Navigating the World of Real Estate Lending

Kc Hagedorn (00:00)
Typically on Facebook, if you ever see somebody that says 100 % financing, no experience, no credit check, and then the rate’s gonna be 6%, I have not seen in probably the three or four years I’ve been doing this, a rate for hard money below 9%. It’s a short term loan, it’s only for 12 months, typically the rates are gonna be higher.

Borrowers see is that’s a great deal and then they get like this upfront payment of hey I need a processing fee of $2,000 before I can quote your loan out with the application and then you never see that person again

It’s just kind of little nuances in social engineering that you gotta look out for.

Kristen Knapp (01:47)
Welcome back to the Real Estate Pros podcast. I’m Kristen and I’m here with KC Hagedorn from Life Changing Lending. And we’re going to talk all about borrowing money. Thank you so much for being here, KC.

Kc Hagedorn (01:55)
No problem, thanks for having me on this beautiful Tuesday night. It’s hot.

Kristen Knapp (01:59)
Yes. It is hot right now too.

And where are you calling in from?

Kc Hagedorn (02:03)
Dallas, Texas, so it is it has been really hot It don’t it don’t matter where you live if it’s south of Ohio. It’s hot so Yeah

Kristen Knapp (02:05)
Yeah.

Yeah.

Yeah, I’m here. So tell

us, like walk us through the beginning. What got you into the real estate market?

Kc Hagedorn (02:18)
So originally I started out wholesaling. When I was doing wholesaling, was like, hey, you know, I was looking at it I’m like, I’m wearing like seven hats. So not only do I have to go find the leads, I have to call the leads, I have to follow up the leads, I have to do pretty much acquisitions, dispo. And I’m like, man, what does a wholesaler need at the very end of it? Because I mean, cash buyers are not.

cash buyers anymore. Typically nobody’s come into closings with duffel bags full of cash and just dropping it in there. So what I did is I’m like, you know, they need money. every, doesn’t matter who they are, every deal is going to need money. And nine times out of 10, even your cash investors are still funding with hard money. So instead of, you know, going out and trying to stake my claim in the gold rush, I’d rather be the guy that sells some PICSAC.

pickaxes and then you know who made more money the guy who sold the pickaxes or the guy who’s trying to go out there and find the gold so and It’s it was a little bit more constant for me in my schedule So I switched over to the lending the underwriting was pretty much the same ⁓ There’s a little bit bit of a difference but overall we’re looking at the numbers the exact same way Because it’s still buying at a discount and making sure the in buyer is making a ton more money

Kristen Knapp (03:17)
Yeah.

Mm-hmm.

Kc Hagedorn (03:36)
that he’s putting into the loan and not just breaking even. And that’s what it really all kind of boils down to. I mean, you’re not really… Everybody talks about the real big assignment fees, but they’re not common. You’re better off making more singles than you are hitting home runs.

Kristen Knapp (03:54)
Yeah. Totally. you just, mean, from the beginning, you just really took to it and obviously kept with it. That’s great.

Kc Hagedorn (04:00)
Yep, I’ve been, so at the time life-changing lending was about, I’d say six months old. It was primarily all traditional and our owner’s Clint and Ryan. like Clint comes with a investment background, Ryan comes with a traditional background. So they kind of merged into one team and they were kind of doing a little bit of both at the time. And then they’re like, hey, let’s just grow it. At that time I was,

I picked Ryan up in a Facebook group and I’m like, hey, I’m thinking about getting licensed. You know, I’m doing this, this and this. Ryan’s like, dude, you don’t really need to be licensed for hard money in DSCR. So why don’t you just come over to the team? I got hired on as like the fourth or fifth person. And I mean, when it came to loans, I had a lot of leads, but I had no idea how to put them together. It’s a little, the number of writing is the same, actually putting them together is a little bit difficult.

Kristen Knapp (04:48)
Yeah.

Kc Hagedorn (04:53)
So after my first couple ones, I pretty much could do them on my own. Still working a full-time job while I’m doing them. I kind of make a joke that, because I do surveys as well, typically surveys up in the mountains, I was doing surveys and I would be getting a phone call trying to put hard money terms together on top of the mountain. then, and I still kind of do some of that to this day. I still do survey contracts every now and then. But it’s

Kristen Knapp (04:53)
Right.

