What is the debt service coverage ratio (DSCR)?
The debt service coverage ratio (DSCR) is a financial ratio that measures the ability of a property to generate enough income to cover its debt payments. It is calculated by dividing the property's net operating income by its debt service. Our free DSCR calculator helps real estate investors determine this ratio easily and accurately.
Why is the DSCR important for real estate investors?
Calculating the DSCR is crucial for real estate investors as it helps them assess the financial viability of a property investment. By knowing the DSCR, investors can make informed decisions about whether a property will generate enough income to cover its debt obligations.
How is the DSCR calculated?
The DSCR is calculated by dividing the property's net operating income by its debt service. Our free DSCR calculator simplifies this calculation and provides investors with an accurate measure of the property's ability to generate enough income to cover its debt payments.
What does a DSCR below 1 indicate?
The DSCR is an important metric for real estate investors as it helps them evaluate the risk associated with a property investment. A DSCR below 1 indicates that the property's income is insufficient to cover its debt payments, while a DSCR above 1 indicates that the property generates enough income to cover its debt obligations.