Preferably, I would like to do a flip in which I purchase the property this fall and fix it up during the mean time to put it on the market during the spring when the market heats up. 

Another option would be to make him a silent partner.

Even though an all cash offer is lower it screams CERTAINTY OF CLOSE versus the risk of underwriting a borrower for a loan and the deal falls apart.It depends on how long you want to wait before you can refi out if that strategy works for you or not.What is your particular strategy for buying the smaller rental houses versus other assets classes if you have that kind of capital to work with??

At a given point in all areas the returns fall off as several people have pointed out to you above.

Congrats on the triplex as it's a nice place to fall into, and you're obviously already ahead of the rookies. :) I've also been listening for a few months and a 1-hour commute to work allows for quite a bit of listening an educating. 

Also, aside from any actual damage to the house, what are some of the pit falls that I should look out for when buying at a trustee sale? 

Don't expect deals to fall into your lap.  

Colorado's lax legalization has led to a big bump in prices lately, due to the sudden jump in demand (and stores in Colorado had to have something to sell day 1 of legalization), but when local supply there catches up, prices will fall again.

If you see it falling, find out why.  

Due diligence as to condition, market, value, title and insurability all fall under the financing contingencies.