If you break apart mortgage payments by principal, interest and escrow, the DSCR only reflects principal and interest in the equation. So, to my understanding this does not reflect an accurate figure unless it includes escrow.
Can this be changed?? Also, the transfers in general are clunky without the ability to have accounts, fixed assets and balance sheet accounting.
Is this on the horizon??
@elliot_rivera Good questions. For DSCR, most investors we’ve spoken with leave escrows out of the equation. The ratio is really meant to be an indicator of how well existing cash flow covers the servicing of the loan, which is typically assumed to be interest and principal only. Insurance, property taxes, HOA dues and anything else that a lender may choose to impound are, at the end of the day, still regular operating expenses.
Notably, if you were to refinance an existing mortgage and the new lender had a DSCR requirement, they would size your loan based on expected DSCR without escrows.
Re balance sheet accounting, this is something that’s been discussed elsewhere in the Wishlist and is on our radar for the future.