I have never invested in real estate before but am considering buying a house in Seattle...

I have never invested in real estate before but am considering buying a house in Seattle and turn it into a rental property. Should I expect this to be a value enhancing investment? Explain!

Expert Solution

VALUE ENHANCING INVESTMENT

Value enhancement focuses on improving the profitability and cash flow of the business by mitigate the risk involved in the ownership of the business and making business performance more excellent.

Instead of buying a home and paying the mortgage yourself every month, consider a first time buyer investment property to rent out. Charging more for rent than your monthly mortgage payment will produce extra cash flow that can go towards debt, bills, rent or savings for the down payment of your next house. So here we can see he is buy a property and using it for rental purpose. Same time he can stay there and if the rental income he is charging is more than the mortgage he is paying then it can be considered as value enhancement. Here he is mitigating the risk factor and try to improvise his cashflow. So it can be considered as value enhancing investment.

ThankYou....

jeff jeffy answered 1 year ago

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