Hi there! I'm a newbie and would love some input. I have a condo I inherited in FL where I own 50% of it. My brother would like to sell. It needs work, so we aren't going to get the best return on it, so I've decided since I have the skills and the time to rehab it, I would like to buy my brother out (probably somewhere in the 65,000 range). I have one rental already, with lots of untapped equity. I have the liquid to pay him, but not sure that's smart with capital gains? I have a HELOC I plan to use for the remodel (planning about 15,000-20,000 in repairs). I then plan to use it as a mid-term rental and see how that goes to try and recoup the remodel. Any opinions about paying cash for it vs. trying to find a private loan or use my other rental's equity? The condo does have a high HOA fee, which the stress of trying to pay a loan on top of the HOA (while it's vacant) sounds less appealing to me. Any thoughts?
Lender · Florida · Member since 2025 · 698 posts · 253 votes
5d
Quote from @Amber Jaworski:
Hi there! I'm a newbie and would love some input. I have a condo I inherited in FL where I own 50% of it. My brother would like to sell. It needs work, so we aren't going to get the best return on it, so I've decided since I have the skills and the time to rehab it, I would like to buy my brother out (probably somewhere in the 65,000 range). I have one rental already, with lots of untapped equity. I have the liquid to pay him, but not sure that's smart with capital gains? I have a HELOC I plan to use for the remodel (planning about 15,000-20,000 in repairs). I then plan to use it as a mid-term rental and see how that goes to try and recoup the remodel. Any opinions about paying cash for it vs. trying to find a private loan or use my other rental's equity? The condo does have a high HOA fee, which the stress of trying to pay a loan on top of the HOA (while it's vacant) sounds less appealing to me. Any thoughts?
From a lender’s perspective, I’d look at this less as “Should I pay cash or borrow?” and more as “What is the best way to preserve liquidity while keeping the project financially sound?”
The fact that you already own 50% of the condo and have the skills to complete the rehab is a meaningful advantage. But I would be careful about putting all of your available cash into buying out your brother and then using additional funds for the renovation.
A few things I would analyze before choosing the financing structure:
1. What will the condo be worth after the renovation? Get a realistic after-repair value (ARV) based on comparable renovated units—not simply what you hope it will be worth.
3. Don't overlook the HOA. The high HOA is probably the biggest issue I'd want to understand. If the unit is vacant for several months while you're renovating, that expense continues regardless of whether you have a mortgage.
Once it's operating as a mid-term rental, I'd want to know the net cash flow after HOA, not just the projected gross rental income.
4. Preserve some liquidity. This is where I would hesitate to recommend simply paying the $65K cash because you can.
Having $65K available doesn't necessarily mean you should deploy all $65K. Real estate projects almost always have surprises. If you spend your liquidity buying out your brother and then encounter a $10K–$15K unexpected issue, you don't want to discover that you have a great property but no cash reserves.
On the other hand, I also wouldn't automatically put a new loan on the property just because financing is available.
If the property has a high HOA and will be vacant during the renovation, debt service during that period can work against you.
I'd run three scenarios:
Option A — Pay cash for the buyout Lowest debt burden, but you sacrifice liquidity.
Option B — Use the existing rental's equity Preserves cash but puts additional leverage on an already-performing asset.
Option C — Finance the condo/project Preserves liquidity, but you have to account for interest, payments, closing costs and the carrying period.
Then compare the total cost of capital and projected cash flow under each scenario.
One other point: I'd separate the tax question from the financing question. Whether paying your brother cash creates a capital-gains issue, and how the inherited property/basis is treated, is something I'd have a CPA or tax professional review before moving money. The financing structure shouldn't be selected based solely on a perceived tax benefit.
From a lending perspective, I actually like the basic strategy you're describing if the numbers work: acquire the remaining interest, improve the property, stabilize it, and then operate it as a mid-term rental.
The key question I'd want answered before funding anything is:
If the answer shows strong equity and sustainable cash flow, there may be several ways to structure the capital.
And I wouldn't be afraid to use some of your own cash. The goal isn't to finance 100% of everything possible—the goal is to use the right amount of leverage while keeping enough liquidity to survive the unexpected. Best of Luck!
