I say go for it--with the caveat that you can afford to do the repairs. Do you rent now or own? If you rent, plan on staying for a few months beyond the close of escrow if you cannot live in the house while repairs are made.
If you currently own a home, it's a bit more complicated. A lot depends on your cash flow situation. Figure all the repairs you need to do on the new house will take three times as long and twice as much money as you think.
Several years ago I came upon the same situation. I'd been looking for some property where I could both live and work. I came upon a place close to town, on an acre of land, with a fixer-upper house on it. Great location, perfect for what I needed, at a price that I couldn't pass up. When I sold my first home and bought this one, I stayed in my first home while repairs were being made.
It took a LOT longer than we thought it was going to. I figured three months, it turned out to be seven, and I was stretched awfully thin paying two mortgages. Fortunately, I had a buyer who wanted my first house, so I had a standing offer for whenever I was ready to move. But if you don't, it can be tricky--you never know how long it's going to take to sell the house.
But I say, if you can possibly manage it, go for it!! It sounds like a really good investment.
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