Grow your real estate investing business with the most competitive and transparent private lender for bridge loans (hard money, fix & flip, rehab, ground up construction), DSCR rental loans.

Private Lender for DSCR Loans and Fix & Flip Loans | OfferMarket

Private Lender for DSCR Loans and Fix & Flip Loans

Revenue - Operating Expenses

 

Net Operating Income is used to calculate capitalization rate ("cap rate"), a fundamental quantitative valuation metric for real estate investing.

 

Depending on the type of real estate, revenue can include: 

 

- Rental revenue
- Service fees
- Parking revenue
- Vending machine revenue

 

Operating expenses include:

 

- property management
- vacancy
- uncollectible rent revenue
- insurance
- property taxes
- maintenance

Net Operating Income ("NOI") = Revenue - Operating Expenses. Learn how to calculate NOI.

NOI - Net Operating Income - Real Estate Glossary - OfferMarket

What is Net Operating Income ("NOI") in real estate?

## What does DSCR mean?

 

**DSCR** means *Debt Service Coverage Ratio*. DSCR is a ratio calculated by taking a rental property's operating income and dividing it by the cost of a loan. DSCR is a metric private lenders and commercial lenders use to determine the amount of a loan they are willing to provide for a single family or multi-family rental property.

 

## How do you calculate debt service coverage ratio?

 

Use our handy [DSCR Calculator](https://www.offermarket.us/tools/dscr-calculator) to quickly and accurately determine DSCR and maximum loan amount!

 

## Method 1: Net Operating Income ÷ Debt Service

 

### Key:

 

**Net Operating Income ("NOI")** = Rent Revenue - Taxes - Insurance - HOA Dues - Maintenance - Property Management

 

Debt Service = Mortgage Principal + Mortgage Interest

 

A DSCR of 1.0 means the property generates exactly net operating income to cover the cost of mortgage payments. 

 

## Method 2: Adjusted NOI ÷ PITIA

 

**Adjusted NOI**: Rent - Maintenance - Utilities - Property Management 

 

**PITIA**: Mortgage Principal + Mortgage Interest + Taxes + Insurance + HOA Dues

 

This second method tends to result in slightly lower DSCR, so it's important to understand how your private lender calculates DSCR.

 

## DSCR Example

 

Let's say you own a rental property that generates $30,000 in NOI and the monthly mortgage payments (principal and interest) are $2,000 or $24,000 annually. That means the property has a DSCR of 1.25.

 

## What debt service coverage ratio do private lenders require?

 

Private lenders typically require a DSCR of 1.2 or higher to make sure the income generated by the property can conservatively repay the loan. 

 

## How does DSCR relate to LTV?

 

DSCR varies based on the target [LTV (loan-to-value)](https://www.offermarket.us/real-estate-glossary/ltv) because the amount of the loan impacts the debt service component of the ratio.

 

## Learn about Private Lenders

 

Read [The Ultimate Guide To Real Estate Private Lenders](https://www.offermarket.us/blog/real-estate-private-lenders) to learn everything there is to know about working with private lenders to grow your real estate investing business.

 

## Looking for a Private Lender for Bridge Loans and DSCR Rental Loans?

 

 Get approved by [OfferMarket Capital](https://www.offermarket.us/capital), our private lending division.

Debt Service Coverage Ratio ("DSCR") = NOI ÷ (Mortgage + Taxes + Insurance). Learn how to calculate  DSCR.

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Debt Service Coverage Ratio (DSCR) - OfferMarket

What is Debt Service Coverage Ratio ("DSCR") in real estate?

A modification or revision to the executed [Purchase And Sale Agreement](https://www.offermarket.us/real-estate-glossary/purchase-and-sale-agreement) (the "Agreement") where the Parties (Buyer and Seller) agree to change one or more terms of the sale. This is common after an inspection or in the event there is a delay that prevents the transaction from closing by the original Close By date.

An addendum is a modification or revision to the executed Purchase And Sale Agreement (the "Agreement") where the Parties (Buyer and Seller) agree to change one or more terms of the sale.

Addendum - Real Estate Glossary - OfferMarket

What is an Addendum in Real Estate?

The Contract Of Sale is the agreement between the Seller and Buyer wherein the terms of the sale of real property are established. Also commonly referred to as a [Purchase And Sale Agreement](https://www.offermarket.us/real-estate-glossary/purchase-and-sale-agreement).

The Contract Of Sale is the agreement between the Seller and Buyer wherein real property is being sold. Also commonly referred to as a Purchase And Sale Agreement.

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Contract Of Sale - Real Estate Glossary - OfferMarket

What is a Contract Of Sale (COS) in real estate?

An individual training to become a licensed real estate appraiser who has completed at least 75 hours of education.

 

## Related terms
- [Certified General Appraiser](https://www.offermarket.us/real-estate-glossary/certified-general-appraiser)
- [Certified Residential Appraiser](https://www.offermarket.us/real-estate-glossary/certified-residential-appraiser)
- [Licensed Residential Appraiser](https://www.offermarket.us/real-estate-glossary/licensed-residential-appraiser)

A Trainee Appraiser is an individual training to become a licensed real estate appraiser who has completed at least 75 hours of education.

Trainee Appraiser - Real Estate Glossary - OfferMarket

What is a Trainee Appraiser in real estate?

A real estate appraisal is the process of developing an opinion of value for real property. Appraisals are performed by licensed real estate appraisers.

 

Appraisals differ from Broker Price Opinion (BPO) and Real Estate Valuation in that appraisals can only be performed by licensed real estate appraisers.

 

You can receive a [free real estate valuation estimate](https://www.offermarket.us/tools/free-real-estate-valuation), compliments of OfferMarket.

Real estate appraisal is the process of developing an opinion of value for real property. Appraisals are performed by licensed real estate appraisers.

Appraisal - Real Estate Glossary - OfferMarket

What is a real estate Appraisal?

An appraiser is a licensed real estate professional who has completed at least 150 hours of courses and accumulated 1,000 hours of experience. No college degree is required.


 

## Related terms
- [Certified General Appraiser](https://www.offermarket.us/real-estate-glossary/certified-general-appraiser)
- [Certified Residential Appraiser](https://www.offermarket.us/real-estate-glossary/certified-residential-appraiser)
- [Trainee Appraiser](https://www.offermarket.us/real-estate-glossary/trainee-appraiser)

A Licensed Residential Appraiser is a licensed real estate professional who has completed at least 150 hours of courses and accumulated 1,000 hours of experience. No college degree is required.