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What is Debt Service Coverage Ratio DSCR
Dated: March 6 2023
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The debt service coverage ratio (DSCR) is a measure of how well a rental property can cover its debt payments with its net operating income (NOI).
It is calculated by dividing NOI by total debt service. A higher DSCR means that the property generates more income than it needs to pay its debts, while a lower DSCR means that the property may struggle to meet its obligations.
Lenders and investors use DSCR to evaluate the risk and profitability of a rental property. A good DSCR for rental property is usually at least 1.25, meaning that the property produces 25% more income than it needs to pay its debts. Meaning that it has a positive net cash flow. This is important to be able to maintain sufficient reserve to cover maintenance expenses, both expected and unplanned.
Are you looking for a rental property with a good DSCR?
Text DSCR to 919.822.9800 for a list of positive cash flowing properties from Raleigh to Fayetteville and beyond.
Ricardo Cobos
About RicardoRicardo Cobos - Real Estate Agent & Mortgage Lender in Garner, NCAs a dedicated mortgage lender and real estate agent, I’m passionate about helping buyers and sellers in Garne....
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