Investor Encyclopedia

DSCR

DSCR: a practical Canadian real estate investor guide to definition, deal math, underwriting use, common traps, and Realist.ca implementation.

Definition

Debt service coverage ratio is NOI divided by annual debt service. It measures whether the property income can carry the loan before investor distributions.

Formula

DSCR = net operating income / annual debt service.

Example

If NOI is $180,000 and annual debt service is $150,000, DSCR is 1.20x. That is thin if taxes, vacancy, or renewal rates move against you.

Why It Matters

DSCR changes what a disciplined buyer can pay, how much debt the asset can safely carry, and whether the return is coming from operations or fragile assumptions.

Investor Interpretation

Debt should make a solid deal more efficient, not hide a weak one. If the asset fails unlevered, leverage usually makes the failure arrive faster.

Realist Tie-In

Realist.ca can make DSCR searchable as an encyclopedia entry, link it to property underwriting, and show it beside listings, saved analyses, market pages, and investor lead magnets.