Find hidden gems with AI evaluationFind hidden gems with AI evaluationDSCR (Debt Service Coverage Ratio) indicates how many times the property's Net Operating Income (NOI) covers loan payments. A value above 1.0 means rental income covers loan payments, with 1.2+ being the typical lending standard.
If DSCR is low, consider: (1) increasing down payment to reduce borrowing, (2) extending repayment period to lower annual payments, (3) finding a lower-rate lender, (4) improving occupancy to increase income.
NOI calculation includes management fees, repair reserves, property tax, city planning tax, fire insurance, property management fees, and vacancy losses as annual operating expenses. Loan payments are not included.
DSCR (Debt Service Coverage Ratio) measures the margin of earnings relative to loan payments. It is also an important factor in bank loan assessments.
Total of management fees, repairs, property tax, insurance, etc.
DSCR (Debt Service Coverage Ratio) indicates how many times the property's earnings (NOI) cover loan payments. A higher value means more repayment capacity.
DSCR = NOI / Annual Loan Payment
NOI = Annual Rental Income - Annual Operating Expenses
Banks generally require DSCR of 1.2 or higher for loan approval. A DSCR of 1.3+ is often considered a stable investment.