Rehab dollars on a fix-and-flip loan do not hit your account on day one. They sit in a holdback — a portion of your loan earmarked for construction — and release in draws as you complete work. Understanding the hard money loan draw schedule is the difference between a smooth rehab and a cash-flow crisis where you are fronting contractor payments while waiting for inspection approval.
If you have already built your scope of work, the draw process is the execution layer. Every line item in your SOW maps to a milestone. Every milestone maps to a wire. This guide explains how draw inspections work, what typical schedules look like, and how to get funds released without delays.
What Is a Draw Schedule?
A draw schedule is the agreed-upon plan for releasing rehab holdback funds in increments rather than a single lump sum. It protects the lender — they only fund work that is actually complete — and it protects you by tying each disbursement to measurable progress.
Typical fix-and-flip structure at closing:
| Component | Example |
|---|---|
| Initial advance (acquisition) | 85%–90% of purchase price |
| Rehab holdback | Up to 100% of approved SOW on qualified files |
| Number of draws | 3–6 depending on project size |
| Interest charged on | Total committed loan amount (including undrawn holdback) |
Important nuance: on most hard money loans, you pay interest on the full loan commitment, including rehab funds still sitting in holdback. That means idle holdback costs you carry — another reason to sequence work efficiently and submit draws promptly when milestones are complete.
Your draw schedule is usually attached to the approved SOW at closing. Changing scope mid-project requires a change order — written approval to add, remove, or reallocate line items. Informal “we decided to upgrade the countertops” without lender sign-off creates inspection failures and frozen draws.
How Draw Inspections Work
Draw inspections are physical verification visits — someone confirms the work you claim is complete actually exists on site and matches the approved scope.
Who performs the inspection
Depending on the lender and loan size:
- In-house inspector or project manager — common at boutique lenders with active rehab portfolios
- Third-party inspection company — national platforms use licensed inspectors in each market
- Hybrid — photo-first review for small draws, in-person for major milestones
What the inspector checks
- Work completed aligns with the draw request line items
- Progress percentage matches the milestone (e.g., rough-in complete, not just demo)
- Quality is consistent with an investor-grade or retail flip standard per your SOW
- No unapproved scope changes ( additions require change orders )
- Property is secured and insurable (no open structural hazards)
What you should have on site
- Approved SOW copy (or digital access)
- Building permits posted if required by jurisdiction
- Contractor presence or site contact for questions
- Completed work accessible ( inspector needs to see the new panel, not just the box )
Failed inspections delay the next wire by 3–10 business days depending on re-inspection scheduling. Most failures are preventable: requesting a kitchen draw when cabinets are ordered but not installed, or claiming 100% rough-in when HVAC is not connected.
Typical Draw Schedule Milestones
While every deal differs, a four-draw schedule on a $75,000 rehab might look like this:
Draw 1 — Demo and rough-in (25%–30% of holdback)
- Interior demo complete, debris removed
- Framing repairs done
- Electrical rough-in, plumbing rough-in
- HVAC rough-in or equipment staged
- Roof dry-in if exterior work is front-loaded
Draw 2 — Mechanicals and enclosure (25%–30%)
- Electrical, plumbing, HVAC trimmed or near trim
- Insulation installed
- Drywall hung, taped, mudded
- Exterior weatherproofing complete
- Windows and doors installed
Draw 3 — Finish work (25%–30%)
- Kitchen cabinets and counters installed
- Bath tile, vanities, fixtures set
- Flooring installed
- Interior paint complete or near complete
- Exterior siding, masonry, or paint
Draw 4 — Final / punch list (10%–20%)
- Appliance installation
- Final plumbing and electrical trim
- Punch list items resolved
- Final clean, landscaping touch-up
- Property photo-ready for listing
Smaller cosmetic flips may use two or three draws. Heavy gut rehabs with structural work often use five or six. The key is that each draw covers inspectable completion — not material deposits or “we started” progress.
Model your carry costs across this timeline with the fix-and-flip calculator so you know how many months of interest-only payments to expect before sale or refi.