Boston, MA · Member since 2015 · 47 posts · 7 votes
1w
Hi Amber, I am in the Transactional Funding space and I work primarily with lenders who 'need more deals' to lend, truthfully speaking I am not sure about condos because I have been focused on commercial multi-family deals and the one 29-SFH portfolio I'm helping a buyer and her agent with. However I'm certain if your condo needs some type of work done, I could recommend you to one of my investors and lender contacts that I partnered with as my capital partners. You could probably buy out your brother with one of these loans with a combination with the HELOC. Whatever I can do to help you with your goals and even if the money you get can be used towards a house purchase, I think there is something they can probably do. It Might be a fix and flip type. Feel free to message me and let's see what we can do.
Thank you, Davon! I may reach out if I decide to go that way. I'm more interested at the moment if it's an ok move to use liquid to pay my brother off (HELOC for the remodel) vs. use a loan. Trying to decide on which direction to go, I'm leaning more towards liquid.
Boston, MA · Member since 2015 · 47 posts · 7 votes
1w
You welcome Amber 🙂 Take your time, I was just thinking from a real estate perspective how you can maximize this situation and help you profit off of a 2 or 3+ deals you could get behind this alongside your current liquidity. Thank you for responding and keep me or us in mind for how this is progressing. I'm genuinely interested in this.
Accountant · Seattle, WA · Member since 2025 · 371 posts · 144 votes
1w
It sounds like you’re approaching this thoughtfully, @Amber Jaworski . Paying cash could make sense if it still leaves you with a healthy reserve for the remodel, HOA dues, taxes, insurance, possible assessments, and a few months of vacancy. It would also reduce the pressure of carrying another loan while the condo is being renovated and leased.
A HELOC or private loan would preserve more cash, but it adds interest and puts more pressure on the rental to perform. Before deciding, compare the monthly costs and remaining reserves under each option. Also confirm the condo's as-is value, rental restrictions, and the inherited tax basis with a tax professional, since the inherited and purchased portions may be treated differently in a future sale.
If the mid-term rental works using conservative rent, occupancy, and expense assumptions—and paying cash still leaves a comfortable cushion—the simplicity and lower stress may be worth more than maximizing leverage.
Hi Divin! Thank you for your reply. I was wondering about the inheritance portion as well, if that changes anything on that end. Sounds like I'll be doing more research! And I agree....sometimes the lower stress in paying cash is worth it. Something I have to decide!
Lender · MD · Member since 2025 · 203 posts · 78 votes
1w
Hi Amber,
It sounds like you've put a lot of thought into this already. Whether paying cash or using financing is the better option really depends on your overall goals. Paying cash avoids another monthly payment while you're renovating, but using financing can preserve your liquidity for unexpected expenses or future investment opportunities.
Since you already have a HELOC and another property with equity, it may be worth comparing all of your options before committing. The best choice isn't always the one with the lowest payment, it's the one that gives you the most flexibility while keeping the project profitable.
I'm a mortgage broker and work with investors on scenarios like this. I'd be happy to help you compare the different financing options and see which one makes the most sense for your goals. Feel free to send me a message.
Hi Gregory! Thanks for your reply. I like that idea, comparing all the options with financing and going from there (didn't even know if I should consider that route). And yes I agree, sometimes the lowest payment isn't always the best. And I may reach out! Thank you!
Lender · Member since 2026 · 23 posts · 11 votes
5d
Don't drain your cash for the buyout — use the rental you already own to fund it.
You're about to put $15–20k into a remodel on a high-HOA condo that will sit vacant. That's exactly when you want liquid reserves. An investor HELOC on your existing rental pulls the ~$65k buyout money from equity you already have: 2nd-position line of credit, fully automated so no appraisal required, no tax returns or W-2s (income from bank deposits), fixed rate, zero prepayment penalty. Your cash stays in the bank for the remodel, the HOA, and the vacant months — which is the stress you're worried about.
One honest caution: run the mid-term rental math against that HOA before you commit. High HOAs kill marginal deals. But if the numbers work, fund the buyout with the rental's equity and keep your cash. Happy to run your numbers — Dan
Before choosing financing, check that the HOA allows 30-day-plus rentals and has no rental caps, since a lot of Florida condos restrict them. Since it's family, ask whether your brother would carry part of the $65K as a seller note. That can beat any bank. Otherwise, a HELOC on your other rental covering purchase and rehab is flexible. Just underwrite the mid-term rental with that high HOA and a couple of vacant months a year, and keep 6 months of reserves either way.
Ah yes, I've thought about asking my family to carry. Not sure that would work. And yes, the condo requires a 3 month stay minimum with only 2 renters allowed per year. So a good point to think about the vacant months. I'm also not opposed to it being a 12 month rental... thanks for the reply.
