Youtor
DSCR Calculator
>> YOUR LINK HERE: ___ http://youtube.com/watch?v=ow9u3PL0IKQ
#dscrloans #rentalproperty #realestateinvesting • DSCR stands for Debt Service Coverage Ratio. It's just a fancy way of saying cash flow, or a cash flow metric. • DSCR = Monthly Rent ÷ Monthly Mortgage Payment • Monthly Mortgage Payment = Principal + Interest + Taxes + Insurance + Association Dues • To calculate DSCR, we take our monthly rent that our rental property generates and divide that by the monthly mortgage payment. • The mortgage payment includes Principal, Interest, Taxes, Insurance and Association dues ( PITIA or PITI ) • Let's take a look at an example: • Transaction type: Purchase • Purchase price: $200,000 • Monthly rent (lower of actual or appraisal opinion): $2,000 • Annual taxes: $2,000 • Annual insurance: $1,000 • HOA: $0 • Interest rate: 6.25% • Structure: 30 year term, fixed rate, fully amortizing • Monthly payment (PITIA): $1,235.15 • DSCR = $2,000 ÷ $1,235.15 • DSCR = 1.62 • Minimum DSCR varies by DSCR lender and the guidelines from the institutional investors that buy DSCR loans. • At OfferMarket, the minimum DSCR in our core program is 1.0. • DSCR less than 1 👉 rental property generates losses • DSCR of 1.0 👉 rental property operates at breakeven • DSCR greater than 1.0 👉 rental property generates profit (cash flow) • Therefore, the higher the DSCR, the safer the investment. • The industry standard DSCR calculation for 1-4 unit rental properties (Rent ÷ PITIA) does not factor in property management fees, maintenance fees, admin fees or any other fees for that matter. So, if you want to be prepared to handle these additional costs (which are very real), you're going to want your DSCR to be well above 1.0 in order to build up your cash reserves. • Think about it like this, if you have a rental property with a DSCR of 1.0, earning you $0 each month, and then your roof needs to be replaced, that will be a tough situation to navigate -- financially and mentally as a real estate investor owning an asset that doesn't produce cash flow. • If, however, your rental property has a DSCR of 1.43 and generates $1,000 per month of free cash flow, your bank account is growing each and every month. When the inevitable maintenance call comes in and you need to replace the refrigerator for $1,000, that's a lot easier to stomach since the cost will be recouped in the very next month. • Give our industry-leading DSCR calculator a try and let us know what you think! https://www.offermarket.us/blog/dscr-...
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