Bye.

Yeah.

Kc Hagedorn (05:15)
like pretty much ran from there and now I’m a team leader. So I have about 10 people under me. Some are traditional that switched over to hard money and then some don’t have any experience whatsoever when it comes to hard money.

⁓ We have like a CNA that’s learning pretty well. have a lot of the guys that come over there doing real estate. They’re like, my wife’s an insurance agent. So I already kind of, work at her office. We have those guys coming in too, trying to learn how to do hard money to kind of.

double dip and keep it in the house.

Kristen Knapp (06:29)
Amazing. And what is really impressive about life-changing lending is you guys run mostly off of referrals.

Kc Hagedorn (06:37)
Yep. So ⁓ we bought one lead list and we will never buy them again. ⁓ Typically, if you’ve never bought leads before, so first off, everybody that you buy a lead from, nine times out of 10, they’ve sold that lead about seven times because that’s how they make their ROI on it. So you’re not, very rarely are you the one that you’re doing the only phone call to that lead. I’ve actually only ran across one company, but

Kristen Knapp (06:41)
Yeah.

Right.

Kc Hagedorn (07:04)
If you’re paying $100, you know it’s probably getting resold. If you’re paying $3,000, there’s probably a little bit more check and balances. But those typically one-off leads that you’re the only person calling them, they’re $2,000, $3,000. And they’re pre-screened prior, but we pulled a list offline. It was like 1,500 bucks, and we’re like, we sat down, we called all, I think it was like 700 people on that list, and not a single one of them were even interested in buying a house.

So we’ve ran the Facebook ads. Typically with Facebook ads, it’s, hey, I just filled it out because I thought I could get a house from it. So they’re not really ready to buy yet. So we just stopped really paying for ads. We do 100 % organic outreach, direct to consumer, direct to realtor. I do a lot of mine with direct to title companies. title companies.

Kristen Knapp (07:31)
Yeah.

Thank

Yeah.

Kc Hagedorn (07:53)
Typically see every single deal. They know every single investor. They know who’s buying and what and you know, you know I kind of make fun of my escrow girl I’ll kind of plug her Candy Patterson But they’re kind of the gossip girls of of real estate because they know everybody’s business. They know who’s buying what they know where they’re Your your realtor sees kind of one or two people your escrow sees everybody because if you’re not closing an escrow You’re there’s something wrong

Kristen Knapp (08:08)
Thank

Mm-hmm.

Kc Hagedorn (08:19)
So

everything needs to be closed in the nest growth. So they see everything.

Kristen Knapp (08:22)
Yeah. And you guys have, you work with a lot of real estate investors because you have a whole investment side to the business. I’d love to talk about that.

Kc Hagedorn (08:29)
Yep. So we do a

ton of FHA, VA, 203Ks, USDAs, bank statement loans. We, but then we’re like, Hey, there’s a whole nother market that we can do as well. So we, with Clint’s side with doing the DSCR, we started the, you know, fix and flip side, DSCR side. We’re doing commercial now. Typically we’re doing commercial anywhere between like three, 400,000 up to 20 million.

So that side all falls into the investment side. And that side’s pretty daggum smooth. Typically we’re closing anywhere between 40 to 65 loans a month just on the investment side. And most of those, I would say are majority of our repeat. And it’s the same investor every month that we’re doing a loan for where he’s just buying his next house every month. So.

Kristen Knapp (09:15)
Wow.

Kc Hagedorn (09:17)
And then we’re doing the takeout side as well. So not only we’re doing the fix and flip side, we’re letting them go through the whole flip. And then we’re refining to either cash out or rate and term into DSCR.

Kristen Knapp (09:26)
And what are some common mistakes you see from investors when they’re trying to borrow money, maybe for the first time?

Kc Hagedorn (09:32)
Typically, they want 100%, but they don’t know the cost of the loan.

Kristen Knapp (09:38)
Mm.

Kc Hagedorn (09:38)
There’s always two sides to a loan. There’s the lender side and then there’s the third party side.

