Why it matters
DSCR is one of the fastest ways to see whether a rental is carrying its loan or just looking good in a spreadsheet. A DSCR above 1.00x means modeled NOI covers the debt. Below 1.00x means the property does not fully support the payment under those assumptions.
PropLurk take: A lender does not care that the listing says 'great cash flow' if the income cannot cover the payment. DSCR is where the deal has to stand up.
- Annual NOI: $24,000
- Annual debt service: $18,000
Result: $24,000 / $18,000 = 1.33x DSCR
Usually include
- Annual NOI
- Principal and interest payments
- Lender stress assumptions when available
- Replacement reserves if the lender requires them
Do not mix in
- Gross rent as the numerator
- Monthly NOI divided by annual debt service
- Appreciation
- Tax benefits
Common ways investors mess this up
- Using gross rent instead of NOI
- Forgetting to annualize both sides
- Ignoring rate resets
- Assuming every DSCR lender calculates it the same way
How PropLurk uses it
PropLurk keeps DSCR next to cash flow, cap rate, and offer math so you can see whether the return and the financing are telling the same story.
This guide is educational and does not provide investment, lending, tax, legal, or appraisal advice. Verify the specific property, lender, and local rules before making decisions.
Stress-test DSCR before the loan becomes your problem.
PropLurk keeps the definition, formula, assumptions, offer, and decision record connected so the number does not get lost in another spreadsheet.