Glossary
Draws (rehab draws)
Draws are the payments a lender releases from the rehab budget in stages as work is completed. You request a draw, the lender usually inspects, and then funds are released.
On most rehab loans, the renovation money is not handed over at closing. It sits in a holdback and comes out in draws. Managing draws well keeps contractors paid and your own cash lower.
How it works
- Agree on a draw schedule tied to the budget lines, for example demo, rough-in, drywall, finishes.
- Finish the work for a stage. Often you or your contractor pay for it first.
- Submit a draw request with photos, invoices and lien waivers.
- The lender inspects and funds the approved amount, less any draw fee.
- Draw 1: demo and rough-in
- $12,500
- Draw 2: drywall and HVAC
- $12,500
- Draw 3: kitchen and baths
- $12,500
- Draw 4: flooring, paint, punch list
- $12,500
- Draw fees ($150 x 4)
- $600
Rehab funded / fees paid$50,000 / $600
$150 per draw is Run The Deal's planning default. Lender fees vary.
What to watch
- Fronting work. If the lender reimburses after inspection, you need cash to carry one stage. That raises your peak cash.
- Inspection delays. A slow inspector stalls the crew. Ask about turnaround before you close.
- Interest. With non-Dutch interest you pay only on what is drawn. With Dutch interest you pay on all of it.
- Change orders. Lenders fund the approved budget. Extra scope usually comes from your pocket.
Track draws, bids and lien waivers in fix and flip project management.
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