On hard money and DSCR, typically because there’s no disclosures and we’re not doing CDs until the very end, we’re gonna be looking at a borrower that doesn’t understand that there’s lender costs and then there’s tax, title, insurance, whatever other third party costs come with that loan that we don’t see yet right off the bat. We get pretty…

pretty close. I’d say typically we’re only about a thousand or two thousand dollars away, which is not bad because there is no system that lets us know that and we don’t have the insurance contact, the title company contact just yet when we’re trying to quote. So they see our cost and even though we’re at a hundred percent like I just quoted one in Florida, we’re at a hundred percent on this loan. It’s twelve thousand dollar lender side cash to close on a three hundred and fifty thousand dollar property.

but he didn’t realize he had about another 10K in closing costs. So his liquidity didn’t match. It was a good deal, but those kind of costs that you gotta see on the backside ⁓ is something that every investor needs to think about. Get three or four quotes from your insurance. You can shop title companies. You can call them and ask for their fees. You can do your best research and due diligence on trying to find your county taxes and any city taxes, depending on.

Kristen Knapp (11:14)
Yeah.

Kc Hagedorn (11:29)
you know how that city runs. So those kind of things you can look into and see and those are completely whether it’s an investment loan or a traditional loan, you’re free to choose whoever those are. So you can actually get those costs without actually going to the lender.

Kristen Knapp (11:31)
Mm-hmm.

Yeah.

And you you mentioned that you guys can do 100 % financing and we’ve talked about how a lot of people think that’s a scam. ⁓ Can you talk about kind of what you’re up against when kind of promoting something like that?

Kc Hagedorn (11:52)
Yep.

So typically

100 % financing is never gonna be below 11%. And I say that like, if I have a paper which is your best borrower 800 FICO score six flips, usually we’re gonna come in at about the 10 and the 10 and a half on the rate. If I got a first time buyer that’s never done a flip before, that rate’s gonna be a lot higher. But.

that’s gonna be like probably 13 and a half percent. So

typically on Facebook, if you ever see somebody that says 100 % financing, no experience, no credit check, and then the rate’s gonna be 6%, I have not seen in probably the three or four years I’ve been doing this, a rate for hard money below 9%. It’s a short term loan, it’s only for 12 months, typically the rates are gonna be higher.

Borrowers see is that’s a great deal and then they get like this upfront payment of hey I need a processing fee of $2,000 before I can quote your loan out with the application and then you never see that person again and you just drop 2k and wired the money to a bank account

typically like I know the biggest scam right now is a green dot wire transfer those are the ones that we’ve been seeing a lot is that’s usually the bank the scammers using not kind of you know saying that’s

them trying to do it, but that’s the one that we’ve been seeing. The other big one that we’re seeing is it’s a lender, but it’s not really a lender. So they’re typically Facebook brokers and there are some that are legitimately good. There are some that basically take that lead and resell all the data.

Kristen Knapp (13:24)
Mm.

Kc Hagedorn (13:34)
to an actual lender and then they’re paid for a lead, but they’re not actually working that file and that’s something, know, a lot of true legitimate brokers work the file. So if that person’s like, I just got to, I’m going to refer you to somebody else. That’s typically, it’s not necessarily a scam, but they’re not working on the file. They’re just connecting. I would, it’s kind of a gray area.

Kristen Knapp (13:44)
Mm.

Kc Hagedorn (13:55)
but a lot of scammers fall into that area just to get the information from you and to try to get like an app fee or a processing fee or underwriting fee, any fee associated outside of using a title company. And then they disappear. But they may look legitimate, they may have a Facebook page, they may have a… I’ve not seen anyone actually use a legitimate email. Typically it’s always like a Gmail or Yahoo or something like that, something they can create.

Kristen Knapp (14:07)
Mm-hmm.

Kc Hagedorn (14:22)
really really quick. But when you’re dealing with people on Facebook like us, mean we have Google reviews, we have a Facebook page, we have a LinkedIn page, we got six or seven TikToks. We have Clint who has a TikTok, I mean half of it’s powerlifting and gym photos. You have Ryan who it’s all like you can see us, you can see our daily lives, you can see like we are people and not like stock image photos.

Kristen Knapp (14:28)
everybody.

Kc Hagedorn (14:45)
Typically too, if they have an outstanding education background, like a master’s in finance and they went to Harvard, those are kind of weird things that you’re looking for leads on Facebook. ⁓ Because I’m not super college educated, if I was, Facebook, I would be at a company where we don’t get our leads like that off Facebook.

Kristen Knapp (14:58)
Yeah.

Mm.

