Common rent roll and expense reporting mistakes that can significantly impact your building's value.
Why Clean Financials Are So Important
For most buyers and lenders, an apartment building is a stream of income, not just a structure. If your rent roll and T-12 are incomplete or inconsistent, buyers:
- Assume the worst about missing data
- Underwrite conservatively
- Lower their offer or walk away entirely
Common Rent Roll Mistakes
Some of the biggest issues I see:
- Missing move-in dates and lease terms
- No record of security deposits
- Inconsistent or unclear concession history
- Using nicknames or abbreviations instead of clear unit identifiers
A strong rent roll should show, at a glance, who pays how much, since when, and under what terms.
Common Expense Reporting Problems
Typical T-12 issues include:
- Mixing capital expenditures (roof, plumbing) with operating expenses
- Unexplained spikes or drops in certain line items
- Missing categories like management, reserves, and professional fees
- Cash expenses with no receipts or explanation
Buyers and lenders want to see normalized, supportable expenses, not guesswork.
How Sloppy Financials Lower Your Building's Value
When buyers can't trust your numbers, they:
- Underwrite higher expenses and lower income
- Demand price reductions during due diligence
- In some cases, choose to buy another, cleaner deal
In a competitive market, clean financials can be the difference between multiple offers and lingering on the market.
How to Clean Things Up Before Selling
If you're thinking about a sale in the next 6–18 months:
- Start organizing digital copies of leases and addenda
- Build or update a clear rent roll and T-12 (your broker can provide templates)
- Work with your broker and accountant to categorize expenses correctly
This preparation makes it easier to defend your asking price and keep deals together through escrow.
Request a valuation and I can help you identify what needs to be cleaned up before going to market.
Quick FAQs
Q: Do I need professional bookkeeping to sell?
A: Not required, but professional bookkeeping or at least a well-organized spreadsheet goes a long way toward building buyer and lender confidence.
Q: Can I fix my financials after going to market?
A: Yes, but it's far better to do this before launching so that your first impression with buyers is strong.