Draw Schedules for Long Island Fix and Flips Explained

Your contractor just finished framing your Hempstead flip. The town inspector won't show up for two weeks. Your hard money lender needs their own inspection after that. Meanwhile, your contractor wants payment NOW or he's moving to another job. This is the draw schedule nightmare that kills most Long Island flips before they even get started.

After funding fix and flip loans across Long Island for over five years, I've seen this scenario destroy profits more times than I can count. The draw schedule isn't just paperwork. It's the beating heart of your entire renovation project. Get it wrong, and you'll burn through holding costs while your property sits idle.

Table of Contents

• Understanding Draw Schedules: The Basics Every Investor Must Know
• The Anatomy of a Hard Money Draw
• Sample Draw Schedules: Cosmetic vs Full Gut
• The Long Island Reality Check
• Managing Your Draw Schedule Like a Pro
• Choosing the Right Lender for Your Draw Schedule
• The Bottom Line

Understanding Draw Schedules: The Basics Every Investor Must Know

A draw schedule is your agreement with your money lender about when and how renovation funds get released. Instead of getting all your rehab money upfront, the lender holds these funds in escrow. You draw them down as you complete specific phases of work.

Think of it as construction milestones tied to money. Complete the framing? Get your framing draw. Finish the kitchen? Release the kitchen funds. This protects both you and the lender while keeping your project moving forward.

Here's what catches new investors off guard: draws are ALWAYS retrospective. You fund the first phase of work yourself. Only after completing and getting that work inspected does the lender reimburse you through the first draw. This means you need working capital beyond just your down payment.

I see investors show up thinking they'll get money for demolition upfront. That's not how it works. You pay for demo, complete it, get it inspected, then get reimbursed. Plan for this or your project stalls on day one.

The Anatomy of a Hard Money Draw

Your draw schedule starts with your Scope of Work (SOW). This isn't some rough estimate you scribbled down. It's a detailed, line-by-line breakdown of every single task in your renovation. Your contractor needs to spell out materials, labor costs, and timelines for each phase.

The SOW determines your After Repair Value (ARV). As a Long Island private hard money lender, I use your SOW to calculate what your property will be worth after renovation. Get this wrong, and your entire loan falls apart.

The actual draw process follows three steps that never change. First, you submit your draw request with photos, invoices, and documentation proving the work is complete. Second, the lender schedules an inspection to verify everything matches your original SOW. Third, once the inspector confirms completion, funds get released to your account.

Speed matters here. When I built Equiquest to serve Long Island investors, I made our inspection and funding process lightning fast. Some lenders take weeks. In this market, that means dead projects and lost contractors.

Sample Draw Schedules: Cosmetic vs Full Gut

Not all flips are created equal. A cosmetic renovation in Patchogue needs maybe three draws. A full gut rehab in Garden City might need seven or more. Let me show you the difference.

Cosmetic Flip Draw Schedule

Draw 1 (60% complete): All exterior work done including paint, power washing, and landscaping. Interior paint prepped and primed. Old flooring removed. Kitchen and bathroom demo complete.

Draw 2 (90% complete): New flooring installed throughout. Light fixtures replaced. Kitchen countertops, cabinets, and appliances installed. Bathroom vanities and fixtures in place.

Draw 3 (100% complete): Final paint touchups. All hardware installed. Property staged if applicable. Final cleanup complete. This draw often includes a 5-10% retainage the lender holds until everything is perfect.

Full Gut Rehab Draw Schedule

Draw 1 (20% complete): Permits pulled. Asbestos and lead abatement complete with clearance certificates. Full interior demo to studs. Site prepped for construction.

Draw 2 (25% complete): New roof on. Windows and siding installed. Foundation repairs done. All framing complete including structural changes. Town framing inspection passed.

Draw 3 (50% complete): Electrical rough-in complete. Plumbing rough-in done. HVAC ductwork installed. All MEP inspections passed by the town.

Draw 4 (75% complete): Insulation installed and inspected. Drywall hung, taped, and finished. Primer applied throughout.

Draw 5 (90% complete): Kitchen cabinets and counters installed. Bathroom tile and vanities complete. Interior doors and trim installed.

Draw 6 (95% complete): All flooring complete. Final paint done. Plumbing and electrical fixtures installed.

Draw 7 (100% complete): Appliances installed. Exterior work including driveway and landscaping done. Certificate of Occupancy received.

The Long Island Reality Check

Generic draw schedules downloaded from the internet will sink your Long Island flip. This market has specific challenges that can freeze your project and burn through your profits if you're not prepared.

The Old House Problem

Most of Nassau County's housing stock was built before 1980. That means asbestos and lead paint aren't possibilities. They're certainties. I've seen investors create a SOW with "Draw 1: Demolition" and get hit with stop-work orders the moment they disturb hazardous materials.

