Real Estate Math

A Wisconsin investor purchases a rental property for $320,000 and finances 80%. The monthly principal and interest payment at 7% for 30 years is approximately $1,704. What is the annual debt coverage ratio if NOI is $28,000?

A1.06
B1.12
C1.14
D1.37✓ Correct

Explanation

Annual debt service = $1,704 × 12 = $20,448. DCR = NOI / Annual debt service = $28,000 / $20,448 = 1.37.

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