How to cash flow using DSCR?

[Raj Patel]

With conventional mortgage rates hovering around 7% for 30 years… cash flow basically happens at 6.5% cap rate and above. If you don’t care about cash flow year 1 you can go down as low as 6% cap rate and still break even. This assumes 25% down. 

Now in markets like Manhattan it’s hard to find a seller willing to go to 6.5% or above in areas outside Harlem. But in other markets in NYC/N-NJ it’s doable. 

DSCR starts at 8% for borrowers with strong credit scores (800+ which I have btw) but at 8% at 30 years 75% LTV you would need to buy at 7% cap rate to just about break even.

This becomes much harder to find properties. Also the DSCR ratio at 7% cap rate is barely above 1. Would it even be approved?

I’m so lost. What  am I not seeing? 

I see the advantages with DSCR… in that unlike conventional mortgages which have a 10 property cap, and it becomes exponentially harder to purchase each time… DSCR allows you to build a portfolio.

But the math doesn’t seem to work at all. 

Can anyone help? 

Thanks! 

Let's assume the property has $313,000 in NOI

Valued at 

6.26 M 5% cap 
loan $4,695,000

P+I annual= $413,400> NOI

5.216M 6% cap 

loan $3,912,000

P+I annual= 344,460 > NOI

4.47M 7% cap 

loan $3,352,500

P+I annual= $294,708 <NOI cash flow +