What does DCR stand for?
DCR (debt-coverage-ratio) is the ratio of a property’s net operating income (income after expenses but before debt service) to the annual debt payments due on the loan. For example, a property with an NOI of $100,000 and annual debt payments totaling $80,000 would produce a DCR of 1.25 ($100,000/$80,000). This is the ratio that Lenders use to determine whether a
property can produce enough income to support the underlying loan placed on the property. Higher DCR is better from the lenders perspective and is a ratio that is predominantly used in 5 units and up properties (not plexes).
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