Should we buy first rental that needs at least $10k in repairs?

[Ana G.]

Hi everyone. We're looking to buy our first rental property in Philadelphia (South Philly, east of Passyunk). We found a cute 2 bedroom, 1 bath row house with a nice yard and offered $155k (originally listed for $159k), which was accepted. Median home price seems to be around $220k, properties in this price range seem few and far between. Upon inspection, we discovered a host of issues, including an active water leak in one of the basement walls, roofing issues, along with some smaller cosmetic issues that aren't urgent. We're looking at at least $10k in repairs from the get-go. The property has tenants under lease through the end of January 2018 who pay $1000 per month. They may move out sooner since they're relocating to CA. 

Anyways, we asked for a $10k credit and just heard back from the agent that they would go down $1.5k, but that's it. We live in California and plan on having a property manager but are nervous about taking on big repairs without being around to oversee them. We will be putting $55k down and have a 15 year mortgage at 3.85%. We're looking at the following costs:

principal and interest: $733

taxes: $134.17

insurance: $55

property manager: $80

That's a monthly total of $1002. I'm pretty sure we can find renters in the $1200-$1300 range once the current tenants move out in a few months, which will provide the necessary cushioning for vacancy and repair costs. We'll be scraping by until they move out. What gives me pause is the repairs we're looking at right away... I'm torn. I guess we could also get a 30 year mortgage but part of what makes this an appealing investment is the quick pay off on the loan. I'm eager to get into real estate and start building some equity and it seems like this area of Philly is getting better and better and is popular. We might even live there down the road... I'm just scared by all the issues that came up in the inspection. What do you think? Should we go for it or walk away?