Kagan Lending LLC (2026)

19/07/2023

$20,982❗️

Back in February, someone in my network came to me frustrated with the returns they’re getting in the stock market (down 19.5% in 2022). They’re nearing retirement and were having a tough time stomaching the volatility of the stock market and were nervous about the economy.

I asked them if they’d ever considered private lending and the ability to use your funds from a 401k or an IRA to lend money and “become the bank” to real estate investors.

He asked me how it worked and if his investment is secured. All of our loans are secured by a mortgage on the property just like a bank, and we have our borrowers maintain insurance so if something happens to the property – we’re paid out.

He then explained that he was a busy person who didn’t have time to handle a real estate closing himself. I explained how we structure things with our investors, our clients typically spend about 15-20 minutes reviewing each lending opportunity, and we handle the rest.

Our investor did a $307,000 loan to one of our clients for 9 months, earning $20,982 over the term of the loan, on a passive, secured, and insured asset!

13/07/2023

You could argue that with most things in life, experience outweighs everything else. 🤷‍♂️

But, from our perspective as private lenders, character is just as important.✅

Although experience is invaluable to make sure we can structure a successful deal together, it is MUCH preferred to have someone with bullet proof character and less experience, than a stacked resume with no character. 🤝

We had a previous client outline their budget from start to finish in detail. Then, repairs and renovations went way over budget with unexpected surprises due to the condition of the property. They never missed a payment, didn't cut any corners, and in the end, provided a completed flip that was something to be proud of, all while making just a little bit of money on the property. 💩

They never complained to us, missed a payment, made it our problem, or even thought about stepping away from the deal. Their character was undeniable, and we are happy to fund many future projects with them.⛳

Clients like these represent our passion in business to do good deals with great people.🙂

11/07/2023

Do you have a GOOD deal⁉

There is a big difference between having a deal, and then having a GOOD deal where you, the investor, are actually going to MAKE MONEY💲

We have had previous clients reach out to us for funding on projects that just don't add up and have actually been thanked for letting them know their deal was going to be an unprofitable project. They walked away to find something that simply makes more sense. 🏃

A good private lender can help in this scenario, but that doesn't mean you should be using private lender's underwriting abilities to check over your deal for you. BUT, as a last chance, your lender should be able to tell you if your project will give you a chance for profit, or if you're destined to be in the RED.⛔

At the end of the deal, if we, as the lender, are the only party to be making money, then the deal doesn't work for us. In this business, it's a win-win-win situation. Its what helps us build quality relationships for years to come. In order to stay in business, we need to make money deploying capital. You, as the client, need to make money flipping the property for all of the time and energy that goes into it. The buyer of the home needs a quality and well priced home in order to actually buy the property and pay the client for the flip 🏡

If all of these pieces aren't set up to succeed from the beginning, the deal simply isn't in our best interest❌

Flipping houses isn’t cheap, and you really need to budget everything in to ensure that you will walk out of the deal profitable. Analyze your deal and all of the costs to make it to the finish line before contacting your private lender. This will ensure your lender is most likely to partner with you to close the deal, showing your character and drive to build a quality relationship along the way. ✅⛳

06/07/2023

Another flip funded with private money❗

I wish we could say this was another case of how we salvaged a deal from a tailspin, but some deals just go smooth🧈

Our repeat client put this property under contract and the seller needed 6 weeks to move before closing 🚍

With already having a great relationship, all it took was a few texts back and forth and the necessary documents for us to underwrite and approve this $478k loan✅

It's always a pleasure doing good deals with great people, and we are excited to see how this one turns out🏡

04/07/2023

Wishing everyone a happy Independence Day from all of us here at KL! 🎆🗽

13/06/2023

Whenever we work with a new client, we're asked if the repair funds are disbursed all on day 1 or in draws, as the work is completed. Here at Kagan Lending, we always disburse our repair funds in one or more draws, for a number of reasons: 📝

When a loan is closed and a construction budget is factored in, the repair budget is held in an escrow account. When the borrower completes specific projects, like replacing windows or renovating a kitchen, pictures or an inspection are done and funds are released, reimbursing the client for the work they performed. Although this sounds like a bit of a waste of time and extra paperwork, it isn't. The lender is putting capital up front on the closing of the deal, and the loan to value percentage is locked in with what the property is worth at the time of closing.

In order for the lender to be able to safely lend on a property, there has to be enough equity in the deal for it to be backed by the real estate. If we were to loan 100% of the value on the property, and the borrower were to default, a foreclosure would occur. Then, being at 100% loan to value on the property, it leaves the lender at a loss if the foreclosure were to happen. Construction draws keep both the lender and the borrower accountable and the project on track.

When each phase of the project is completed, the funds are released. We release the funds the same day to make sure our clients can keep working and keep their cash flowing. With each draw, more capital is being put into the deal, raising the value of the property. This increases our loan to value, protecting the capital that is being disbursed to the borrower. This also allows the lender to be sure that the funds being released are actually going into the project. If the lump sum was given at the time of closing, the borrower could invest that money into a number of other projects, or other properties (or even buy a boat!🛥). The property value wouldn't be increasing, and the loan to value would be too high for the lender and investor to ever be able to recoup their investment. It's simply too risky.

