At this stage, you can also discuss creative financing options, like seller financing, that might help bridge the gap between what you can afford and what they’d like to get for the property.

This multifaceted approach can often shield them better against market downturns, providing a more resilient investment option. 

Not sure what rent they were willing to pay and what options are in your area but I would likely want to keep the STR going to and have them rent a nice LTR nearby to you.

It seems now we have a bull market and if it starts going the other way I would like my rental to at least continue to produce monthly cashflow...that's where I'm at now...still researching and seeing my options... $46,800/year in cash flow with $500k is a nice yield at 9.36% ($46,800/$500,000).

You’re in a strong position with multiple viable options.

Once you’ve identified STR friendly locations, figure out your financing with your brother to help narrow down your price range and market options.

@Olecia Williams Though it's still possible to purchase a second/vacation home with only 10% down, it may not be your best option. 

.✅ Master Lease Option (MLO): Take control of the asset with an option to buy after stabilizing revenue—especially useful if the property is underperforming.✅ Equity Earn-In: Offer the seller a minority stake (e.g., 10-20% ownership) instead of cash up front.2.

You aren't necessarily building that much equity (cost of building exceeds the value) but it is a third option that is a hybrid.Another factor is location.

Unfortunately, this reassessment is unavoidable, so you’ll need to evaluate whether transferring the property is worth the potential tax increase.If a Transfer Is Not Feasible:If the potential property tax increase makes the transfer impractical, an alternative option is for your father-in-law to secure a Home Equity Line of Credit (HELOC) on the property.