Kc Hagedorn (15:51)
It’s just kind of little nuances in social engineering that you gotta look out for.

And if it looks like it’s too good to be true, like, Google it. Because there should be enough information about that person. Like, I know if you Google my name, like, life-changing lending is the first thing that pops up with my profile picture, my display page, and then right under that is my LinkedIn. I don’t post on LinkedIn that much. I don’t, I never really could figure it out. But, like, there’s enough, like, social media about me. Like…

Kristen Knapp (16:09)
Right.

Ha ha.

Right.

Kc Hagedorn (16:18)
In my flyers, like my pictures there, my phone number’s there. I’m not asking you to WhatsApp me. ⁓ And I’m not giving you like a plus six three number. Like those little weird things like that, that’s what you gotta look out for, because that’s what a lot of scammers will do. We actually have a big issue of people pretending to be us. And we keep saying they hate us because they ain’t us. ⁓ But they…

Kristen Knapp (16:24)
Mm-hmm.

wow.

Yeah.

Kc Hagedorn (16:42)
Created Facebook pages. They’re texting people with our pictures Like and because we get a ton of leads So yeah, it’s it’s kind of a kind of a weird deal When you see somebody posting you’re like, that’s not my post. but that’s me and You know Facebook’s pretty quick about taking it down once they realize like they stole you but It is hilarious because we get

Kristen Knapp (16:48)
Yeah.

Kc Hagedorn (17:04)
⁓ emails from Ryan saying that one of us need to approve his budget ⁓ and approve a loan that he did and I’m like dude you’re the owner so I don’t know why the lonely LO is approving the broker’s

Kristen Knapp (17:09)
wow.

Wow.

I mean, a lot of

these scams are getting so sophisticated, the fishing. It’s scary.

Kc Hagedorn (17:21)
They are. They are, and

I mean, really, like, read the email. Like, is that email like a legitimate company email? Very rarely is it ever. And nine times out of 10, it don’t even have the person’s name that they’re pretending to be in the email. It’s like a bunch of letters and numbers that don’t make sense. They can cut it off. So the phone numbers are the worst, because they’re actually making it to where they can make the numbers look like they’re coming from the same spot as that person.

Kristen Knapp (17:28)
Right.

wow.

Kc Hagedorn (17:48)
So that’s,

yeah, that’s one of the new ones we got this week is, Tam, one of my partners, he actually got a number from Houston. And the scammer pretended to be him and pulled a number from Houston from another company in Colorado from a company in India. So, yeah.

Kristen Knapp (18:03)
Okay, got

it. So yeah, just, mean, do your research, double check everything. Is it normal to ask for money upfront like that?

Kc Hagedorn (18:12)
So yes and no, typically most lenders have like a processing fee, but ask like how that processing fee is. Typically it’s not more than a couple hundred dollars, and usually what that is, is it’s paying the processor, like a third party processor that they’re using, or a third party underwriter, to kind of start that file, and then it’s usually deducted from the HUD. So that…

If it’s deducted from the HUD, that’s usually one of the biggest, like, kind of good things that you could see because you’re not just paying it, it’s deducted from the HUD. Typically, there’s a lender website, there’s a bunch of things going into play that if somebody did just take your money outside of, you know, the loan was good but we still never funded it. Granted, there’s always little issues that pop up, but typically, like, some lenders may ask for, a 250.

and they’re legitimate lenders, they’re doing that because of the way the processing and underwriting works. Is they’re usually third party, they have to pay them, you know, to start the file. So, but typically like I’ve never seen one like $2,000 application fee. And then like some of those costs like the 250 and stuff that kind of in a sense also like depending on the program goes towards an appraisal. So.

Kristen Knapp (19:16)
Right.

Mm.

Kc Hagedorn (19:25)
And those are the fees like appraisal, you’re not gonna usually pay that on a hard money or fix and flip or DSCR. You’re not paying that at closing like you would a traditional loan. You’re paying that upfront. And we can’t underwrite the loan until we get that back. So especially if it’s an asset based loan.

Kristen Knapp (19:39)
Mm.

That makes sense. I mean, this is very good information for people to know so they don’t get scammed.

