Short version: on a fix and flip loan, you pay for the rehab first and get reimbursed after, and the gap between those two events is one of the most underestimated cash-flow problems in the business. From the day your crew finishes a phase to the day the money hits your account usually runs three to seven business days, sometimes longer. If you do not plan for that gap, you can run out of working capital in the middle of a project that is actually going fine on paper.
How draw reimbursement actually works
Almost every fix and flip loan holds the rehab budget back and releases it in stages, not all at once. That structure protects the lender and it is standard, but it means the money flows in a specific order that new flippers get backwards. You do the work with your own cash or your contractor’s, then you request a draw, then an inspection confirms the work is done, then the lender wires you the money. You are always fronting the work and getting paid back after. We explain the holdback structure itself and how much cash you bring on day one in our guide to rehab holdback versus initial advance.
So the real question is not whether you get the rehab money. You do. The question is how many days pass between spending it and getting it back, and how many times that gap repeats over a project.
The five steps in a draw, and where the days hide
A single draw moves through five steps, and each one adds time.
One, you request the draw. You tell the lender which line items are complete and how much you are requesting. Clean, itemized requests move faster than vague ones.
Two, the inspection is ordered. The lender sends an inspector, or asks for photos or a video walkthrough on smaller draws. This is usually the biggest single source of delay, because it depends on the inspector’s schedule, not yours. We cover exactly what the inspector is looking for in our post on draw inspections.
Three, the inspection is completed and reported. The inspector confirms the percentage of work done and sends it back to the lender.
Four, the lender approves the draw. They match the inspection against your request and sign off on the amount.
Five, the funds are wired. The money leaves the lender and lands in your account, usually same day or next day once approved.
On a well-run draw with a responsive inspector, all five steps take three to five business days. When the inspector is booked out, a holiday lands in the middle, or your request does not match what is actually finished, it stretches to seven, ten, or more. That variability is the thing to plan around, because your contractor does not care about the lender’s timeline. They want to get paid.
A real timing example
Take a fifty thousand dollar rehab released in three draws. Say the first draw is fifteen thousand dollars after demo and rough-in. Your crew finishes that phase and you have already paid them, or promised to, out of your own pocket. You request the draw on a Monday. The inspection gets scheduled for Thursday. The report comes back Friday, the lender approves the following Monday, and the wire lands Tuesday. That is eight days where fifteen thousand dollars of your cash is out the door and not yet back.
Now multiply that by three draws across the project, and add the reality that you often start the next phase before the last draw reimburses. At any given moment you might be carrying ten to twenty thousand dollars of unreimbursed work. That is your true working-capital requirement, and it is completely separate from your down payment and closing costs. Investors who only budget the down payment are the ones who stall mid-project. Run your own numbers on our deal calculator so you know the cash you actually need on hand.
The carrying cost while you wait
There is a second cost to the gap beyond the working capital. On most rehab loans you are paying interest on the money as it is drawn, and how that interest is charged, on the full loan or only the drawn balance, changes your real cost. That distinction is worth understanding before you sign, and we broke it down in our post on Dutch versus non-Dutch interest. Some investors also budget an interest reserve so they are not writing a monthly interest check while the house produces no income, which we covered in our guide to fix and flip loan interest reserves.
How to shrink the gap
You cannot eliminate the reimbursement lag, but you can tighten it. A few things that reliably move it.
Request draws in logical, complete phases instead of dribbling out small requests. Fewer, cleaner draws mean fewer inspections and less total delay. Take clear, dated photos as you go so a photo draw can substitute for a physical inspection where the lender allows it. Give the lender accurate percentages, because a request that does not match the inspection gets kicked back and restarts the clock. And build a relationship with your contractor around the timing, so they are not expecting same-day payment on work that is going to reimburse in a week. The best flippers structure their contractor payment schedule to match the draw schedule, not fight it.
Speed on the front end helps too. A lender that closed you fast usually processes draws fast, because the same operations team handles both. If closing speed matters to you, we wrote about realistic timelines in how fast you can close a fix and flip loan.
Why this matters more in 2026
Holding times are longer than they were a few years ago, which means more draws, more inspections, and more total days where your capital is out. In slower resale markets like much of the Midwest and the value plays across Ohio, the deals still work, but the working-capital discipline has to be tighter because the project runs longer. We look at one of those markets specifically in our guide to the best fix and flip loans in Ohio.
The bottom line
Draw reimbursement is not a problem, it is a rhythm you have to fund. Plan on three to seven business days from finished work to money in the account, plan on carrying ten to twenty thousand dollars of unreimbursed work at any given time on a mid-size rehab, and structure your contractor payments around that reality instead of against it. The flippers who run out of cash mid-project almost never had a bad deal. They just did not budget for the gap.
Want help structuring a draw schedule that keeps your working capital intact? Call or text 412-990-2941, reach out through our contact page, or learn more about our fix and flip and bridge loan options.
FMC Capital is a Pittsburgh-based mortgage brokerage serving real estate investors across Pennsylvania and additional states. Draw structures, inspection processes, and reimbursement timelines vary by lender and are subject to change. This is general educational information, not a loan commitment or financial advice. NMLS #1840537.