First investment property

[Edwin Giraldo]

I am ready to make my first purchase in an investment property. I have located the house and have spoken with banks, I will be obtaining a preapproval in the upcoming week. 

The property is 100k I'm putting down 20% and will be receiving a monthly passive income of 1k after paying the mortgage. 

I want to know if this is a good first step into real estate. Considering the fact that this is my first investment I want to know any advice that you may offer in terms of negotiating the house, selecting a bank (I posses a 785 credit score), closing costs. tenants, insurance, basically anything that I should be paying attention to. 

Also, I am currently living in Michigan and I will be purchasing the property in Philadelphia, my parents who currently live in Philly will be responsible for managing the property. I have not purchased a primary residence yet. Should I still continue in pursuing the investment property as a first step?

[JD Martin]

If you are clearing $1k on a 100k house after paying the note (I assume that includes insurance and taxes?), you are doing very well. In that area I would have to assume you're talking about $1500 rent or so. Downsides are that the possibility exists that your parents get sick of being the PMs, or find they are not suited for being PMs and you have to hire one, which will cut down on your income. 

Whether you should purchase a primary residence depends on how stable you are where you are, what housing rental costs are, and how much appreciation/depreciation your area is experiencing. There are areas of the country where you are going to be much better off renting rather than absorbing depreciation or attempting to unload a home without buyers. This is especially true in a lot of the Rust Belt areas where population levels are decreasing. There are pros and cons to each approach, and I doubt anyone here can tell you if you should buy a house first.