Advice on Using Equity

[Matt Hubert]

Hello

I am looking for some help in considering the purchase of a family members property.  The property is a farm that has been in the family for about 80 years and is currently held by a family member of deteriorating health.  He took out a note several years ago and still owes on the property and does not have anyone to pass it off to.  Therefore, I am interested in buying him out, but before I do I want to understand if it helps me or hurts me in my investment journey.

I would be buying 60 acres for $260,000 and it would cost me $60,000 for the down payment and closing costs.  Current market value is between $9k-$10k per acre, so $540,000 to $600,000.

My big question is I don't fully understand if/how I can use that equity effectively to help out with other BRRRR properties. If I chose not to buy this property, I would use the $60,000 down payment to buy a couple BRRRR properties this year. The farm will not cash flow and it will cost me $400 per month for the next several years. On the other hand, BRRRRs will cash flow slightly.

I personally think that the farm purchase is more of an emotional decision for me and I am leaning towards not going forward so I can invest in BRRRRs which helps me achieve my goals more quickly.  But, if the equity is a useful tool that helps me complete BRRRRs then I would consider moving forward with the farm to keep it part of the family.

To those with more experience: What would you do?