Look for rate, amortization, interest-only period, maturity, extension fees, covenants, reserves, prepayment penalties, and rate caps.
Plain-English term
Debt service
The required loan payments the property has to survive.
Definition that survives review
Debt service is the scheduled principal and interest owed to the lender, usually measured monthly or annually. In a real review, translate the term into the cash flow, priority, deadline, tax treatment, status test, or control right it changes.
Use it to translate loan terms into monthly and annual pressure on the property. If you cannot point to the exact document or calculation behind it, you have recognized the vocabulary but not yet understood the deal.
Why it matters
Debt is not a line item you negotiate with after closing. The lender gets paid before the investor gets impressed. This is why the term is not finished until you know who calculated it, what period it covers, and what happens if the friendlier definition is wrong.
A useful glossary entry should show where the word appears, what input changes it, and which connected term changes the answer next: DSCR, NOI, Rate cap.
How to use it in diligence
Principal + interest payments = debt service
$48,000 per month of loan payments is $576,000 of annual debt service before the deal can brag about distributions.
Underwriting debt as static when the actual loan terms have resets, maturities, caps, and covenants.
Proof checklist
- The source period, calculation basis, and owner of the number are named.
- The term reconciles to the PPM, operating agreement, lender documents, tax schedule, underwriting model, or verification record.
- The downside version is visible before the optimistic version gets trusted.
Example, trap, question
$48,000 per month of loan payments is $576,000 of annual debt service before the deal can brag about distributions.
Underwriting debt as static when the actual loan terms have resets, maturities, caps, and covenants.
- how the payment changes after interest-only periods, floating rates, rate caps, maturities, and covenant tests.
- What source document, schedule, or third-party evidence proves this term in this specific deal?
- Which connected term changes the answer next: DSCR, NOI, Rate cap?
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