Debt Service Coverage Ratio (DSCR) Explained [Real Estate]

Debt Service Coverage Ratio (DSCR) Explained [Real Estate] // The debt service coverage ratio is a very simple formula, but this one metric can have some really big impacts on commercial real estate investors.

So whether you want to make sure you can talk through this concept in an interview, or if you’re just trying to understand this metric when doing your own deals, this video walks through what the debt service coverage ratio is, how this is used within the commercial real estate industry, and exactly when this comes into play for a real estate investor.

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🕒 Timestamps 🕒
0:00 Introduction
0:47 Defining The DSCR
2:12 Loan Sizing
3:54 Why You NEED To Track This
5:29 Refinance Implications
7:08 The Debt Funding Gap

#commercialrealestate #realestateinvesting

*Nothing in this video should be construed as tax, legal, accounting, valuation, or financial advice or recommendation. All information in this video is intended solely for educational purposes, and you are advised to consult with your own personal professional advisors regarding your personal investment decisions.

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Research and articles referenced in this video:

[BreakIntoCRE]

What other debt-related topics would you like to see covered in more detail in a future video on the channel?

[charlesmungan]

Very clear and easy to follow, thank you

[OrionRoss-pt]

Would like to know about current loan modifications banks are making to kick the can down the road. Also interested where the distress is in different re asset classes!

I’d like to know the amount of loan mature each month over the next few years and where the opportunity lies for investors.

Enjoy your content, been watching for a few year out of Santa Barbara.

[brianwise]

Hey Justin, always great content. Do you have or ever thought about a loan comparison model with maybe three or four loan options to see which loans would fit best for a borrower? Sometimes lenders can have a low interest rate and seem like a better option but the terms might make it more expensive and another could have a little higher rate but terms are better which might make for a better loan.