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Updated 7 months ago,
Advice on Using Equity
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?