06/14/2026
Most passive investors evaluate multifamily deals on projected IRR.
The number that actually protects your downside? Debt service coverage ratio.
And most sponsors hope you don't ask about it.
DSCR measures whether a property's net operating income can cover its debt payments with margin to spare. Think of it as the financial cushion between your investment and trouble.
A 1.25 DSCR means the property generates 25% more income than required to service debt—25% breathing room when things don't go exactly as planned.
Below 1.20, you're one bad quarter from cash flow pressure. One unexpected expense spike, one seasonal occupancy dip, and suddenly the margins disappear.
Above 1.30, you have real downside protection when occupancy dips or expenses spike unexpectedly.
This is the number that determines whether an asset can weather stress without requiring additional capital calls from investors.
It's the difference between losing sleep over market conditions and knowing your investment has built-in resilience.
At Axxis, we structure deals with conservative DSCR targets because we invest capital we steward as our own. If a property can't generate comfortable debt coverage, it doesn't meet our standard—no matter how attractive the projected returns look on paper.
The standard never moves.
What's the minimum DSCR you'd require before investing in a deal? Drop your threshold in the comments.
