I've bought a couple of similar lots (not quite this big, but the biggest was about 1200 records or a little more). I'm not sure it's worth doing for profit, but by picking out what I wanted and selling on the rest as smaller job lots, I've acquired my current collection of probably 1000 LPs for about £150.
One thing I've learnt though is that looking at 'book value' or Ebay buy-it-now prices isn't much use, as there are enough cheap records around for people not to pay top prices for all but the rarest, most collectible, near mint records. So don't expect huge profits, but a good, cheap collection is a good aim.
Incidentally, when he says £200 for one record, it may be that he has a narrow-band edition of something worth £200 as a wide-band grooved issue...