"I’m back again with private money lender and real estate investor Beau Eckstein. This time out, I asked him about construction loan “draws”.
Beau gave us the lowdown on how hard money construction loan draws work with private money lenders.
Construction lenders need a line item budget. From that, your private money lender will “draw up” a budget and payment schedule. This payment, or draw, schedule, will be followed through to a construction project’s completion.
Draws could involve one draw or many, up to 20 and more. Large construction projects are better managed this way. In days gone by, many projects blew their budgets, overspent on initial outlays, and generally failed because they ran out of money.
Hard money lenders have gotten smart. They know that a sound budget with solid draws paid out to the contractor for construction or rehab purposes is a best practice for large (or small) construction deals."
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