DSCR is defined as what ratio?

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Multiple Choice

DSCR is defined as what ratio?

Explanation:
DSCR measures a property's ability to cover its debt payments from operating income. It is calculated by dividing net operating income by annual debt service (the total principal and interest payments due in a year). This ratio shows how much cash flow is available to service debt; a DSCR greater than 1 means enough income to cover debt, while a DSCR below 1 indicates a shortfall. The other expressions don’t describe DSCR: inverting the ratio would be debt service divided by NOI, using NOI over purchase price is a cap rate, and subtracting operating expenses from NOI isn’t a valid ratio.

DSCR measures a property's ability to cover its debt payments from operating income. It is calculated by dividing net operating income by annual debt service (the total principal and interest payments due in a year). This ratio shows how much cash flow is available to service debt; a DSCR greater than 1 means enough income to cover debt, while a DSCR below 1 indicates a shortfall. The other expressions don’t describe DSCR: inverting the ratio would be debt service divided by NOI, using NOI over purchase price is a cap rate, and subtracting operating expenses from NOI isn’t a valid ratio.

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