EBITDA

EBITDA is a company's earnings before interest, taxes, depreciation and amortization. Corporate lenders divide it by annual debt service to get a business DSCR. For a single rental property, net operating income plays the same part.

Adding back depreciation and amortization removes non-cash charges, and leaving out interest shows income before any lender is paid. That makes EBITDA a rough measure of the cash a business has available to cover its loans. Some lenders subtract capital spending first and call the result EBITDA less capex.

Investors meet EBITDA when a property is owned inside an operating business, such as a hotel, a self-storage facility or a short-term rental company. For an ordinary long-term rental, a residential DSCR lender skips it entirely and divides gross rent by PITIA.

Further reading: EBITDA on Wikipedia.