What Is a Good DSCR for a Rental Property?

Run the last division and the ratio falls out: 12,384 divided by 12,773.81 is 0.9695, which the sheet reports as 0.97. The property earns about 97 cents for every dollar of mortgage payment. The missing three cents is the -$32.48 a month in F20, and the reason the annual figure is -$389.81 rather than a round number is that the rent is not the only thing that does not divide evenly.

Why does a 6.2% cap rate deal still fail the DSCR test?

Because cap rate ignores the loan entirely. It divides NOI by price, so two buyers paying wildly different financing get the identical cap rate on the same building.

In this deal the loan and the down payment add to a $200,000 purchase (F5 plus F6), and $12,384 of NOI against $200,000 is the 6.2% in F21. That number is a property statistic. DSCR is a financing statistic: it asks whether this particular loan, at this particular payment, fits inside that same NOI — and $12,773.81 of annual debt service does not fit inside $12,384 of income. Same building, same rent, same year; one metric says respectable and the other says short.

The 1% rule in F24 makes the same point from the other direction. The rule of thumb wants monthly rent at or above 1% of the purchase price, and this deal lands at 0.9%. It is a screening shortcut rather than a law, and in a lot of 2026 markets almost nothing clears it — but here it flagged the same weakness the DSCR did, one line earlier and with far less arithmetic.

What rent would this deal need to reach 1.15?

About $2,002 a month instead of $1,800, working backwards from the regulated 1.15 floor through operating expenses and vacancy to the rent line.

Nothing in this step is a benchmark or an estimate — it is the same chain of formulas run in reverse from two figures already in the table. Operating expenses are not stated as their own cell, but they are recoverable: effective gross income minus NOI, or 20,520 – 12,384 = 8,136.

REQUIRED NOI    = annual debt service x target DSCR
                = 12,773.81 x 1.15
                = 14,689.88          (a gap of 2,305.88 over the seeded 12,384)

REQUIRED EGI    = required NOI + operating expenses
                = 14,689.88 + 8,136
                = 22,825.88

REQUIRED GROSS  = required EGI / (1 - 0.05 vacancy)
                = 22,825.88 / 0.95
                = 24,027.24 a year

REQUIRED RENT   = 24,027.24 / 12
                = 2,002.27 a month   (vs 1,800 seeded)

At a 1.25 target the same chain gives 2,114.32 a month.

One honest caveat on that arithmetic: it holds operating expenses flat at $8,136. In a real sheet the management fee is a percentage of collected income, so raising the rent raises that line slightly and the true required rent sits a little above $2,002. The analyzer recalculates it properly because management is entered as a percentage; the version above is the hand-arithmetic that shows you where the answer comes from.

Notice how far that is from the break-even rent in F25. $1,843.90 is the rent at which cash flow reaches zero — the 1.0 line, roughly. Getting from break-even to a 1.15 lender cushion costs another $158 a month on top of that, which is the part people miss when they say a deal “almost works.”

What actually moves DSCR?

Four inputs, and only two of them are under your control on any given Tuesday: rent, operating expenses, the loan balance and the interest rate.

• Rent and vacancy move the top of the fraction. Every dollar of rent is worth 95 cents of EGI at a 5% vacancy assumption, and less than that after the expense ratio takes its share.
• Operating expenses move the top of the fraction the other way, dollar for dollar. In this deal they eat $8,136 of $20,520 — about 40 cents of every collected dollar, before the mortgage.
• Loan amount moves the bottom. A smaller loan means a smaller PMT, so a larger down payment mechanically raises DSCR without changing anything about the building.
• Interest rate and term move the bottom hardest, because PMT is not linear. The same $160,000 at a different rate produces a different F8, and F8 times twelve is the entire denominator.

This is the whole argument for running the ratio on a sheet rather than in your head. Four inputs and a PMT function is more arithmetic than anyone does accurately standing in a driveway, and the answer changes sign on differences of thirty dollars a month.

Common questions

Run it on your own numbers

The arithmetic above is the part that gets skipped, so it is the part this site publishes for free. The free rental property deal analyzer runs the whole chain — vacancy, NOI, PMT, DSCR, cap rate and break-even rent — from six inputs, and the seeded figures above are what it loads with, so you can reproduce every number on this page before you type your own.

The Rental Property Deal Analyzer workbook is the version you keep — Google Sheets and Excel in one purchase, $19.99, every formula machine-checked before it ships. Fifteen figures in it were rebuilt in code from the same seed inputs and compared line by line; one disagreement would have stopped the release, and an excerpt of that ledger sits on the product page.

Rental Property Deal Analyzer

Run the numbers from this guide yourself — free, in the browser, no sign-up. Keep the full workbook if it earns its place.

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Educational estimates only. These calculators and workbooks do the arithmetic on the figures you enter; they are general-purpose tools, not financial, investment, tax, legal, lending, insurance or construction advice, and no result is a quote, an offer, or a guarantee of any outcome. Results depend entirely on your inputs and assumptions. Verify anything you intend to rely on with a licensed professional — a CPA, attorney, lender, licensed contractor, or your own agent. WorkbookBarn and Marcos Gil accept no liability for decisions made using these tools. Marcos Gil is a licensed Kentucky real estate agent (License No. 296259) and is not a lender, CPA or attorney.