Option deal on mixed-use - am I missing anything?

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Got a 65 yo widow. Husband ran retail business in location and rented two 3 br apartments above. He dies, no interested heirs to take business. She's clueless about RE.

She enters into a 5 year with a commercial retail tenant who promptly files bankruptcy in 1st year. He skips from OH to FL, effectively abandoning the property and lease. She thinks that because it's still in bankruptcy that she's stuck.

She hates screening tenants so residential is empty. She doesn't want to mess with it because it "drags her down".

FMV is $190-200K very near major university and university med center.
Student housing market is definately a consideration for comps.

My offer:

She's willing to entertain a year option to purchase for $2K cash because she's worring about coming up with the tax payment. She's entertaining a $170K option purchase offer.

She's willing to enter into separate master lease with sublet rights for $600/month.

The property seriously needs cleaned up and could use a coat of paint on the exterior, but is otherwise in halfway decent shape and very structurally sound.

After cleanup and residential rents, FMV should be $220K. In the university area, 3br apartments would be in the $1K range.

She will give me a $1000 clean-up credit towards purchase price.

The strategy is to get the residential rented by advertising on bulletin boards at the med center (grad students/interns).

Then advertise the property for sale as follows:

FREE RETAIL SPACE FOR YOUR BUSINESS NEAR UNIVERSITY.

or

Distressed seller. Cash flowing building with tenants.

Sell option to buy for $20K to qualified buyer. Or exercise based on purchase price after finding retail tenant.

Ohio permits self-help for commercial. Risk of adverse possession claim very low because of relocated deadbeat to FL.

Any thoughts? What am I missing?