Quick Answer
Portfolio-level DSCR aggregates all property NOI and debt service into a single coverage ratio, allowing strong properties to support weaker ones in blanket or cross-collateralized loans. Most portfolio lenders require minimum 1.20-1.25 aggregate DSCR, but individual property performance matters for exit flexibility. Use portfolio-level modeling to optimize your borrowing capacity across multiple rentals.
Key Takeaways
- Aggregate DSCR = Total Portfolio NOI ÷ Total Debt Service—individual property ratios matter less than the combined figure
- Cross-collateralization allows strong properties to cover weak ones, but requires all-or-nothing exit strategies
- Most lenders require 1.20-1.25 minimum portfolio DSCR for blanket loans vs. 1.0-1.25 for individual property loans
- Separate loans provide flexibility to sell individually—portfolio loans may offer better pricing but limit exit options
- Track each property’s contribution to portfolio DSCR to identify which assets strengthen or weaken your overall position
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.