I think something here is miscalculated. With a cap of 17, the dscr would automatically be higher than 1.46, unless you were extremely leveraged at a very high interest rate. For example, even a 75% LTV at 10% interest only, with a one million dollar property @ a 17 cap has a NOI of 170,000. A loan of $750,000 at 10% i.o. is $75,000/yr. 170,000/75,000 is a dscr of 2.26. A dscr of 1.46 for the 170,000 noi, means the payment is 116,438. That could service a loan of $1,164,000 at 10% i.o. Or a loan of 800,000 at 14.5%.
Feb 17, 2010