Debt Service Coverage Ratio (DSCR) Calculator
Debt Service Coverage Ratio (DSCR) Calculator
How to Use Our DSCR Calculator
Follow these steps to calculate your property's DSCR:
- Monthly Rental Income: Enter how much your property generates in income per month through tenant rent.
- Loan Amount: Input the total loan amount for the property.
- Loan Term: Specify the loan term in years.
- Interest Rate: Enter the annual interest rate as a percentage.
- Optional Fields: Include monthly taxes, HOA fees, and insurance costs if applicable. These expenses impact your DSCR by reducing net income and providing a more accurate DSCR.
The calculator will automatically compute your monthly loan payment, total monthly payments, and DSCR. This quick analysis helps you gauge your property's financial performance and loan serviceability.
Understanding Your DSCR Results
Your DSCR result provides key insights into your property's financial health:
- DSCR < 1: Your property's income doesn't cover its debt payments, indicating potential financial stress.
- DSCR = 1: Your income exactly covers your debt, leaving no margin for unexpected expenses.
- DSCR > 1: Your property generates more income than needed for debt payments, suggesting financial stability.
In commercial real estate, a DSCR of 1.25 or higher is typically considered good. This means your property generates 25% more income than needed for debt payments, providing a safety buffer.
For a deeper understanding of DSCR and its impact on your investment strategy, visit our comprehensive guide: Understanding Debt Service Coverage Ratio (DSCR) in Real Estate Investing.
Closing Thoughts
Now that you have calculated the DSCR for your property or potential investment, it's time to take action. Ready to expand your portfolio? Explore commercial real estate for sale across the US. If you're looking to sell or lease your property, consider advertising with LoopNet to reach millions of potential buyers and tenants, including 96% of Fortune 1000 companies.
To make even more informed investment decisions, dive deeper into these essential metrics and tools:
By leveraging these tools and LoopNet's extensive network, you'll be well-equipped to make strategic decisions and maximize your commercial real estate investments.
Disclaimer: This page is intended for educational purposes only. The results generated by this calculator are based on user inputs and are not guaranteed to be accurate or indicative of actual future performance. This information is not intended to take the place of financial, tax, or legal advice, nor should it be the only deciding factor in making a business transaction. Each investor is responsible for determining whether an investment is appropriate based on personal insight and financial circumstances
