A DSCR loan measures whether a property's rental income covers its mortgage payment. A Phoenix property with a DSCR of 1.3 to 1.6 means rent exceeds the mortgage by 20 to 60 percent, showing the property can handle its debt and still generate cash.
Are you familiar with the term debt service coverage ratio? No. If you know about a DSCR loan, a DSCR loan takes our potential cash flow compared to our mortgage and comes up with a ratio, which means that if I pay $1,000 a month in a mortgage, I need to make $1,200 a month in rent or cash flow. And so on a property like what we're looking at right here in Phoenix, we can rent it out. Blake ran the numbers on it. We can rent it out for I think it was 1.3 to 1.6 DSCR. So he can cash flow it and cover that cash flow or cover that debt service number by, by 20 to 40, 20 to 60%.