Kc Hagedorn (19:46)
Yeah,

and I mean, like I said, there’s like, with life-changing lending, there’s a hundred places you can go to to see that. Like, if we’re a scam, honestly, like, I can’t see how it could be. Our social media presence, I mean, we have Rachel running social media, we have Clint, I mean, pretty much posting gym photos of himself and his dog all day. I mean, it’s, there’s enough that you know you’re dealing with legitimate people, legitimate lenders.

Kristen Knapp (19:53)
⁓ You’re legit.

Yeah, and I mean just having referrals and having repeat customers and all of that. can see why that’s what makes your business so great and what keeps everything rolling.

Kc Hagedorn (20:14)
Yeah.

In the Google reviews, mean, we’re five star. So, and like that’s, I mean, we’re kind of new at doing that, but I think we’re at like almost a hundred reviews, I think. ⁓ So that’s really good that we’re at five star for a hundred reviews. ⁓ So, and it just keeps growing. So we just let it grow. ⁓

Kristen Knapp (20:22)
Totally.

Wow. Yeah.

Yeah.

Yeah, that’s

amazing. Cool. And then just kind of to wrap things up, you you’ve been in this business for a while. What’s a lesson that you’ve learned that maybe you can share with people?

Kc Hagedorn (20:50)
Typically, I would say the biggest thing is make sure you’re running your numbers. There’s a difference between a hard money lender and a PML. Both use private money. One’s a guy, one’s a company. HMLs are gonna run with guidelines, nine times out of 10. I’ve not met a single hard money lender that did not have some type of rule on how they did a loan or where they lend and stuff like that.

But that’s also good at the same time because typically like us, we’re very transparent about like where the loan needs to be prior to us taking it, which means you like in my flyers, I say we’re at 70 % on TV. Purchase plus rehab is 70 % or less of the ARB. So it’s not a hidden fact when we’re telling you like, hey, it’s at 90. So this is what we have to be at. This is our guidelines. We put them on all our flyers. We’re usually at 70%.

And while we are creative, not all lenders are created where they’re created equally. ⁓ So not all lenders will do the same things. This guy over here will do one thing, but this guy over here can’t do that same thing.

Kristen Knapp (21:46)
Mm-hmm.

Kc Hagedorn (21:54)
I’m literally up till probably 10 o’clock at night working But like not all lenders are created equal so So just kind of keep that in mind that it it sometimes you feel like it should be like Burger King and have it your way but We have to stick to these guidelines

Kristen Knapp (21:58)
Yeah.

Yeah.

Kc Hagedorn (22:12)
We have to put loans in the guidelines

I mean, that’s it. We’re just not all created equal. So just always do your due diligence. Like talk to the lender, see what his programs are, see if it fits. You know, we do, we check terms without running a credit check. So we just want to see the numbers on the deal and we can usually check the deal out without, without.

Kristen Knapp (22:18)
right?

Kc Hagedorn (22:33)
having to pull your credit, having to do a full application. And that’s a little bit easier on an investor, especially a new investor that’s kind of like, it’s gonna feel like a lot at first and it’s gonna be stressful. And I try to make it as not as stressful as possible

because it’s already gonna be stressful once we get

to the money part and doing the construction and the draws and all that.

Kristen Knapp (22:52)
We’ll tell everybody where to find you.

Kc Hagedorn (22:54)
Yep, so you can find me on Facebook KC Hagedorn. It’s letter K letter C and then H-A-G-E-D-O-R-N You can also go to case life-changing lending comm slash letter K letter C. So KC because that is my first name That’s my profile page. It has my phone number on it. Just shoot me a call text DM And then home loan Hagedorn comm so

Kristen Knapp (23:16)
me.

Kc Hagedorn (23:17)
Yeah, and that’ll go to pretty much my quote page and you can just submit deals left and right through that job form. ⁓ We do kind of have a technology upgrade we’re doing in the next couple weeks. So eventually we’ll have a broker and borrower portal coming out. We already kind of do. It’s more of the traditional side, but we’re building a new one for the investment side.

Kristen Knapp (23:36)
Amazing. Well, awesome. I encourage everyone to check him out and check out Life Changing Lending. I think people learned a lot today. So thank you so much for being here.

Kc Hagedorn (23:45)
Yeah.

Yes, no problem. Thanks for having me.

Kristen Knapp (23:47)
Awesome, and thank you everybody for listening and we will see you next time. Bye.

Kc Hagedorn (23:50)
See you everybody.