Four Doors. One Hidden Coverage Problem.
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An off-market package of four individually deeded condominiums in a single complex, offered at $345,000. Three units occupied, one three-bedroom vacant. Rent in place of $3,400 a month, with a stabilized figure of $4,850 once the vacant unit leases.
On gross rent it reads as an easy DSCR deal. It is not, and the reason is a line most gross-rent screens never look at.
The question
Does the property support ordinary DSCR financing once HOA dues, taxes, insurance and vacancy are included — or does the gross rent create a misleading first impression?
The deal at a glance
Four individually deeded condos in the same complex. Three occupied; the vacant three-bedroom offered the income upside.
| 1 bed / 1 bath — occupied | $1,000 rent · $300 HOA |
| 2 bed / 2 bath — occupied | $1,100 rent · $350 HOA |
| 2 bed / 2 bath — occupied | $1,300 rent · $350 HOA |
| 3 bed / 2 bath — vacant | $1,450 market estimate · $400 HOA |
| Total | $3,400 current / $4,850 stabilized · $1,400 HOA |
The fixed-expense burden
Before making a mortgage payment, the package carries approximately $2,100 per month in HOA dues and property taxes. That is about 43% of projected stabilized rent — before insurance, vacancy, maintenance or management.
What the fixed costs consume
- 29% — HOA dues as a share of stabilized rent
- $25,200 — annual HOA plus property taxes
- $15,600 — current annual rent left after HOA and taxes
Headline findings
- 0.81 current DSCR — a monthly shortfall of $809 against PITIA plus HOA
- 1.15 stabilized DSCR — still below a 1.20 target after leasing the vacant unit at $1,450
- $1,651 — the vacant-unit rent needed to reach 1.20, about $200 above the market estimate
- 1.09 NOI-based DSCR — before management. Professional management pushes it below 1.00
Illustrative DSCR underwriting
Many residential DSCR programs compare qualifying monthly rent with PITIA: principal, interest, property taxes, insurance and applicable HOA dues. This illustration uses a 1.20 target DSCR.
| Purchase price | $345,000 |
| Down payment | 25% |
| Illustrative loan | $258,750 |
| Amortization | 30 years |
| Illustrative rate | 7.50% |
| Principal & interest | $1,809 / mo |
| Property taxes | $700 / mo |
| Estimated insurance | $300 / mo |
| Combined HOA | $1,400 / mo |
| Total PITIA plus HOA | $4,209 / mo |
What each rent scenario produces
- Current occupancy, $3,400 — DSCR 0.81, a shortfall of $809 a month.
- Stabilized at $1,450 on the vacant unit, $4,850 — DSCR 1.15, a surplus of $641.
- Rent required for a 1.20 DSCR, $5,051 — a surplus of $842.
- Rent required for a 1.25 DSCR, $5,261 — a surplus of $1,052.
At current occupancy, rent falls about $809 short of the illustrated monthly housing expense. Leasing the vacant unit at $1,450 improves coverage to roughly 1.15, still below a 1.20 target. To reach 1.20 under these assumptions the vacant unit would need to produce about $1,651 per month. The result is highly sensitive to the actual rate, the insurance requirement and the lender’s treatment of HOA dues.
Leverage and underwriting structure
Coverage by down payment
- 20% down — $276,000 loan, stabilized DSCR 1.12. Below target.
- 25% down — $258,750 loan, stabilized DSCR 1.15. Below target.
- 30% down — $241,500 loan, stabilized DSCR 1.19. Near target.
Traditional NOI view
- Stabilized gross rent — $58,200
- Less HOA dues — ($16,800)
- Less property taxes — ($8,400)
- Less estimated insurance — ($3,600)
- Less 5% vacancy — ($2,910)
- Less 5% maintenance — ($2,910)
- Estimated NOI before management — $23,580
- Annual principal & interest — $21,708
- Illustrative NOI-based DSCR — 1.09
Increasing the down payment improves coverage, but the package remains close to the line. Adding professional management would push the NOI-based ratio below 1.00. The lender’s calculation method and the financing structure are decisive here in a way they are not on a single-family rental.
Decision framework
What could make the transaction work
- A larger down payment that lowers monthly debt service.
- A lower verified interest rate, or an interest-only structure.
- Documented market rent above the preliminary $1,450 estimate.
- A low separate insurance premium, if the HOA master policy is adequate.
- A lender program allowing DSCR below 1.20 with reserves and pricing adjustments.
Items to verify before financing
- Unit numbers, current leases, payment history and a complete rent roll.
- Appraisal-supported market rent for the vacant unit.
- HOA budget, reserves, delinquency, litigation and pending assessments.
- Master insurance coverage and the required borrower policy premium.
- Four individual condos versus one blanket portfolio loan; condo eligibility and concentration rules.
The bottom line
Door count is not cash flow. Fixed expenses can overwhelm the apparent benefit of owning multiple units. This was not necessarily a bad acquisition, but it was not the straightforward cash-flow opportunity the gross-rent figure suggested. At the offered price, ordinary DSCR financing appeared weak at current occupancy and marginal after stabilization. The investor’s result depended on leverage, verified market rent, insurance, HOA review and the lender’s calculation method.
Underwrite the deal before you chase the doors.
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Method and assumptions
- Property figures were supplied for the case study. No address, unit numbers or ownership details are published.
- The $1,450 vacant-unit rent is a preliminary market estimate based on a same-complex listing reviewed in September 2026, not an appraisal-supported figure.
- The 7.50% rate, the $300 monthly insurance and the 25% down payment are illustrative inputs chosen to show the mechanics, not a quote.
- DSCR methodology varies by lender. Some count full HOA dues in PITIA, some count a portion, and some underwrite to NOI instead. That choice alone moves this deal across the 1.20 line.
- Run your own version of these numbers in the DSCR Calculator, which reports both the lender DSCR and the conservative NOI-based figure.
Run the numbers before you write the offer
Put the rent, taxes, insurance and HOA into the calculator and see both DSCR figures on your own deal. If you want a second set of eyes — rent roll, HOA review, exit pricing — send it over.
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Illustrative case study only. This is not a commitment to lend or a guarantee of financing. Rates, terms, leverage and eligibility are subject to credit approval, appraisal, property review, lender guidelines and final underwriting. Investment-property financing is subject to underwriting, lender approval, appraisal or alternative valuation, title work, and a complete borrower file.