The implications of Debt Service Coverage Ratio (DSCR) Covenants in a rising interest rate environment.
The moral of the story: even if you can get a loan on that investment property, make sure you can maintain your bank requirements during your ownership. Especially when the rate resets.
You want to make sure that you have a business plan with each property that mitigates your risk given likely scenarios during your hold period.
If the numbers are tight, but it’s a really great property, put more money down if you can in order to give yourself more cushion above the usual bank minimum DSCR of 1.2 to 1.25.
Do you get something of value out of these videos? If you do, be sure to register for our next Multifamily Masterminds event on March 2nd! You will have the chance to network with 75 other active investors and learn from the best real estate minds in our market! Link below!
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Matthew Drouin is a full time real estate investor and REALTOR with 12 years of acquisition, disposition, development and management experience in Rochester, NY.