Every experienced real estate investor has a deal they passed on and shouldn’t have, or a deal they jumped into and wished they hadn’t. In most cases, the difference comes down to one thing: the numbers. And when it comes to financing rentals, the property’s debt-service coverage ratio (DSCR) is key.
DSCR answers a straightforward question: Does this property generate enough rental income to cover its monthly obligations?
To calculate this ratio, divide the property’s gross monthly rental income by its total monthly debt obligations, known as PITIA: principal, interest, taxes, insurance and association dues.
Debt-Service Coverage Ratio (DSCR)
Debt-service coverage ratio measures a property’s or business’ ability to generate enough op...
