The Biggest Challenge Facing the AP Boys
AP Real Estate Investing has been in existence for a little over a year now. We've learned an incredible amount in that short period of time. However, we are far from where we want to be. We have an insatiable desire for consistent improvement. Many have compared our tenacity in business and craving for self-improvement to that of a professional football player every time he steps on the field. Don't believe me? Just watch our last weekly wager:
Like I said... professional football player.
All jokes aside, we are constantly striving to be better. Whether it's finding deals, flipping homes or creating content, we always want to improve and find ways to scale this business as quickly as possible. And I would say we've been doing that fairly well. But after selling our second house flip, we seem to have hit a bump in the road.
A couple weeks ago, I purchased a home for myself (not a big deal). But it is a big deal. Because what this now means for AP Real Estate is that the strategy we used to finance our first two projects, which was a 5% down conventional loan on a PRIMARY residence, no longer works... Why? Because you can't have two primary residences. In this case, your secondary property is automatically considered an investment property in the eyes of a lender. And since Brendan and I aren't quite at the point where we can buy a property cash AND fund the renovation, we require some form of financing.
"But Andrew, why don't you just get a loan for an investment property in addition to the mortgage you have on your primary residence?" Well, I could in theory, but the minimum down-payment for an investment property is typically 15-20%, which makes your up-front investment considerably higher. Not to mention interest rates are higher for an investment property loan.
"But Andrew, why doesn't Brendan get a 5% down conventional mortgage as his primary residence?" Good question... The answer is that our dear friend Brendan does not have the minimum required income history that most lenders would require for a conventional mortgage.
So what options do we have left? Honestly, there are many options. We could look for additional partners, approach hard-money lenders, inquire about seller-financing or investigate the many other forms of creative real estate investing.
The truth of the matter is we just haven't yet. If there is one thing I've learned over this past year it's that a majority of success in business is just overcoming obstacles and finding solutions to problems. If there's another thing I've learned it's that networking creates opportunities. It is 100% about who you know, not what you know, and we've been fortunate enough to meet some great people on our journey thus far.
So I'll leave you with this. The AP Boys, much like the Boondoggle Boys, are sometimes down, but never out. We love a challenge (Brendan especially loves the weekly wager) and we find a way to overcome. We are tough. We are resilient. We are gritty.