@David Hanson i often hear people looking at the spread between the mortgage rate and cap rate (for instance in Toronto a 5 year fixed may be 2.7% and a cap rate could be 4.8%) and immediately thinking its a cashflow deal if the number is positive. This is misleading and would only apply to interest only loans...as a result the rates cannot be looked at as if they were an interest only loan. In terms of DSCR, 1.00 is typically not acceptable to traditional lending institutions. In Canada, many lenders need >1.25. I would contact the underwriter/mortgage broker.
Lastly, I would recommend that you add a management figure (typically 4% of NOI for apartments), and a R&M (repair and maintenance) figure when calculating NOI...and by extension a 'cap rate'. Many investors overlook these items and find out the hard way once the building is professionally underwritten and the lender tells you what the real cap is. They may even include capex reserve ($250 per unit up here)...but I know it is a contentious topic--whether capex reserve is below or above the NOI line.
