Tommy Dobczyk shows how to hit a 1.8 debt service coverage ratio on an $18 million property by shifting $1 million in annual operating costs to the tenant through a triple-net lease. This move raises NOI by roughly $200K monthly, easily covering the $120K monthly debt service.
Chapters
Are you in the deal room? Again, see if the— if this was assumed, how much income would I need to create for a 1.8 DSCR? I'm going to need to add another $25,000 a month. So what do I do? Probably throw more events, monthly events up to $45,000, $50,000 a month. That'd be an easy way to do it right there. Just to also add 10% more to the club, Club Scottsdale, $7K more for events, or— and then $7K more for cars, right? Add in some more cars. The DSCR lender sees this and says that that if I have an NOI of $2.8— $2.3 million a month, that my bank annual debt service is, is in good hands, right? So what I want to do is go down a little bit more. We're going to take a look. Keep going, keep going, keep going, keep going. I said build this out into a P&L so I can see all the assumptions. So price, $18 million. First loan, $9 million. Second loan, $9 million. Debt service, $120,000. Projected income, $280,000. Then 32% of gross income could be used for operating expenses. Everything rounded to the nearest dollar. This is how it looks. Keep going down. These are operating expenses. Look at the operating expenses. I got a property tax of 8%, insurance at 3%, utilities at 4%. You're going too fast. Repairs, payroll, marketing and events, admin, capital reserves. That's how it came up to the 32%, right? So what I can do is I can put a lot of this back on Club Scotsdale and say that they have to come up with the net on all that. That's called a triple net lease. So I could triple net lease them on it, right? So get rid of— if I can eliminate that million dollars out of my annual, NOI goes up, right? So let's take a look at it. Go down to the NOI. So what our net operating income would be, about $200,000 a month extra, which is how we're able to cover our mortgages.
