How to read a T-12 the way an underwriter does
The T-12 is the first document you open and the easiest to misread. A field guide to the lines that move a deal — and the ones sellers lean on.
Rent roll analysis for multifamily underwriting
The rent roll is the ground truth of a multifamily deal. Here is how to turn a raw unit-level export into economic vacancy, loss-to-lease, and a defensible income base.
If the T-12 is the story a seller tells, the rent roll is the ground truth underneath it. It is a unit-by-unit snapshot of who is paying what, on which lease, with which concessions. Read carefully, it produces a defensible income base that no summary statement can override — which is exactly why it deserves more scrutiny than any other document in the package.
Physical vs. economic occupancy
A property can be 96% physically occupied and materially below that economically. Units occupied by non-paying tenants, employees, or models; heavy concessions burning off collected rent; and tenants in arrears all separate the occupancy a broker quotes from the rent actually collected. Economic occupancy — collected rent over gross potential rent — is the number that services debt.
Loss-to-lease is a signal, not just a line
The spread between in-place rents and current market rents — loss-to-lease — tells you how much embedded upside is real versus already captured. A large loss-to-lease can be genuine upside or a sign that the market-rent assumption is aggressive. Testing that assumption against actual recent leases, not a pro forma, is what separates underwriting from wishful thinking.
What to extract from every rent roll
- In-place rent per unit and per square foot, by floor plan.
- Lease start and end dates, to see how much of the roll turns over in year one.
- Concessions and their burn-off schedule.
- Delinquency and non-revenue units, separated from vacant units.
Rebuild, then compare
The income base you rebuild from the rent roll is what you carry into NOI reconciliation. If it disagrees with the T-12, the rent roll usually wins.
A rent roll rebuilt this way feeds directly into a defensible NOI and an honest cap rate at ask. It is the same unit-level discipline InvestAssist applies automatically — extracting the roll, computing economic vacancy and loss-to-lease, and keeping anything ambiguous visible rather than smoothing it away.