Cash Flow to Debt Ratio

The cash flow to debt ratio divides a borrower's annual operating cash flow by its total debt balance. It shows how many years of cash flow it would take to pay off everything owed. DSCR compares cash flow to one year of payments; this ratio compares it to the whole balance.

On the site's example property, net operating income of about $28,500 against a $375,000 loan gives a ratio of 7.6%. At that pace the income would retire the loan in roughly 13 years if every dollar went to principal and none to interest.

Lenders use it more for companies than for single rentals, where the balance is fixed by the loan-to-value cap. It is the same idea as a debt yield, which some commercial lenders set as a minimum alongside DSCR. See net operating income for what goes into the numerator.

Further reading: Cash Flow to Debt Ratio on Wikipedia.