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ICR Calculator

ICR Calculator

Get in Control of Your Investments with the Interest Coverage Ratio (ICR) Calculator

The Interest Coverage Ratio (ICR) is a financial metric used in real estate investing to measure a property’s ability to pay interest on its debt with its net operating income (NOI). A higher ICR means it’s easier to cover interest expenses which is key to financial health and good loan terms.

Our ICR Calculator makes this easy. Use it to evaluate your investment properties and make informed decisions, manage risk and optimize your portfolio.

Why ICR Matters

  • Financial Health: Shows you can meet interest obligations to avoid default.
  • Lender Assessment: Lenders use ICR to qualify and price loans.
  • Investment Health: Property’s profitability and operational efficiency.

An ICR of 1.5 means your property earns 1.5 times its annual interest expenses, which is good to cover interest payments.

Interpreting ICR Values

  • ICR < 1: Not enough income to cover interest expenses (high risk).
  • ICR = 1: Just meets interest obligations (moderate risk).
  • ICR > 1: Covers interest expenses comfortably (low risk).

How to Improve Your ICR

  • Boost NOI: Raise rents, improve occupancy or add services to increase income.
  • Reduce Interest Expenses: Refinance debt at lower interest rates or pay down principal.
  • Cut Operating Costs: Streamline operations to increase NOI without sacrificing quality.

Using the ICR Calculator

  • Loan Planning: Can you take on more debt or refinance existing loans?
  • Risk Management: Find the stress points and act ahead of time.
  • Performance Benchmarking: Compare ICR across your portfolio to optimize resources.

Benefits of High ICR

  • Better Creditworthiness: Looks good to lenders and investors.
  • Financial Flexibility: A buffer against interest rate changes or income volatility.
  • Investment Appeal: Attracts buyers or partners with strong financials.