Does it have the original engine? All E30 318 Tourings produced were equipped with the M40 ... only the convertible and saloon got the M42 (for E30 318's). Anyway, the M40 is also a tough 4-pot. It uses a timing belt so it's good to check when was the last time it's been replaced.
M40 B18
Number of Cylinders - 4
Effective Displacement - 1796 cc
Power - 115 BHP (112 BHP with cat) * 5500 rpm
Maximum Torque - 165 Nm (162 Nm with cat) * 4250 rpm
M42 B18
Number of Cylinders - 4
Effective Displacement - 1796 cc
Power - 135 BHP * 6000 rpm
Maximum Torque - 172 Nm * 4600 rpm
For common problems:
http://www.e30info.com/pages/maintainence.htm