Construction Playbook
Construction DrawStrategy
Structuring land, interim, and take-out facilities so your draw schedule stays funded through completion — without stalls, gaps, or cost-overrun surprises.
May 20268 min read
Construction projects don’t fail because of bad designs or unmotivated trades. They fail because the money runs out before the building is finished — or because a draw is delayed long enough that the schedule unravels. The fix isn’t more equity. It’s a properly sequenced capital stack where land, interim, and take-out facilities hand off cleanly.
This is the playbook we use at Max Capital Financial when we structure commercial construction financing across Alberta and BC. It maps the three facilities, the handoff points between them, and the underwriting moves that keep draws funded right through certificate of occupancy.
The three-facility stack
Every well-structured construction deal has three distinct facilities. Trying to collapse them into one loan is where most files get into trouble — banks won’t fund pre-development risk, and short-term private lenders won’t underwrite the permanent take-out.
1. Land facility
The land loan funds acquisition and pre-development costs: site assembly, rezoning, development permit, architectural drawings, and soft costs through to a shovel-ready file. Banks rarely lend on raw land or early-stage entitlement, so this facility is typically private or syndicated, sized at 50 – 65% loan-to-cost, with interest reserves built in. Term is usually 12 – 24 months — long enough to reach DP issuance and a bankable construction file.
2. Interim construction facility
The construction loan funds the build itself, advanced on a draw schedule against cost-to-complete and quantity surveyor (QS) certification. Sized to total project cost less equity and pre-sale or pre-lease commitments, typically 65 – 80% loan-to-cost. The land loan gets refinanced into this facility at first draw, so the land lender is repaid and the construction lender takes first position on the entire project.
3. Take-out (permanent) facility
The take-out is the long-term mortgage that repays the construction loan at completion. For multifamily, this is usually CMHC MLI Select — up to 95% LTV, 50-year amortization, and rates 150 – 250 bps below conventional. For commercial or mixed-use, it’s a conventional bank, credit union, life company, or CMBS facility. The take-out commitment should be in place — at least in principle — before the construction loan funds, not negotiated at the eleventh hour.
How a draw schedule actually works
A construction draw is not a wire transfer on request. Every draw follows a defined process, and each step takes time. Knowing the timeline lets you plan trade payments instead of chasing them:
- Cost-to-complete request: borrower submits progress claim with invoices, lien holdback calculations, and updated budget
- QS site inspection: quantity surveyor visits the site, verifies work-in-place, and certifies the draw
- Lender review and funding: lender reviews the QS report, confirms compliance with budget and schedule, and funds — typically 10 – 20 business days from request to advance
- Holdback management: 10% statutory holdback retained on each draw and released only after the lien period expires post-substantial completion
The single biggest cause of draw delays is incomplete or inconsistent documentation. A clean draw package — invoices, sworn statements, lien searches, updated cost-to-complete — gets funded on schedule. A messy package stalls in lender review and the trades stop showing up.
Five moves that keep the draw schedule funded
1. Size interest reserves to your real timeline
The construction interest reserve must cover the entire build period plus stabilization. Most cost overruns aren’t hard costs — they’re carrying costs from schedule slip. Budget 12 – 15 months of interest on a 9 – 12 month build, and the reserve absorbs weather, supply chain, or permitting delays without forcing a top-up request.
2. Lock the take-out commitment early
A construction lender wants to see a credible exit before they advance the first draw. On multifamily, secure the CMHC MLI Select pre-approval — including your point score and affordability commitments — before the construction file closes. On commercial, get a term sheet or letter of intent from the permanent lender. Last-minute take-out shopping is how projects end up renewing private bridge debt at punitive rates.
3. Manage cost-to-complete weekly, not monthly
Track committed costs against budget every week. If a trade comes in over budget, you find out at week three — not at draw five when the lender’s QS flags it and pauses funding. Contingency lines exist to absorb variances, but only if you draw on them proactively with proper documentation.
4. Pre-position the lease-up plan
For income-producing projects, the take-out funds against achieved or committed NOI. Marketing, pre-leasing, and signed LOIs should be progressing in parallel with construction, not starting at COO. A stabilized building qualifies for full take-out proceeds; an empty one triggers a holdback that strands equity for 6 – 12 months.
5. Build the contingency the lender wants to see
5% hard-cost contingency is the floor, not the target. On retrofit or complex projects, 10% is more realistic. Lenders underwrite contingency seriously — an under-contingent file gets a smaller loan or a larger equity ask. Sizing it right at the front end actually increases your leverage and protects the draw schedule from surprises.
The handoff points where deals stall
Three transition points decide whether a construction project finishes on time and on budget:
- Land → construction: the construction lender takes out the land lender at first draw; if the construction file isn't ready when the land loan matures, the borrower pays renewal fees and rate spikes
- Construction → stabilization: certificate of occupancy doesn't automatically trigger take-out funding; the permanent lender wants leases in place and operating expense history before full proceeds advance
- Construction → take-out: if the take-out conditions slip — DSCR not achieved, LTV exceeded due to soft appraisal, lease-up behind schedule — the borrower needs bridge capital to cover the gap; planning for this in advance is cheaper than scrambling at maturity
Western Canada construction landscape in 2026
Active construction lending markets we’re funding across right now:
Edmonton and Calgary — purpose-built rental and MLI Select multifamily dominating new starts; strong CMHC take-out pipeline supports aggressive construction leverage
Vancouver — high-density multifamily and mixed-use; longer entitlement timelines mean larger land facilities and tighter interim underwriting
Kelowna and Victoria — purpose-built rental and hospitality conversions; demand fundamentals supporting strong lease-up assumptions
Red Deer, Northern Alberta, and Southern Alberta — workforce housing and industrial; smaller deal sizes but solid private-to-bank exit paths
How Max Capital structures the full stack
We don’t broker land, construction, and take-out as three separate transactions. We structure the full stack up front so the handoffs are pre-negotiated — the land lender knows when they’re being repaid, the construction lender knows the take-out is committed, and the borrower knows every draw will fund on time. That’s the difference between a project that finishes and one that stalls at 60% complete.
If you have a project on the drawing board, a permit in hand, or a draw schedule that’s starting to slip, send us the file. No deposits. No fees until funded.
Need a construction stack structured?
Send us the project budget, site plan, and timeline. We’ll come back with a land, interim, and take-out structure that funds every draw through completion.
- Land, construction, and take-out structured together
- Draw schedules sized to your real timeline
- CMHC MLI Select take-out pre-positioned
- $0 until funded
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Land, interim, and take-out facilities structured together so every draw funds on schedule.
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