Real estate & rental
Real Estate Debt Service Coverage Calculator
Whether a property's income covers its debt, and how much headroom there is before it does not.
Result
An arithmetic tool, not investment advice. Property returns depend on the local market, the condition of the building, financing terms and tax position, none of which a calculator can see. Verify the income and expense figures against actual statements rather than a seller's projection. Break-even occupancy is the more useful figure for judging risk. A property needing 88% occupancy to break even has almost no margin in a soft market, whatever its DSCR looks like at full occupancy.
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About this calculator
What does break-even occupancy tell me?
How much vacancy the property can take before it stops covering its costs. Below about 80% it is comfortable; above 90% a single long vacancy causes real trouble.
Should capital expenditure be included?
Not in the conventional DSCR, but you should know the figure. A property with a 1.3 DSCR and a roof due next year has less cushion than the ratio suggests.
The formula
DSCR = NOI / annual debt service; break-even occupancy = (expenses + debt service) / gross rent
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