If they will do a loan with less than 1, the pricing takes a hit.I've included an example below to help illustrate this.So different lenders have different rates (which do vary even for DSCR loans) but these are factors they all consider.See example below:DSCR < 1Principal + Interest = $1,700Taxes = $350, Insurance = $100, Association Dues = $50Total PITIA = $2200Rent = $2000DSCR = Rent/PITIA = 2000/2200 = 0.91Since the DSCR is 0.91, we know the expenses are greater than the income of the property.DSCR >1Principal + Interest = $1,500Taxes = $250, Insurance = $100, Association Dues = $25Total PITIA = $1875 Rent = $2300DSCR = Rent/PITIA = 2300/1875 = 1.23DSCR lenders generally let you vest either individually or as an LLC.

Quote from @Eric Williams: Let's say a rental property gets 12k in rental income, passive.Cost seg gets 50k, resulting in passive activity loss of around 38k.The amount of passive losses carries from the Sch E to the 8582 to determine the loss allowed.In this case I assume no other passive activities and no active participation exception.In this case the amount paid for the cost seg is worthless and may be for several years, especially considering rent may stay stable while other expenses have not been accounted for which add to the depreciation carryforward and add to the chance of limitation (in this very over simplified example).No losses are allowed on Schedule E, which flows to Schedule 1, to the front page of the 1040.Again, just a simple demonstration of the flow of the return.I just found this spreadsheet to illustrate that as the carryforward progresses, it loses value as the deduction benefits are delayed. 

Asking rents for retail spaces have increased by 3.5% over the past year to a new record high of $24.00/SF.Here are several graphs illustrating the current national commercial retail market in The United States of America:Here is the full USA retail market report for you to review: https://d2saw6je89goi1.cloudfront.net/uploads/digital_asset/file/1170833/United_States-Retail-National-2023-10-02_compressed.pdf Data includes: Sale price per unit distribution, cap rate distribution, cumulative sales volume by year, months to sale, recent significant sales, vacancy rates, market rent per square foot, construction deliveries/demolitions, economy, job growth. population growth, and Los Angeles county sub-market activity.

I've included an example below to help illustrate this.So different lenders have different rates (which do vary even for DSCR loans) but these are factors they all consider.See example below:DSCR < 1Principal + Interest = $1,700Taxes = $350, Insurance = $100, Association Dues = $50Total PITIA = $2200Rent = $2000DSCR = Rent/PITIA = 2000/2200 = 0.91Since the DSCR is 0.91, we know the expenses are greater than the income of the property.DSCR >1Principal + Interest = $1,500Taxes = $250, Insurance = $100, Association Dues = $25Total PITIA = $1875 Rent = $2300DSCR = Rent/PITIA = 2300/1875 = 1.23DSCR lenders generally let you vest either individually or as an LLC.

However, this does not mean that cap rate isn't helpful for residential investors.Cap rate in this context can help an investor compare two different properties that have different profiles and determine which one pays more income relative to the value of the property.Let's compare two properties to illustrate what I mean:1)  This property is available for $329,000, rents for $2,100/mo, has annual taxes of $1,300, annual insurance of $984, an HOA of $35/mo, and is in decent shape, but you want to assume it will take roughly $2,500/yr in maintenance and capital expenses.2) This property is available for $475,000, rents for $2,900/mo, has annual taxes of $1,630, annual insurance of $1,216, an HOA of $50/mo, and you're assuming roughly $3,100/yr in maintenance and capital expenses.It's tough to compare these quickly without calculating a cap rate, which shows which one creates more income relative to the cost of the property.Property 1 Analysis: NOI = $19,996 (annual rents - annual operating expenses).

The rise in second quarter 3-Star absorption suggests that mid-priced assets could lead the beginning of a recovery for these institutional quality assets.Here are several graphs illustrating the current national commercial multifamily market in The United States of America:Here is the full USA multifamily market report for you to review: https://d2saw6je89goi1.cloudfront.net/uploads/digital_asset/file/1170832/United_States-MultiFamily-National-2023-10-02_compressed.pdf Data includes: Sale price per unit distribution, cap rate distribution, cumulative sales volume by year, months to sale, recent significant sales, vacancy rates, market rent per unit, construction deliveries/demolitions, economy, job growth. population growth, and sub-market activity.

Mezzanine and other debt options are available, for a price, and the higher interest payments, together with looming capital requirements from the brands, so-called property improvement plans, or PIPs, may push some owners to sell.Here are several graphs illustrating the current national commercial hospitality market in The United States of America:Here is the full USA hospitality market report for you to review: https://d2saw6je89goi1.cloudfront.net/uploads/digital_asset/file/1170836/United_States-Hospitality-National-2023-10-02_compressed.pdf Data includes: Sale price per key distribution, cap rate distribution, cumulative sales volume by year, months to sale, recent significant sales, occupancy rates, ADR, RevPAR, construction deliveries/demolitions, economy, job growth. population growth, and Los Angeles county sub-market activity.

CoStar is also tracking more than 20 large electric vehicle, battery, and semiconductor plants planning to open across the U.S. during 2024-26, and suppliers to these facilities will likely generate millions of square feet of additional leasing over that period.Here are several graphs illustrating the current national commercial industrial market in The United States of America:Here is the full USA industrial market report for you to review: https://d2saw6je89goi1.cloudfront.net/uploads/digital_asset/file/1170835/United_States-Industrial-National-2023-10-02_compressed.pdf Data includes: Sale price per unit distribution, cap rate distribution, cumulative sales volume by year, months to sale, recent significant sales, vacancy rates, market rent per square foot, construction deliveries/demolitions, economy, job growth. population growth, and Los Angeles county sub-market activity.

But overall, outside a few Sun Belt geographies like Miami and Las Vegas, the office market looks to be a bear market for some time to come.Here are several graphs illustrating the current national commercial office market in The United States of America: Here is the full USA office market report for you to review: https://d2saw6je89goi1.cloudfront.net/uploads/digital_asset/file/1170834/United_States-Office-National-2023-10-02_compressed.pdf Data includes: Sale price per unit distribution, cap rate distribution, cumulative sales volume by year, months to sale, recent significant sales, vacancy rates, market rent per square foot, construction deliveries/demolitions, economy, job growth. population growth, and Los Angeles county sub-market activity.

I disagree with @Carlos Ptriawan on one small detail, but it illustrates how the word itself means different things.