DCR =

NOI =

ADS =

Often known as DCR, ratio that describes the percentage of income that a lender will require a property to generate that is in addition to basic debt service. Lenders refer to it as a margin of safety.

- DCR: Debt coverage ratio.

- NOI: Net operating income.

- ADS: Annual debt service, which is the monthly payments annualized.

If the debt coverage ratio required by the bank is 1.5 and the debt service on the loan is $700,000, what net operating income is required on the property?

- DCR: 1.5

- ADS: 70,000

Select "=" on NOI row. The net operating income required is $105,000 per year.

DCR

NOI

ADS

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Debt Coverage Ratio

Net Operating Income

Annual Debt Service

Margin of Safety