What do you need to know first?
A rehab draw releases eligible renovation funds under the loan agreement after required documentation and verification. For business-purpose, non-owner-occupied projects, the wholesale lender may reimburse completed work rather than advance every contractor payment. Confirm the first-draw rules, inspection requirements, release conditions and payment destination before relying on the construction allocation.
How do you read the draw agreement before paying deposits?
The construction allocation describes money reserved for eligible work, while the draw process governs access to that money. Those are different issues. A loan can include a renovation budget without making the entire amount available to spend at closing.
Hard Money Bot is a brand of Loan Daddy LLC, a mortgage broker arranging financing through wholesale lenders. The wholesale lender and its draw administrator set the requirements under the applicable documents. Ask the broker to help identify those requirements, but rely on the final written terms for your cash-flow plan.
Check which costs qualify, what work must be complete and whether an initial advance is available. Ask how the program treats contractor deposits, stored materials and off-site fabrication. Do not commit cash you expect to recover through a draw until you understand whether that particular expense is eligible.
How do you follow the request from work completion to release?
A draw starts with work that meets the program requirements and a request tied to the approved budget. Use the line-item names and categories in the accepted scope so the reviewer can compare completed work with available funds. A general statement that construction is progressing does not establish an eligible amount.
The administrator reviews the request, collects supporting records and arranges the required verification. An inspection may confirm visible completion, while invoices, payment records or lien documents establish other conditions. No single document necessarily satisfies the whole release process.
After review, the administrator may release the supported amount, request corrections or exclude work that does not qualify yet. Confirm the approved amount and destination before scheduling payments based on it. A submitted request is not the same as cleared cash in the contractor payment account.
- Complete eligible work under the approved scope
- Submit the itemized request and required supporting records
- Arrange access for the required inspection or verification
- Resolve discrepancies, documentation gaps or incomplete work
- Confirm the release amount and reconcile the remaining budget
How do you plan inspection cadence and the first cash gap?
Ask whether inspections follow construction milestones, individual requests or another program process. Coordinate requests around work that can be verified rather than sending small claims without considering inspection costs and administrative effort. Never conceal work that requires inspection before covering it.
The first draw can expose a working-capital gap. If reimbursement follows completed work, you may need to pay labor or material costs before receiving renovation proceeds. Determine the cash needed to reach an eligible milestone and keep that amount separate from acquisition funds.
There is no universal release schedule for every project. Property access, reviewer questions, required documents and construction condition can affect the sequence. Avoid promising a contractor a payment date based only on the date you submit the request. Establish a payment plan that accounts for verification and correction steps.
How do you align contractor payments and retainage?
Your construction contract and loan agreement serve different purposes. A contractor may request deposits or progress payments before the lender considers work reimbursable. Reconcile those differences before work starts, and document who supplies cash when the two schedules do not match.
Confirm whether releases go to the borrower, contractor, joint payees or another approved destination. Keep invoices and proof of payment organized by trade and budget line. Avoid paying the same invoice twice when a partial release and a later supplemental request relate to the same work.
Retainage is money held back until specified completion conditions are satisfied. It can encourage final performance and protect against unfinished obligations, but the applicable amount and release rules come from the contracts. Ask whether contractor retainage and lender holdbacks differ so you do not promise funds that remain unavailable.
How do you get budget changes reviewed before relying on them?
A change order records work added, removed or revised after the original agreement. Document the reason, scope, price and effect on the construction sequence. Separate a necessary concealed-condition repair from an elective upgrade so the financing reviewer can understand the request.
Money left in one budget line may not automatically move to another. Ask the draw administrator how reallocation works and what consent is required. A contractor agreement to make the change does not establish that the wholesale lender will finance it.
Maintain a current budget showing approved amounts, completed work, releases and remaining obligations. Add your own cash contributions as a separate category. If a change exceeds eligible financing, decide how to cover the gap before authorizing additional work that the project cannot pay for.
How do you remove the problems that stall draws?
A failed inspection can mean the claimed work is incomplete, inaccessible or inconsistent with the approved scope. Ask for the specific deficiency and correct it before requesting another review. Photos can support a request, but they do not replace a required site inspection unless the program explicitly accepts that method.
Missing invoices, unclear payment records and incomplete lien waivers can also block release. A lien waiver addresses specified payment and lien rights under applicable law; its form and effect matter. Coordinate conditional and unconditional documents with qualified professionals rather than asking a contractor to sign inaccurate payment statements.
For ground-up construction, permit status, required municipal inspections and work sequencing can add dependencies. A lender inspection is not a substitute for code compliance or your own quality control. Keep those responsibilities distinct and retain the records needed for each.
Assign one person to track requests and answer questions. Verify property access, label invoices consistently and reconcile each release against the budget. These controls reduce preventable confusion, but they do not promise a release date or excuse unmet loan conditions.
What else should investors know?
Can the first draw pay my contractor deposit?
Only if the selected program permits that use and its release conditions are met. Some structures require completed work before reimbursement. Ask specifically about deposits and materials before signing the construction contract, then maintain enough working capital for expenses the loan does not advance.
Does a passed inspection mean the money is released?
Not by itself. The administrator may still need invoices, payment evidence, lien documentation or other conditions before release. Confirm the status of the entire request rather than treating the inspection result as payment confirmation. Keep contractor commitments aligned with actual available funds.
Can I move unused funds into another rehab line?
The program may allow reallocation with review, but do not assume that unused money is unrestricted. Submit the revised scope and budget through the required process. Obtain any necessary consent before relying on the new allocation to pay for work.
Who checks construction quality and code compliance?
Your contractor, qualified inspectors and local authorities have responsibilities distinct from the lender draw review. A draw inspection can verify progress without accepting the work for every legal or contractual purpose. Maintain your own quality-control process and confirm required permits and municipal inspections separately.