How to Prepare for a Draw Inspection
Before you request a draw
- Walk the property against the SOW — If a line item is not done, do not include it in the request.
- Collect documentation — Invoices, paid receipts, or conditional lien waivers from GC and subs for the work in this draw.
- Photograph everything — Date-stamped photos of each completed area. Wide shots and detail shots. Photos speed photo-first reviews and protect you if an inspector misses something on site.
- Submit on your lender’s platform or form — Include draw number, dollar amount, line-item breakdown, and contact for site access.
Day of inspection
- Confirm utilities are on — inspectors need lights, water pressure, and HVAC operation where applicable.
- Clear access to attics, crawl spaces, and mechanical rooms.
- Have your GC or site super available by phone minimum.
- Do not schedule inspection before trash-out is complete — demo debris fails inspections and creates safety flags.
After approval
- Confirm wire receipt and reconcile against your contractor payment schedule.
- Update your internal budget tracker — know remaining holdback vs. remaining SOW balance.
- If you are behind schedule, communicate early. Lenders tolerate delays; they do not tolerate silence while interest accrues and the project stalls.
Draw Process Timeline: What to Expect at Each Stage
Here is a realistic timeline from closing through final draw on a mid-size SFR flip:
| Stage | Typical timing | Your action |
|---|---|---|
| Closing + holdback established | Day 0 | Verify wire for acquisition; confirm draw contact at lender |
| First work on site | Days 1–7 | Demo begins; permits posted |
| Draw 1 request | Week 2–4 | Submit rough-in package |
| Draw 1 inspection + wire | +2–5 business days | Pay demo and rough-in subs |
| Draw 2 request | Week 5–8 | Drywall and mechanicals complete |
| Draw 2 inspection + wire | +2–5 business days | Pay mid-project invoices |
| Draw 3 request | Week 9–12 | Kitchen, baths, flooring done |
| Draw 3 inspection + wire | +2–5 business days | Pay finish trades |
| Draw 4 / final | Week 13–16 | Punch list, staging |
| Final inspection + wire | +2–5 business days | Close out GC, list property |
Winter rehabs in northern markets add 2–6 weeks to this timeline for masonry, roofing, and exterior paint. Florida and Sun Belt markets often compress the schedule — but hurricane season and material lead times can offset the gain.
First draw is usually the slowest for new borrowers learning the process. Repeat sponsors at Jaken often see draw turnaround under 48 hours from request to wire when documentation is clean.
Get Your Funds Fast: How Jaken Handles Draws
Jaken Finance Group structures fix-and-flip loans with milestone-based holdbacks tied directly to your approved scope of work. Our draw process is built for investors who need speed, not a 30-day bank inspection cycle.
What to expect working with Jaken:
- Pre-closing scope alignment — We map your SOW to draw milestones before you close so there are no surprises on draw one.
- Clear draw submission channel — Submit requests with photos, invoices, and line-item amounts through your loan officer or dedicated draw email — no opaque portal black holes.
- Responsive inspection scheduling — We prioritize draws on active rehab files; most inspections schedule within 24–48 hours of a complete request in our core markets (Illinois, Indiana, North Carolina, Georgia, Florida, South Carolina, DC metro).
- Change order process — Scope changes happen. We handle written change orders quickly when ARV and LTC still work — so you can upgrade a kitchen package or add a roof line without stopping the project.
- Bridge to exit — When the rehab is done, our team already knows your file. If you are selling, we coordinate payoff with title. If you are BRRRR-ing into DSCR, we can discuss the refi lane on the same relationship.
Common draw delays we help sponsors avoid:
- Submitting before work is inspectable
- Missing lien waivers on prior draws ( some lenders require sequential waivers )
- Scope drift without change orders
- Unpaid permit fees causing stop-work risk
For the full picture on how rehab funds fit into your flip economics — acquisition leverage, ARV validation, and exit planning — download the Fix-and-Flip Financing Guide or read what to know about fix-and-flip loans.
Active rehab or shopping your next deal? Get pre-qualified with Jaken and ask your loan officer to walk through draw milestones on your specific SOW before you close.