Would You Pay a Higher Rate for a Better Rehab Draw Process?
Most hard money comparisons focus on interest rate, points, LTC, and ARV.
But a cheaper loan can become expensive fast if every draw requires a slow inspection, reimbursement takes a week, or unused funds can’t be moved between budget categories.
Would you accept slightly worse pricing for:
- faster photo-based draws
- fewer inspection fees
- flexibility between line items
- partial upfront rehab funding
- a lender who processes changes quickly
For investors who’ve used multiple lenders, which draw-process term matters most after closing?
Most Popular Reply
Great question! I've been running draws on new construction and rehab projects since 1996, so I'll answer from the borrower side of the table.
Draw speed. By a wide margin! The cost difference never moves the needle enough for me. Speed always wins.
Here's the math nobody runs when they compare lenders. Say the rate difference is 1%. On a $200,000 loan over an 8 month project, that's about $1,300. Now say the slower lender takes 10 extra days per draw and you pull 4 draws. That's 40 days of subs waiting on money, trades walking to other jobs, and your schedule sliding. A 40 day slip on a flip carrying $3,500 a month in interest, taxes, insurance, and utilities costs you $4,600. And that's before you count what a delayed listing does to your exit if the market's cooling.
So yes, I'd take worse pricing for faster draws. Here's how I'd rank your list:
- 1. Draw speed (photo based or next day inspection)
- 2. Flexibility between line items. No budget survives the project. If I save $4,000 on flooring and need it for framing surprises, a lender who makes me file paperwork for that move is costing me weeks.
- 3. Partial upfront rehab funding. Helps cash flow, but fast draws mostly solve the same problem.
- 4. Fewer inspection fees. Real money, but small. $150 a draw times 4 draws is $600. See the math above.
One more thing. Ask the lender their average days from draw request to funds wired, and get it in writing or from a reference. Every lender says they're fast. The wire date doesn't lie.