Let the monthly cash model determine it; this research does not support a universal number of months. Our proposed model should show opening unrestricted cash, operating receipts and payments, debt service, tax and insurance timing, renovation draws and reserve restrictions.
For the desk’s coverage calculation, divide cash available for debt service by scheduled principal and interest, then reconcile that result to the lender’s contractual definition. Separately show the lowest monthly unrestricted cash balance: an annual coverage figure is not the liquidity schedule.
Stress event deposits, cancellations, reopening delays and the timing of lender reimbursements. Set the owner’s minimum-cash requirement explicitly rather than leaving the model to assume that every positive balance is distributable.