Which measure assesses the ratio of a property's income to its total debt?

The Debt Service Coverage Ratio (DSCR) is the correct measure for assessing the relationship between a property's income and its total debt. It specifically calculates how easily a property can cover its debt obligations, indicating the financial health and cash flow position of the property.

To understand the significance of DSCR, it is important to recognize that it is calculated by dividing the net operating income (NOI) of the property by the total debt service (the total amount of principal and interest payments due over a specific period). A DSCR greater than 1 suggests that the property generates sufficient income to cover its debt obligations, while a DSCR below 1 indicates potential cash flow issues.

This measure is crucial for lenders and investors because it provides insights into the property's ability to generate enough income to satisfy its debt obligations, which is especially important in evaluating the risk associated with financing or investing in real estate.

In contrast, Loan to Value (LTV) measures the ratio of a loan amount to the appraised value of the property, indicating how much leverage is being used. Return on Investment (ROI) focuses on the profitability of an investment relative to its cost, while the Capitalization Rate (Cap Rate) assesses a property's potential return on investment based on its net