Has anyone collected draws on homes that you are doing the work your self for a fix and flip and is there any reason why you couldn't?
Eh? Do you mean can you get a hard money loan that include a rehab budget and then do the work yourself? Yes, that's possible. A savvy hard money lender will require permits, though and that may limit what you can do yourself.
This is perhaps less formal than you think. You establish a rehab budget and scope of work up front. The HML decides if that's reasonable and uses that when coming up with an ARV. What you actually spend will almost certainly differ from the budget. But you're only going to the budgeted amount, whether that's more or less than the actual expenses. If the work done is less than what was agreed on, you won't get the draw money until it is.
Are you talking about draws in the sense that you get paid today and the deduct that amount from your split when the flip sells? If that is your meaning, talk to your investors. I wouldn't want to pay you much more than peanuts and gas, but that is just me.
Items to consider:
Do you have to pay the rest of the investors back if the market goes south on the flip?
Do you owe the other investors interest on the money you took out, or does it go onto the books as an expense?
I'm a contractor and just wasn't sure if you could take a draw on completed work not looking for anything other then getting paid on inspected and completed work. I know with conventional banking you but wasn't sure you could with HML Im looking to do this full time and that would help with creating an income.
I'm also a contractor and have worked many deals with my HML in which I performed the work. It has never been an issue. I do not take multiple draws as each one requires an inspection and fee. I just take a final draw at the end of project.
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