180-degree views of Melbourne's city skyline, a freestanding bath and an entertainer's patio

A rundown milk bar in one of Melbourne's most sought-after suburbs has been transformed from an eyesore with no heating and chipped brown paint into an elegant three-bedroom family home.

The now luxurious three-level property in Richmond has been passed down through generations of the Lyster family, who originally built the humble shop selling newspapers and milkshakes in 1884.  

Jen Lyster was the last family member to live inside 43 Bendigo Street before selling it to property developer Ben Reid in 2009.

It didn't take Mr Reid long to see the potential in the building, which now has stunning 180-degree views of Melbourne's cityscape, a freestanding bath and open plan living and dining area a little over a decade later.  

A rundown milk bar in one of Melbourne's most sought-after suburbs has been transformed from an eyesore with no heating and chipped paint into an elegant three-bedroom family home

A stunning gourmet kitchen sparkles inside the home with an island bench top and top of the range quality appliances

A stunning gourmet kitchen sparkles inside the home with an island bench top and top of the range quality appliances

The beautifully renovated bathrooms also have 180-degree views of Melbourne's CBD, which can be seen here from the master

The beautifully renovated bathrooms also have 180-degree views of Melbourne's CBD, which can be seen here from the master

At first glance Mr Reid was shocked at how decrepit the original structure of the milk bar had become, describing it as 'like a scene from a horror movie', Domain reported.

'To give you an idea, the toilet was outside and inside there was no heating and the windows didn't close properly,' he told the publication.

'In winter we'd lie in bed and would literally see our own breath but our home became a bit of a weekend spot with our friends and we had a lot of fun in there.

'The old cellar had caved in, there was two feet of water and about 50 years' worth of dust and spiders.' 

But when deciding how to upgrade the corner-facing house, Mr Reid didn't want to stray too far away from the home's history, and promised that the renovations would include a connection to the site's past.

When first entering the house family members and guests are welcomed by a large living and dining area, pendulum lights hanging over a kitchen island and windows that let in light from all directions. 

The grand main bedroom features a chic en-suite with a freestanding stone bath and private balcony

The grand main bedroom features a chic en-suite with a freestanding stone bath and private balcony

Outside is a phenomenal patio and backyard, perfect to have guests over for a barbecue or dinner with the family outside during summer

Outside is a phenomenal patio and backyard, perfect to have guests over for a barbecue or dinner with the family outside during summer

The grand master bedroom has its own chic en-suite with a freestanding stone bath and private balcony, which is the perfect place to view the city from.

The other two bedrooms are not small in size either, each featuring their own robes, air conditioners, and a central bathroom connecting them. Both rooms also have a view of the city. 

A study room with an inbuilt spotted gum timber desk is a good place to while the hours away - or continue to work from home. 

But for the ultimate in relaxation a large outdoor lounge and BBQ can be found in the patio downstairs. 

'This is truly a one of kind property and a rare chance to secure the best of urban living,' the listing read. 

The home is expected to fetch up to $2million at auction on Saturday November 7.    

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