Relative new to RE investing. Got REO not sure if I should keep

I am in the north east. Housing price only dropped greatly in bad areas.  This house is in a so so area.  It was on market for over a year,listing started at 199,000.  The price I got is when listing dropped to 120,000. I won the bid for $125,000.

My problem is the house has very small bedrooms.(total 1247 sf, 3 bed 1.5 bath, built in 1934) Does it affect renting out?  I am thinking if I should withdraw.  Bedrooms are one 88 sf, two 110 sf. 

living room  250 sf, kitchen & ding are 120.  Neighborhood is quiet all house are around 1930s. Easy access to highway and public transportation.

Is small bedroon difficult to rent out? Thank you so much.