A Tale Of Two Deals

Sharing a business experience relating to two smaller, rehabbed, occupied multifamily deals in different markets. And their varying financing situations. Plus, how the current environment has complicated doing certain deals.

Debt Service Coverage Ratio (DSCR) formula:
For example, if a rental property is generating an annual NOI of $6,500 and the annual mortgage payment is $4,700 (principal and interest), the debt service coverage ratio would be: DSCR = NOI / Debt Service. $6,500 NOI / $4,700 Debt Service = 1.38. Most banks require a DSCR of 1.2 minimum.

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