Setting the stage:

My wife and I have been looking for quite sometime for a good opportunity in our area, southern California, beach community. A realtor I've been in communication with called me up and said I have something you might be interested in. It was a pocket listing from her office that was going to go on the MLS in a day or two. The home is a 1920's home within a 4 min bike ride to the beach but needs a total remodel. The roof needs to be replaced with rafter repairs, need new electrical panel and rewire, a wall needs to be removed, needs a new kitchen and bathroom. We made an offer to try and avoid letting it go on the MLS and getting into a bidding war and they accepted. After some negotiation they have agreed to replace the roof (only a 25 year) and declined to credit us a 9k for the electrical work.

The numbers:

Purchase price - 639,000

Repairs - 120,000

ARV - 850,000

The Problem:

We are going to be using most our savings for the 20% down payment and will have to borrow about 75,000 from family for the repairs. After paying the mortgage and the repair loan, we will cash flow from our income 4k. We plan on having a baby next year and if my wife stops working we will loose that 4k for a few months making things very tight. Flash forward 5 years, she will be back at work, loan paid we will be living very comfortably 7k cash positive a month.

Is this deal not worth being tight for a year or so?  Am I about to spread ourselves too thin? Is there a better financial strategy I'm not thinking of? Is this just bad all around?  

My wife and I have talked endlessly about this and have flip flopping on what we should do. I was hoping to get an outsiders honest opinion.  Thank you so much in advance.