Amazingly, that is the price I paid for my 1989 535im. It was a one owner car with 194k and really tired suspension. Paint and body are fair with a lot of little chips dings and scratches. No show car but one which has a few scars appropriate for the mileage. Interior is pretty nice and after spending about $4500 for new suspension, and a lot of other stuff, it is a real strong runner and looks pretty good too. I have to say that for the $7500 or so I have in this car, it is worth every cent. What can you possibly buy that would put that kind of smile on your face every day.
I will say this. You have to be able to do your own work on the car. You cannot put the thing in top shape and keep the costs down without learning to do your own work. In the end, you will derive great satisfaction from this as well. There are a lot of people to help you and plenty of sites with great pictures of how-to etc. If you don't have tools, get down to Sears and start with some Craftsman stuff. Good and won't let you down. Do not use cheap Taiwan tools that break and will let you down.
Sounds like you have a gem of a project that will give you a lot of satisfaction.
Mike Holbrook
Meridian, Idaho
1992 535im, 17", Euro M5 Throwing Stars 8's & 9's, FK-451 235/45s & 255/40s, M5 Sway Bars 25/20, Conforti chip, Lowes Ram Air, glass sunroof