We enjoyed our first visit to Lisbon and staying at Carole & Pedro's place enhanced it. The nightly fado out the window was a plus, especially because the performers varied from night to night so it wasn't repetitious. The location was convenient to many sights and good restaurants.
There's only a short flight of steps within the building, but you will have to climb steps and slopes to get to and from it. That's pretty much true of Lisbon in general, though.
There were only 2 of us in the 3 bedroom flat, so we each got a "dressing room." None of the bedrooms is large . I think it would be a tight fit for more than 3 or 4 people.