City recently did a building inspection and we noticed the tenant is smoking in the unit (cigarettes and marijuana), food waste everywhere leading to building pest issues, and there are 5 people living there now (3 adults and 2 kids).

Hi Davis,I live in NC but invest primarily in Greenville SC / upstate with my business partners. 

Also - what part of the country do you live in...

My sister and I have done all the leg work in finding where the 2 individuals lived at. 

You won't find a deal where you live for free, but if you can live in a great neighborhood at a reduced cost of living that is a nearly risk free way to get started in real estate. 

Mine was also out of state, in a town I’d never visited, and I relied heavily on videos from my agent.This sounds like a tough first deal, but it seems like you have some capital on the side, which will be useful as you face the upcoming challenges and learn from those expensive early mistakes.Regarding the subject of this post, “help me adjust my expectations,” I’d recommend assuming that; repairs will cost twice as much as you estimate, maintenance and vacancy rates will likely double from your initial projections, there’s a very real chance you may lose money on this deal.That said, there are ways to mitigate these risks by:- Keep asking questions here on BP and connecting with local experts- Stay proactive and communicative with your agent and property manager.And remember “Inspect what you expect.”Im not trying to discourage you but to help reset your expectations.

Video is very important, shoot walk through video and have that.

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I live in a very expensive market (Seattle, WA) and I am looking to invest out of State.

It has been a long process, but I am finally living in it.