CRE Loans, Experience-Based vs. Credit-Based Leverage
The Pro Business Group Capital matrices determine your borrowing power (leverage) using two primary models, depending on whether the loan is short-term (bridge/reno) or long-term (rental).
1. Leverage Based on Experience
Applied to: Stabilized Bridge, Fix & Flip, and New Construction programs.
In these programs, your “track record” of completed projects in the last 3 years dictates your Loan-to-Value (LTV) and Loan-to-Cost (LTC).
| Experience Level (Last 3 Years) | Maximum LTC (Purchase + Renovation) | Maximum ARV (After-Repair Value) |
| 0 Projects (Entry Level) | 85% Purchase + 100% Reno | 70% of ARV |
| 1–4 Projects (Mid-Tier) | 90% Purchase + 100% Reno | 72.5% – 75% of ARV |
| 5+ Projects (Professional) | 92.5% – 95% Purchase + 100% Reno | 75% of ARV |
Key Takeaways:
- Renovation Funding: Regardless of experience, Pro Business Group Inc. typically funds 100% of renovation costs.
- Risk Mitigation: Investors with no experience are required to “put more skin in the game” (higher down payment), while seasoned pros get the highest leverage.
- New Construction Note: For ground-up builds, the projects must have been completed in the same state as the subject property to count toward experience.
2. Leverage Based on Credit Score (FICO)
Applied to: Long-Term Rental Programs (30-Year).
For long-term hold properties, Pro Business Group Inc. shifts the focus from “what you’ve built” to “how you manage debt.” Leverage is tiered based on the guarantor’s FICO score.
Single-Family (1-4 Units) Long-Term Rental:
| FICO Score | Purchase (LTV/LTC) | Refinance (LTV) | Cash-Out (LTV) |
| 740+ | Up to 80% | Up to 80% | Up to 75% |
| 700–739 | Up to 80% | Up to 80% | Up to 75% |
| 680–699 | Up to 75% | Up to 75% | Up to 70% |
Multi-Family (5-9 Units) Long-Term Rental:
| FICO Score | Purchase (LTV/LTC) | Refinance (LTV) | Cash-Out (LTV) |
| 740+ | Up to 70% | Up to 70% | Up to 65% |
| 720–739 | Up to 70% | Up to 70% | Up to 65% |
| 700–719 | Up to 70% | Up to 70% | Up to 65% |
Key Takeaways:
- Minimum Thresholds: You generally need at least a 680 for single-family rentals and a 700 for multi-family rentals.
- Stabilized Pricing: Unlike the “Experience” model, the “Credit” model offers more rigid LTVs but provides long-term stability with 30-year terms and fixed rates.
- Cash-Out Penalty: Opting for a “Cash-Out” refinance typically reduces your maximum leverage by 5% compared to a standard purchase or rate-and-term refinance.
Summary Comparison
| Feature | Experience-Based (Bridge/Flip) | Credit-Based (Rental) |
| Primary Driver | Completed “Flips” or Projects | FICO Score |
| Goal | High leverage for speed/renovation | Sustainable leverage for cash flow |
| Max LTV/LTC | High (Up to 90%–95% LTC) | Moderate (Up to 70%–80% LTV) |
| Loan Term | Short (12–24 months) | Long (30 years) |