Guide
Rehab Draw Schedule Example and Cash Gap Worksheet
Team RE Underwrite Lab
A rehab draw schedule maps when work is paid for and when a lender releases funds. When draws reimburse completed work, the biggest cash gap can occur just before a draw clears. To find it, list contractor payments and lender deposits as separate events and calculate the running balance.
Start with the lender’s draw process
Ask what counts as completed work, what the inspector needs to see, how the lender treats deposits and change orders, and when reimbursement arrives after approval. Ask about draw fees and retainage, which is money held back until a condition is met. Some lenders publish their procedures. For example, Unitas Funding describes a draw request and inspection process for completed work. Unitas Funding draw procedures
Rehab draw schedule example
Suppose a $40,000 rehab has $36,000 of eligible funding and $4,000 of costs the borrower must cover. Payments go out before the corresponding draw clears. The dates and release amounts below are illustrative.
| Event | Cash paid | Draw received | Cumulative cash tied up |
|---|---|---|---|
| Week 1, initial work | $12,000 | $0 | $12,000 |
| Week 3, next phase begins | $14,000 | $0 | $26,000 |
| Week 4, first draw clears | $0 | $10,000 | $16,000 |
| Week 6, final phase paid | $14,000 | $0 | $30,000 |
| Week 7, second draw clears | $0 | $12,000 | $18,000 |
| Week 9, final draw clears | $0 | $14,000 | $4,000 |
Cash tied up = cumulative rehab payments − cumulative draws received. The peak rehab cash gap is $30,000 in week 6. That figure excludes the down payment, closing costs, financing fees and any other cash the project needs during the same period. Draws are loan proceeds and increase the amount to repay under the loan terms.
What happens if the first draw arrives late?
Move the $10,000 reimbursement to after the week 6 payment. At that point you have paid all $40,000 and received nothing, so the peak gap rises to $40,000. Run the same test with a delayed inspection or a change order that the lender excludes. If the lender calculates interest on drawn balances, use its actual draw dates to estimate interest as well.
Use the cash-to-close guide to work out the money due at closing. Then add the timing of contractor payments and other cash outflows to estimate how much you may need before the sale. Before you sign a contract, compare contractor payment milestones with the lender’s draw steps.
Example only. Not financial, investment, legal, tax, lending, or appraisal advice.
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