How do you calculate the DSCR?

The debt service coverage ratio (DSCR) can be calculated using gross rent and PITIA (principal, interest, taxes, insurance, and association fees). Here is the formula for calculating DSCR using gross rent and PITIA:

DSCR = Gross Rent / PITIA

Gross rent is the total amount of rent that a property generates before deducting operating expenses.

PITIA (principal, interest, taxes, insurance, and association fees) is the total amount of debt service that a property owner must pay on a mortgage or other loan. It includes the principal and interest payments on the loan, as well as property taxes, insurance premiums, and association fees (if applicable).

To calculate DSCR using gross rent and PITIA, you will need to know the total gross rent that a property generates and the total PITIA that the property owner must pay.

For example, let's say a property generates $24,000 in gross rent per year and the owner must pay $18,000 in PITIA per year. The DSCR for that property would be calculated as follows:

DSCR = $24,000 / $18,000 = 1.33

This means that the property's gross rent is 1.33 times greater than the owner's PITIA, which indicates that the property generates sufficient cash flow to cover the owner's debt obligations. A DSCR of 1.0 or higher is generally considered to be healthy. A DSCR below 1.0 may indicate that the property is struggling to generate sufficient cash flow to cover the owner's debt payments.