Hard Money "Holdbacks"

[John Geldert]

Earlier this summer I funded one of my BRRRR properties using a HML (for the first time). The terms were not that bad considering I got the the property at a steep discount and they were able to close in about two weeks. Shortly before closing the lender insisted that I bring All of the funds for my rehab to closing as opposed to just "showing" proof of funds. I was instructed that they would hold my money and I could make draws against it as the work got completed. This obviously threw a wrench into my strategy as I needed to come up with an additional $22k in a few days in order to get this deal closed. The deal closed, I finished the rehab and was able to recapture all of my funds...

My question is; do all hard money lenders insist one holding your rehab capital? Has anyone had experiences with HM lenders that do not require this, if so can you please share?