Guide to Rent Rolls and T-12 (Trailing 12 months)

Do You Want a Smooth or Delayed Refinance?

 Even though you are an experienced sponsor, you might want to review these tips to be sure your financials include all of these items as lending requirements do change, especially now in light of the pandemic. There is a helpful tip regarding COVID-19 accounting later in this article. When applying for a mortgage on one of your investment properties, you will need current financial records with the two most important documents being the current Rent Roll and the T-12 (Trailing 12 months of financials). If you are wanting your refinancing to go smoothly and as quick as possible, keep these records up-to-date as it will reduce hassles and frustrations, not to mention maximize your value. This may seem common and normal practices to you to have the Rent Roll and the T-12 updated, however, Howell Investment Finance has seen many sponsors that lack up to date records.

What needs to be on a Rent Roll?

All rental properties must have a rent roll that documents every unit with the current status and occupant information. A rent roll has several components. Using a computer spreadsheet application streamlines the process of establishing a rent roll and makes updating records quick and easy. First, you'll need to review all the leases for the building's current occupants. Below are items that need to be included in your Rent Roll: 

• List every unit number.
• Each apartment needs to include the number of bedrooms, bathrooms, and the square footage.
• List both the Current Rent and the Market Rent
• If the unit is currently occupied, include the name of the tenant(s), deposit amount, date the lease started, the move-in date, and the lease expiration date.
• If the unit is vacant, list it as vacant and note the expected rent, market rent and deposit.
• List any additional fees paid by the tenants (parking, etc).

What Needs to be on a T-12?

The Trailing 12 (T-12) is one of the most important documents that you need to be reviewing each month as it shows the ongoing financial strength and weakness of your investment property on the monthly basis. Keep this updated each month showing the previous 12 months of financials.

The T-12 needs to show the total income and expenses broken out by category. 

• All income is listed with the rental income broken down by residential, commercial, late fees collected, parking, and other incomes such as laundry, etc.
• Total all income.
• Next, categorize all expenses for quick review.
• Maintenance and Repairs such as supplies, maintenance, pest control, elevator services, alarm, HVAC, janitorial, etc.
• Administrative Expenses such as office supplies and equipment, etc.
• Management fees.
• Payroll expenses.
• Marketing expenses.
• Utilities broken out by electricity, gas, water and sewer, etc.
• Fixed expenses such as property taxes and insurance.
• Total all expenses.
• Show the Net Operating Income (NOI).

Keeping your financials up-to-date will assist you and Howell Investment Finance in getting the best financing available for you. HUD, Fannie Mae, CMBS, and regional banks will all require these and other property documents. To get a better understanding on increasing your properties cash flow, call Howell Investment Finance today.

If you're considering purchasing or refinancing a multifamily, mixed-use property, or senior housing facility and want to improve the cash flow of your properties, you need to contact Howell Investment Finance as they have been serving Cedar Rapids, Iowa City, the Quad Cities, Sioux City, Ames, and West Des Moines areas for several years They offer commercial and multifamily mortgages, construction loans, bridge loans, and other financing options for properties $2 million to over $50 million. Call (515) 233-8228 or visit them online to schedule a consultation.