Real Estate Math
An investor buys a Texas property for $500,000, puts 20% down, and finances the rest at 5.5% for 20 years. If the monthly payment (P&I) is approximately $2,750, what is the annual debt coverage if the NOI is $45,000?
A1.36✓ Correct
B1.50
C1.25
D0.92
Explanation
Annual debt service = $2,750 × 12 = $33,000. DSCR = NOI / Debt Service = $45,000 / $33,000 = 1.364 ≈ 1.36. This exceeds most lenders' minimum DSCR requirement of 1.20–1.25.
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