Your first draw milestone must be "Asbestos/Lead Testing and Abatement Complete." Get those clearance certificates before touching anything else. Yes, it costs money upfront. But it saves you from a frozen project with interest accumulating daily.

The Permit and Inspection Nightmare

Time is literally money in fix and flips. Every day of delay costs you interest on your hard money loan. On Long Island, your biggest delays come from municipal building departments, not contractors.

Take the Town of Huntington's inspection process. They explicitly state inspections are "generally scheduled 10-14 days out." Your contractor finishes framing today. The town inspector comes in two weeks. Then you request your lender's inspection. Another few days. Then funding gets released.

You're looking at 16-18 days between work completion and getting paid. Your contractor won't wait. Build this lag into your timeline and budget, or watch your project die.

The Suffolk County Septic Surprise

Suffolk County protects its groundwater aquifer aggressively. If your renovation costs exceed 50% of the structure's value or you're adding 25% more floor space, you trigger mandatory septic upgrades. That's $20,000 to $30,000 you didn't budget for.

I've funded investors who planned a 500 square foot addition to maximize ARV. That triggered the 25% rule and added $30,000 in septic costs. Profit gone. Now they design 350 square foot additions to stay under the threshold. Know these rules before you close on the property.

The Hamptons Complexity

Flipping in Southampton or East Hampton isn't just expensive. It's complicated. Most desirable properties sit in FEMA flood zones requiring specialized engineering and elevated foundations. Both towns enforce pyramid height laws that limit building height near property lines.

Your first draw in the Hamptons shouldn't be demolition. It should be "Approved Stamped Architectural Plans and Building Permit Issued." Releasing funds before securing these approvals is speculation, not investing.

Managing Your Draw Schedule Like a Pro

Change orders will happen. Hidden termite damage, rotted beams, or outdated electrical systems appear once you open walls. How you handle these determines whether your project succeeds or fails.

Stop work immediately when you discover an issue. Contact me or your lender before doing anything. Submit a formal change order detailing the problem, solution, cost, and timeline impact. Wait for approval before proceeding.

Some lenders let you reallocate funds between line items. Need $5,000 for unexpected foundation work? Maybe it comes from your landscaping budget. Other lenders treat every change as a loan modification requiring committee approval. Know your lender's process before you need it.

Budget for Reality, Not Hope

Over 70% of fix and flip projects go over budget. That's not pessimism. That's data. Include a 10-20% contingency line item in your SOW. This isn't extra profit. It's your buffer for material price spikes, permit fee increases, and those surprises hiding behind every wall.

Factor in the soft costs too. Draw fees run $125-150 per draw. Seven draws mean $1,000 in fees. Inspection fees add another $100-150 per inspection. Origination points are 2-5% of your loan amount. These aren't surprises if you plan for them.

Choosing the Right Lender for Your Draw Schedule

Interest rate isn't everything. Speed and flexibility in the draw process matter more for Long Island investors. A slow lender kills profits faster than high interest.

Good contractors on Long Island are booked solid. Make them wait three weeks for payment because your lender is slow? They're gone to another job. Now you're scrambling for a replacement while burning interest daily.

Ask potential lenders these CRITICAL questions:

"What's your typical draw release time from request to funding?" Anything over 48-72 hours post-inspection is too slow. We fund draws in hours at Equiquest because we're local and understand the market urgency.

"How do you handle change orders?" Do they allow simple budget reallocation or require full re-underwriting? This reveals whether they're a partner or a roadblock.

"How do you handle draws waiting on municipal inspections?" This question proves you know the market. Will they work with you on partial draws, or rigidly hold funds while your project bleeds money?

The right lender understands Long Island's unique challenges. They've dealt with Hempstead's morning-only inspection call windows. They know East Hampton closes Wednesdays to catch up on permit backlogs. They get that your success is their success.

The Bottom Line

Your draw schedule isn't just paperwork. It's your project's strategic blueprint. Get it right, and you'll navigate Long Island's municipal maze profitably. Get it wrong, and you'll join the graveyard of failed flips killed by poor planning.

A professional draw schedule anticipates Long Island's specific challenges. It front-loads abatement in older homes. It budgets for inspection delays. It accounts for septic mandates and flood zone requirements. Most importantly, it's backed by a lender who knows this market inside and out.

Success in Long Island fix and flips isn't about finding deals. Everyone can find deals. It's about executing those deals profitably despite the obstacles. Your draw schedule is the tool that makes that possible.

Ready to structure your next Long Island flip with a lender who actually understands this market? Apply for funding here and let's discuss how to make your draw schedule work for your project, not against it.