Why this scenario matters
DSCR lending decisions often hinge on small assumption changes. A pre-screen model reduces wasted applications and helps you negotiate from a stronger position.
Baseline modeling framework
- Start with conservative effective rent, not optimistic pro-forma rent.
- Include vacancy, management, maintenance, tax, insurance, and HOA when applicable.
- Run at least three rate scenarios and two vacancy scenarios.
- Verify lender overlays before committing capital.
Practical checklist
- Export your assumptions before every lender call.
- Keep a stress-case DSCR threshold of at least 1.15 for downside resilience.
- Compare payment structure, not just headline rate.
Related guides
FAQ
Q: How do I calculate portfolio DSCR? A: Sum all property NOI, sum all property debt service, then divide total NOI by total debt service. Individual property DSCRs don’t matter as much as the aggregate.
Q: Can strong properties cover weak ones? A: Yes, in a blanket or portfolio loan. Cross-collateralization allows excess coverage from one property to support weaker performers.
Q: Should I keep properties separate or combine them? A: Separate loans provide flexibility to sell individually. Portfolio loans may offer better pricing but require all-or-nothing exit strategies.
Next Step
Use the DSCR Calculator for each property, then aggregate your results for portfolio-level planning.