Potential first rental property - 1350 sqft, 1 acre, 84 years old

[Dan Sto]

So I'm looking at the property, very old, needs work, but owner is currently living in there. 4 bedroom (debatable), 1 bath - 1350sqft.

Needs new roof, new kitchen, leaking basement, etc. Needs at least ~$25k in renovations, willing to do most work.

Asking $145k

However I spoke to city planning and they're saying I can subdivide the 1 acre and potentially build another duplex on the other 1/2 acre.

Agent says I can rent out for around $1,500 after renovations.

Have experience remodeling, would do most work myself. Would be my first property. 

However seller wants cash...

Would you do it? Why/Why not? And can I get equity out later, to build the duplex?