Analyze my Deal...Please?

[Joel Cummings]

Hey folks,

I believe this will be my first post on BP. If you care to do so, I'd like you all to analyze a deal I am negotiating currently, because I'm on the fence about it. This is a triplex in relatively good shape.  No immediate repairs needed and fully rented.  Rents are under market.  The numbers: 

Purchase Price: $90,000

Gross Rent: current $1225, potential $1550

Expenses (Vacancy, Management, Taxes, Insurance, Maintenance, Cap Ex, Utilities): $715.38

$72,000 mortgage @ 4.5% = $365

Current cash flow: $144.63. Potential Cash Flow: $373.75

Current COC: 9.7% Potential COC: 24.9%

The seller has agreed to pay for a one year home warranty, so I could lower my maintenance reserves for a year if I wanted to increase cash flow. I'd rather not. Seller is also paying closing costs so my total out of pocket cost is $18,000. 

In my opinion, this deal with the current rent numbers is marginal, but something about the potential rent is eating at me. I know it is a golden rule of investing to not buy based on potential, so I put it to you BP members. Would you buy this deal and why or why not?  Thanks!