Closing a lead. Owner financing offer on the table.

[Nate Williams]

I found the worst house on the best block in a local historic neighborhood. Lots of old houses valuing over 500k and up to 1M (local house price in my market is 167k). I eventually tracked down the lady who owns it, gave her a call, and we had a friendly conversation about her house and real estate deals of her past. She said that she knows that house is worth 300-400k (and she's right), but she told me to bring her a price that would work for me, and she would be willing to owner finance if we agreed on a price-she has done owner financing for other buys in past years. The house needs about 50k worth of work which I could myself. 100k if I were to sub it out.

My question is, how do I navigate this? I know little about owner financing, and to be honest, if I take on a 300k house payment (or even 250k for that matter), I would struggle to make the payment if I had a prolonged vacancy due to my current W2 income. 

My current options: rent out the current 4 bed 2 bath house that I own and live in so I could move into the 300k house and remodel while I live in it. Or I could buy the 300k house, stay in the house I'm in, get the 300k house remodeled asap and get a renter in asap. I have 35k in the bank currently, so I also could simply be over my head going for a deal this expensive. It is just a once in a lifetime find in a such an expensive neighborhood.