Hit a DSCR of 1.25 on my first small apartment deal, just barely squeaked by

Ngl I almost passed on this 6 unit in Cleveland because the numbers were so tight. Then I ran it again with actual rents and the DSCR came to exactly 1.25, which was the lender's minimum. Has anyone else cut it that close and still closed?

2 comments

2 Comments

abbyd368d ago

Oh man, don't get too excited about that 1.25. Lenders usually quote that as a minimum but they actually want something higher after they add in their own vacancy and expense assumptions. I've seen deals come back at 1.15 after underwriting because they bump vacancy to 10% and cap management fees differently. You might need to negotiate hard or bring more cash to closing.

carr.xena8d ago

See it a bit different @abbyd36... some lenders actually stick with that 1.25 if you push back.