How Rehab Draws Work on a Fix and Flip Loan

Short answer: on a fix and flip loan the rehab budget is held by the lender and released in stages. You finish a phase of work, request a draw, and the next portion is released on a set schedule.

Why lenders use draws

Draws protect both sides. The lender knows funds go into the property, and you get steady access to money as the work moves forward.

The basic steps

1. Close the loan. The purchase is funded and the rehab budget is set aside.
2. Complete a phase of work, such as demolition, framing or finishes.
3. Request a draw with documentation of the finished work.
4. The lender confirms the progress and releases the next portion.

How to keep draws smooth

Start with a clear scope of work and a realistic budget. Keep photos and invoices for every phase. Request draws as soon as a phase is done so contractors are paid on time and the project stays on schedule.

What if costs go up?

Tell your lender early. Surprises are easier to solve when they are raised before the money runs out.

Planning a flip? See our fix and flip loans or send us your deal.