Real Estate Math
A Colorado investor is considering a property with a $750,000 purchase price, $65,000 NOI, and $45,000 annual debt service. What is the debt coverage ratio (DCR)?
A1.22
B1.44✓ Correct
C1.67
D2.00
Explanation
DCR = NOI / Annual Debt Service = $65,000 / $45,000 = 1.444. Most lenders require a minimum DCR of 1.20–1.25, so 1.44 indicates adequate cash flow to cover debt obligations.
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