A T-12 is the operating statement for the last twelve months: what the property actually collected and actually spent, month by month, through the most recent closed period. It is the historical record of the building, as opposed to any projection of it, and it is the document a lender and a serious buyer will underwrite from.
- It is a record, not a forecast. Its value is that nobody had to believe anything for the numbers to exist.
- Read it monthly, not annually. A single month carrying an entire year of insurance or repairs is the story, and the annual total hides it.
- In owner-operated buildings the owner's own hours are not a paid line, so labour and management do not appear. Add what a buyer will pay.
- Ask what is missing: capital projects, deferred repairs, and unbilled utilities do not appear, and each of them is real money.
The same eight units, on the trailing twelve rather than on the seller's page.
This is what happened. Anything more optimistic is an argument, and an argument is something a price can be negotiated against.
Related terms
All termsRent Roll
A rent roll is the schedule of every unit in a building and what it earns: the tenant, the rent, the lease start and end, the deposit held, and whether the unit is occupied.
InvestmentNOI (Net Operating Income)
Net operating income is what a property earns from operations in a year: all collected income minus operating expenses, before any mortgage payment, income tax, or capital projects.
InvestmentOperating Expense Ratio
The operating expense ratio is total operating expenses divided by effective gross income, expressed as a percentage.
Terms arrive with the writing.
The glossary grows as the Journal does, one email when something worth reading goes up. No noise.
Unsubscribe anytime. See our Privacy Policy.