Creative or absurd?

[Greg Appelt]

I have a unique opportunity on an off-market property. Older home in south St Pete that's just a 2/2 1193sq ft with a 2-story building in back that has 1 studio apartment. The owner's husband passed 3yrs ago and her son is in very poor health (living with her). She's finally accepting that she can't maintain the property but doesn't want to list it.  I was thinking about owner financing. She's currently thinking she can get $350 based on comps, but in reality, the home needs at least $100k in repairs, but could appraise at over $400 if converted to a 3/2 and the studio was brought up to code.  My cash offer currently stands at $165k, but I'm thinking about offering her $200k with 10% down, 90% owner financed @ 3% over 30yr, with a 5yr balloon. A quick reno on the studio and renting it would cover the payment and utilities and a 9-12 month reno on the main property would then have a carrying cost of about $35k depending on the taxes.
Does this sound like a realistic offer? I know 'reasonable' is dependent on the motivation (buyer & seller), but I'd like to know if I'm on track or totally bonkers.