what is debt coverage ratio?

In Buying Property - Asked by Winston R. - Mar 18, 2017
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Answer(s)

Todd W.
Owner/Investor
San Diego, CA

Commonly, when were talking about Real Property it's the (Annual) NOI / (Annual) Debt Service = DSCR aka Debt-Service Coverage Ratio
whereas a DSCR greater than 1 means the entity – whether a person, company or government – has sufficient income to pay its current debt obligations. A DSCR less than 1 means it does not.
1.5 or greater is typically known as a moderately impressive figure for obtaining financing or refi.
Best of luck and even greater returns!
Todd

Mar 18, 2017
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Juanita A.
Broker/Agent
Hallandale, FL

It is a comparison of how much income you receive with how much of it goes to pay the loan (debt) on the property. A bigger ratio (in theory above 1) shows there is enough income. A lower ratio means there is not enough income.

Mar 20, 2017
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Daniel C.
Broker/Agent
Los Angeles, CA

DCR is the ratio of cash available for debt servicing to interest, principal and lease payments.

May 26, 2017
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