The draw process works well for both parties. It allows the borrower to have some of their own capital into the project, ensuring that they have more personal investment into the deal. It also allows the lender to make sure that with the increase of funds being released, the property value is increasing to back their investment. When everything is done correctly on both ends, it's a win win❗

12/06/2023

Is there anything better than working with repeat clients❓❗

We had the pleasure of working with a former GC on a property we lent on earlier this year. We received a phone call from him on a Tuesday afternoon, saying that the condo he was looking to purchase needed funding and had to close on Friday. He was working with another lender, and for whatever reason, they couldn't fund the deal and backed out. Because we had an existing relationship, that initial phone call was all we needed to get the numbers and information on the deal. 🔓

It was a smaller loan, $90k, but that didn’t stop us from performing our own underwriting and seeing if the loan was a good fit for us. After determining that it was, we put all of the pieces together and closed the deal with him that SAME Friday - three days from the initial phone call to closing! This property hit the market a few days ago and is already under contract!⛳

We don't mind being a plan B lender for when our client needs speed to close due to extremely short deadlines. Forming relationships with people is the best way to expedite deals and streamline the process from start to finish. Initial deals with new clients take time to underwrite and understand, but as we always say, once the relationship is formed, we make quick work of meeting our client's needs.

And because we’re backed by 100% true private capital, when we commit to be able to fund a loan, we always close on time. 🎯

06/06/2023

Part 2:
Now, say we have the exact same loan but structured slightly differently.

- The lender agrees to fund the same $450k
- $350k at the time of purchase, borrower brings $100k to closing
- Monthly payments on the interest
- Lender funds the $100k renovation budget, allowing borrower to finance rehab

The immediate LTV on the property from the lender's side is about 77% at the time of closing. This puts the lender in a much better position in case the borrower was to default on the loan before any capital improvements were made to the property, providing a cushion in case of a foreclosure incident. The borrower would also have a much higher incentive to make payments on time to not risk losing their 100k initial investment. Also, during the construction phase, the draw requests would be sent once proof of work was completed. This allows the lender to place capital into the property as property value is being raised by the renovations.

The borrower is able to borrow the money to repair the property, pay back the interest monthly on the property, and then repay the full amount of the loan at the time of selling the property. A win win for the borrower, as their 100k initial investment allowed them to secure the property and then acquire funding to perform the necessary repairs to bring the property value up to the estimated ARV, allowing them to make a profit. From the lender's perspective, this makes the initial LTV a more favorable percentage in case of something happens, as well as releasing more capital into the property as proof is provided that the property value is rising.

Providing a scenario where both parties are benefiting is the goal of every single private loan here at Kagan Lending. We wanted to give some insight that goes into our underwriting process, so our clients have a little bit more transparency as to why some loans are structured the way they are. We want to establish a good relationship with each new partner in this business, while also protecting our investor capital for years and deals to come.

06/06/2023

Part 1:
Why don't lenders defer interest payments until the end?

Structuring a private money loan properly is very important to having a successful outcome, both for the borrower and the lender. In order to establish a good relationship between both parties, the loan must work for everyone.

Let's say:
- $450k property, $100k renovation budget, ARV of $700k.
- Lender agreed to loan 100% of the purchase price on the property
- Defer the interest payments and fees to the end of the loan
- Borrower funding renovations themselves.

This is a very appealing deal for the borrower, being able to save their cash for the renovation. The borrower would then only need to bring a couple thousand dollars to closing - title fees and closing costs. This means the borrower would only have a few thousand dollars into the deal at time of closing, while the lender would have $500k into the property.

Although at the face value a 65% loan to ARV seems great, this is a very risky loan for the lender. On the first day, the loan to value on the lender's end is over 100%. With the borrower only having a couple thousand dollars into the deal, the risk from party to party is too heavily weighted in the lender's direction. If something bad happened to the borrower, or if another property came up during time of repairs, the borrower could invest their $100k into anything else and not be walking away from any serious amount of money.

On the lender's end, this means that at the time of closing, they are out of pocket the exact amount that the property is worth, without any capital being implemented into the property (100% LTV). If the borrower were to default, which would be hard to do on a loan where no payments are being made until the end of the term, say 6 months later, selling the property would mean the lender and investor would be at a huge loss. Selling a property is never quick and having to pay for all of the legal fees to foreclose, backed up utility payments, insurance, title fees, etc add up very fast. This could result in $50k or more of a loss. If things don't go perfectly in this scenario, the lender is set up to lose money.

24/05/2023

Have you ever wondered if there is a way to leverage your equity in your investment property without having to do a cash-out refinance with today's high interest rates❓

In a recent deal, we were able to get creative with a client's existing equity using cross-collateralization. Instead of doing a cash out refinance, losing your low mortgage rate just to be replaced by a rate that could be triple what you have now, you can work with a private lender that is comfortable with cross collateral lending. This will allow you to leverage the equity in your property and also keep your existing mortgage.🏗

Normally we lend 80% of purchase price and 100% of repairs, meaning that our clients are bringing 20% down plus closing costs to the table. Instead, we can place a second mortgage on another owned property, be that a rental or another investment property, and use that equity for the down payment, closing costs and maybe the construction costs up front! 🔓

This isn't something new, as we had a client come to us that owned a cash flowing rental property with substantial equity and a 3.27% mortgage. He wanted to purchase a 10-unit property to BRRRR with no money down. Instead of putting 20% down for the project, we were able to leverage the equity in his existing property, allowing him to close on his next property with no money down! 🎯🏠

Our client was very happy to preserve his capital to be able to fund another deal. Most hard money lenders don’t offer this, but with our local approach, in-house underwriting and exclusive use of friends and family capital, we can get creative to help our clients close deals using their existing equity! ⛳

Kagan Lending LLC

19/07/2023

13/07/2023

11/07/2023

06/07/2023

04/07/2023

13/06/2023

12/06/2023

06/06/2023

06/06/2023

24/05/2023

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