Property Management
In Minnesota, an income-producing property's 'debt service coverage ratio' (DSCR) of 1.0 means:
AThe property generates twice the income needed to cover the mortgage
BThe property's NOI exactly equals the annual mortgage payments, with no surplus income✓ Correct
CThe property is generating a 10% return on investment
DThe property has no debt
Explanation
A DSCR of 1.0 means the property's NOI exactly equals the annual debt service (mortgage payments). There is no cushion—if income falls slightly, the owner cannot cover the mortgage from property income alone. Lenders in Minnesota typically require a DSCR of at least 1.20-1.25 for commercial loans.
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