A fixed, fully amortizing loan removes rate-reset and balloon risk. Coverage still depends on rent actually collected from the tenant.
The policy described in the research
Edition 1.0 describes a strict debt policy for its planning model: fixed rate for the entire loan life, fully amortizing over the contractual life, no interest-only or balloon dependence, and per-property collateral without blanket liens or cross-default. Final financing terms are not arranged and may differ.
Coverage is the real test
Debt-service coverage (NOI ÷ annual debt service) depends on NOI, and NOI depends on the tenant paying. A 20% gross-rent loss in one research illustration reduced property coverage materially before legal, vacancy and replacement costs. A fixed coupon does not change that arithmetic.
- Report senior and all-in coverage, including any seller note
- Stress loss of the largest operator plus slower re-leasing
- Hold reserves that are actual cash, not uncalled commitments
Try the arithmetic
Use the generic loan and DSCR calculator in Tools to see how price, leverage, rate and amortization interact. It is educational and does not model the fund.