How do rehab draws work with a hard-money lender?

How a draw works, step by step

The cash-flow catch: an approved $60,000 rehab budget does not mean $60,000 is available on day one. Ask your lender how much cash you will need between draws, how long reviews usually take and whether partly finished items qualify.

1. Approve the scope and budget. Before closing, you and the lender agree on the eligible work, the costs and the draw rules.
2. Complete eligible work. The contractor works the agreed scope. When the contractor gets paid is a separate agreement between you and the contractor.
3. Submit a draw request. You send the lender its form and supporting documents. Depending on the lender, that can include invoices, proof of payment, lien waivers and photos.
4. Verify the work. The lender confirms progress by in-person inspection, virtual inspection or another approved method.
5. Receive the reimbursement. The lender releases eligible funds under the loan terms, less any fees. Repeat until the final draw.

What slows a draw down

• Lump-sum budgets the inspector cannot match to finished work
• Missing invoices, lien waivers or progress photos
• Work that is not draw-eligible yet, like a half-finished kitchen when the lender only pays completed lines
• Scope changes the lender has not approved. An owner-approved upgrade is not automatically an approved budget change.
• Inspection scheduling and site access

The goal is not an instant draw. It is a review that does not turn into a scramble to reconstruct what happened on the job.

How we help you stay draw-ready

• An itemized scope before work starts that you can reconcile to your lender budget
• Planned sequencing with clear completion milestones
• Dated progress photos at the intervals you or your lender set
• Written change orders, approved before changed work starts
• Our internal QC walk and a completion report at handback

Share your lender's draw requirements and the approved budget with us before construction, and we will line the scope and documentation up with them. You remain responsible for the draw request and lender approvals unless we agree otherwise in writing.

We coordinate construction and documentation. We do not lend money, give financial advice or front construction costs, and payment terms are set in the construction agreement.

Five questions to ask your lender before you close

1. Is rehab money released in advance or reimbursed after completed work?
2. Do you pay for partly completed line items, or only finished ones?
3. What documents do you need for every draw: photos, paid invoices, lien waivers, permits?
4. Are inspections in person or virtual, what do they cost and how long is a typical review?
5. How are scope changes, contingency and the final draw approved?

Can we scope the property before you close?

Yes. We walk DFW investment properties before closing and build an itemized rehab scope you can take to your lender. The pre-close walk and scope are free if we are awarded the rehab. If you only want the scope, our scope-only service is $1,000.

Common questions