My first home purchase (rental) and seller just countered offer!

[Tone Church]

Ok, I know there are a ton of posts on the boards of people asking for help analyzing their deal or rental. In fact, reading them is what helped me determine the things I need to consider when building my rental property deal analyzer spreadsheet I created. But there's a lot more riding on the use of the spreadsheet than the creation of the spreadsheet, especially since this is my first home purchase ever and the seller just countered my initial offer. I thought it would be wise to get some insights from some of the great people here on BP before I respond.

Backstory:

Listed 08/03/2017 for $279,000
Price Changed 09/17/2017 to $264,000
Seller's agent notified my agent the property has only had one offer at $200,000
Seller received my offer of 247,000 with a $10,000 seller's concession financed via an FHA loan on Saturday and replied today, Monday offering 257,000 with no seller's concession and they want me to find other "more traditional funding" for some reason and don't like the FHA loan - something related to the age of the house (1890).

Here's the numbers breakdown:

MONTHLY INCOME: $3,000
Price: 257,000
Units: 2
Potential Rental Income: $3,000 ($1,300 on one and $1,700 on the other - I will be living in one for the first year, per FHA requirements but put that aside when evaluating please)
% of Purchase Price: 1.17% (monthly rental income divided by purchase price x 100)

MONTHLY EXPENSES: $2,806

Taxes: $775
Insurance: $120
Utilities: paid by respective tenants
Private Water and Septic
Lawn/Snow: $20
Vacancy Expense (8%): $240
Repairs Estimate: $150
CapEX: $120
Property Management: $0.00
Mortgage (Principle, Interest, and PMI): $1,381 (assumes 3.5% down and 4% interest rate)
Missing anything obvious?

CASHFLOW: $194.00

CASH ON CASH / ROI: 1.27

Downpayment: 12,850 (assumes 5% down which one of the brokers said would be required if I don't do the FHA)
Closing Costs: $15,420 (assumes 6% down as avg closing cost)
Total Initial Cash Investment: $28,270
Annual Cash Flow: $36,000
Annual Cash Flow/Total Initial Cash Investment: 1.27 (cap rate?)

The house was built in 1890. Looks in good shape, including the roof (though no home inspector yet), recently "renovated" and ready to rent on the first day (but currently unoccupied). I would probably spend about $1,500 on some new carpeting in some of the bedrooms and would consider finishing the massive attic space (about 700 sq ft up there) and that's about it. The seller is a Harvard graduate ER doctor that lives out of state and inherited this house from his mother when she passed away in 2011. 

Would you accept the offer if you had to (i.e. if you countered and they rejected it and stuck to the 257,000)? What do you think of this rental property?