Lender · Florida · Member since 2025 · 698 posts · 253 votes
5d
Quote from @Amber Jaworski:
Hi there! I'm a newbie and would love some input. I have a condo I inherited in FL where I own 50% of it. My brother would like to sell. It needs work, so we aren't going to get the best return on it, so I've decided since I have the skills and the time to rehab it, I would like to buy my brother out (probably somewhere in the 65,000 range). I have one rental already, with lots of untapped equity. I have the liquid to pay him, but not sure that's smart with capital gains? I have a HELOC I plan to use for the remodel (planning about 15,000-20,000 in repairs). I then plan to use it as a mid-term rental and see how that goes to try and recoup the remodel. Any opinions about paying cash for it vs. trying to find a private loan or use my other rental's equity? The condo does have a high HOA fee, which the stress of trying to pay a loan on top of the HOA (while it's vacant) sounds less appealing to me. Any thoughts?
From a lender’s perspective, I’d look at this less as “Should I pay cash or borrow?” and more as “What is the best way to preserve liquidity while keeping the project financially sound?”
The fact that you already own 50% of the condo and have the skills to complete the rehab is a meaningful advantage. But I would be careful about putting all of your available cash into buying out your brother and then using additional funds for the renovation.
A few things I would analyze before choosing the financing structure:
1. What will the condo be worth after the renovation? Get a realistic after-repair value (ARV) based on comparable renovated units—not simply what you hope it will be worth.
3. Don't overlook the HOA. The high HOA is probably the biggest issue I'd want to understand. If the unit is vacant for several months while you're renovating, that expense continues regardless of whether you have a mortgage.
Once it's operating as a mid-term rental, I'd want to know the net cash flow after HOA, not just the projected gross rental income.
4. Preserve some liquidity. This is where I would hesitate to recommend simply paying the $65K cash because you can.
Having $65K available doesn't necessarily mean you should deploy all $65K. Real estate projects almost always have surprises. If you spend your liquidity buying out your brother and then encounter a $10K–$15K unexpected issue, you don't want to discover that you have a great property but no cash reserves.
On the other hand, I also wouldn't automatically put a new loan on the property just because financing is available.
If the property has a high HOA and will be vacant during the renovation, debt service during that period can work against you.
I'd run three scenarios:
Option A — Pay cash for the buyout Lowest debt burden, but you sacrifice liquidity.
Option B — Use the existing rental's equity Preserves cash but puts additional leverage on an already-performing asset.
Option C — Finance the condo/project Preserves liquidity, but you have to account for interest, payments, closing costs and the carrying period.
Then compare the total cost of capital and projected cash flow under each scenario.
One other point: I'd separate the tax question from the financing question. Whether paying your brother cash creates a capital-gains issue, and how the inherited property/basis is treated, is something I'd have a CPA or tax professional review before moving money. The financing structure shouldn't be selected based solely on a perceived tax benefit.
From a lending perspective, I actually like the basic strategy you're describing if the numbers work: acquire the remaining interest, improve the property, stabilize it, and then operate it as a mid-term rental.
The key question I'd want answered before funding anything is:
If the answer shows strong equity and sustainable cash flow, there may be several ways to structure the capital.
And I wouldn't be afraid to use some of your own cash. The goal isn't to finance 100% of everything possible—the goal is to use the right amount of leverage while keeping enough liquidity to survive the unexpected. Best of Luck!
CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
4d
Amber, to your capital gains question: buying your brother out doesn't create a capital gain for you, whether you pay cash or borrow. You're the buyer. Any gain is your brother's, and it's measured against the value of his half at the date of death, not what the family originally paid. If the condo hasn't gone up much since then, he may have little or no gain.
Divin's right that your two halves are treated differently. Your inherited half has a basis equal to its value at the date of death. The half you buy has a basis of what you pay him plus closing costs, and your rehab gets added on top. If you don't have a date-of-death appraisal, it's worth getting one, since it sets the starting basis for half the property and drives your depreciation.
On the HELOC: the interest follows the money, not the collateral. HELOC funds that go into the condo rehab are a rental expense on that property, so have the draws go straight to the project.
One more thing: with a 3-month minimum stay, this is treated as a regular rental, not a short-term rental. Most of the $15K to $20K remodel will likely be capitalized and depreciated rather than deducted up front. Any rental loss is passive, so whether it offsets your other income depends on your income level.
Feel free to DM me, I’d be happy to send over few resources that may help you compare the options.
