Well, it is hard to tell from this post which is happening: either the work is not completed satisfactorily, or the lender is holding funds for some reason, possibly unrelated to the project.
As a baseline, we try to get to a project within 2 days of the borrower requesting an inspection. With rehabs, we do our own inspections. Then, if the work is not completed as submitted, we explain on the spot what is missing, what we are withholding, and why. This doesn't happen often, but it does happen. Then we wire funds the next morning. It is in our interest to keep the project moving, and providing the funds is part of that.
On larger, more complex projects, we utilize an inspection service. The inspectors are pros, and they will occasionally hold funds if appropriate lien waivers are not supplied. Could this be part of the issue? But they are quick, and are out to a project within a couple of days, and inspections are submitted to us normally the afternoon of an inspection. We then wire that next morning.
With borrowers who are very experienced and good at what they do, occasionally when we arrive, a portion of the work submitted for reimbursement is not completed. If we can see that it is in process, we might be a little more liberal with borrowers who we know well. However, the reality of experienced borrowers is that they are more often ahead of what they submitted rather than behind, because they value their reputation and relationship with their best lenders, and they have funds to continue the work.
The flip side of this is that sometimes inexperienced borrowers are all over the place, with poor quality control, poor communication with contractors, hiring and firing multiple contractors, inspection delays, poor planning for utility connections, and on and on. Including lack of actual on-site supervision. Those inexperienced borrowers will frequently submit a draw based on what their contractor tells them, rather than what they have actually seen as completed. Or if they have change orders, they will submit based on money spent, rather than work completed. We only reimburse based on work completed.
Now to the lender's possible reasons: If it is a small lender, it could be he/she is short of funds. Sometimes small lenders commit funds based on what they expect to have back from a deal, rather than what they actually have in the bank. This can be a huge problem for you, the borrower, because time is money in your case. If it is a larger lender, this less likely, and it is more likely the quality or substance of the work.
I would question the inspector at the time of the inspection to find out exactly what he is recommending to hold back and why. That will be the beginning of your answer as to why it is being held back.
You can most certainly refinance with another hard money lender, but ask yourself if the cost will be worth it. I cannot help you, as I don't work in your area. I am writing this as a general information post to help others, not to solicit business.
Rather than assuming all hard money lenders are like this one, network in your local real estate group to find lenders who others have worked with and recommend. I frequently get deals from experienced borrowers who can get conventional financing, but choose to borrower from me because I'm good to work with, fast, and predictable.
