What is the T12 in real estate?

The T12 stands for Trailing Twelve Months. It is a financial document. This document shows the total income and operating costs of a property. It covers the last 12 months. It is one of such documents that are useful in determining the efficient use of debt for the property whether it be a multi-family building, a shop centre or a commercial premise.

What Is The T12 Report And Why Is It Important For Real Estate?

1. Assessing Revenue Generation: The T12 report shows the monthly cash flow from the property. It helps answer if the property is making money.
2. Tracking Seasonal Trends And Variations: Easy notice of changes in seasonal income such as one off expenses for roof repair versus income during summer.  At the same time pointing out the historical record Allows for a far stronger prediction of where the performance in the future is headed based on where it has been. 
3. Legal Obligations Relating To Investors: The T12 statement is crucial to the transaction for buyers or lenders at the time when property is being evaluated and financed. The report increases the ability for all stakeholders to see how the specific property is being run. 
4. Decision Making Towards Rent: Owners of the property would be able to point out potential cost advantages of raising rents in relation to past results. The report aids in the budgeting of maintenance costs and estimating revenue in the coming years.

Who Uses T12 In Real Estate Transactions?

Buyers: Covers questions about if the income generating potential of the property is enough to cover the debt service. 

Managers And Asset Managers: Speeds up the process of monitoring and ensuring net operational income (NOI) growth relative to the operational efficiency.

How is it different from Proforma Reports:

T12 documents can be reviewed in conjunction with an income and expense forecast, in order to check the validity of assumptions made about the profitability of the property.

Advantages of Using a T12 Report

Understanding the overall picture: Enables a detailed account of the earning and spending streams of the property.Enhances Investment Through Understanding The Past: Mitigates risks by disclosing the track record of the property.Aids Operational Budgets: Makes it easier to increase devoted expenditure for running costs and repairs.