What is a T-12 in real estate?

A T-12 (Trailing Twelve Months) is an operating statement showing the last 12 months of income and expenses for a property. Lenders use it to calculate Net Operating Income (NOI) and determine loan amounts. Bhumi provides forensic T-12 audits that reconcile every line item to bank statements.

How long does a T-12 audit take?

Bhumi delivers a complete, lender-ready T-12 package within 48 hours of receiving your documents. Full forensic reconstruction typically takes 1-2 weeks. Deal closing support runs approximately 30 days.

What size multifamily portfolios does Bhumi work with?

Bhumi specializes in $500K to $5M multifamily portfolios with 5-50 units. This is the sweet spot where institutional lenders require documentation but owners often lack institutional-grade bookkeeping - too complex for most accountants, too small for institutional advisors.

What documents do I need to start a T-12 audit?

To start, Bhumi needs three things: 12 months of bank statements for all accounts touching the property, a current rent roll showing units, tenants, and rent amounts, and your most recent tax return or Schedule E for the property.

How much does a T-12 audit cost?

Bhumi charges a flat fee based on portfolio complexity - number of units, bank accounts, and document condition. No hourly billing surprises. Contact for a specific quote based on your situation.

What lenders does Bhumi work with?

Bhumi is lender-agnostic and has prepared packages for Freddie Mac Small Balance Loans, Fannie Mae Small Loans, regional banks, credit unions, and private lenders. The documentation standards are tailored to each lender's requirements.

What is NOI variance and why does it matter?

NOI variance is the gap between what your T-12 operating statement shows and what your bank deposits prove. Lenders require zero variance for loan approval. Bhumi's forensic reconciliation traces every dollar of revenue to a specific bank deposit, eliminating phantom income and protecting your loan amount.

Can Bhumi help with inherited real estate portfolios?

Yes. Bhumi specializes in inherited portfolios where the previous generation ran operations manually. We've handled portfolios with Venmo payments, cash deposits with no paper trail, commingled personal and business expenses, and decades of accumulated documentation gaps.

T-12 vs. Profit & Loss Statement: What's the Difference?

Key Distinction

A T-12 is a trailing 12-month operating statement formatted for lender underwriting. A Profit & Loss (P&L) is a general accounting report showing revenue minus expenses. They often contain similar data but serve different purposes and follow different rules.

Property owners frequently assume their QuickBooks P&L can substitute for a T-12. It can't. Understanding why requires understanding what each document is designed to do.

What Is a Profit & Loss Statement?

A P&L (also called an income statement) summarizes your business's revenues, costs, and expenses over a period. It follows Generally Accepted Accounting Principles (GAAP) and is designed for:

Tax preparation
Business performance tracking
Investor reporting
Internal management decisions

Your accountant produces a P&L. It may include depreciation, amortization, interest expense, and other items that have nothing to do with property operations.

What Is a T-12?

A T-12 is a specialized operating statement designed specifically for real estate lenders. It shows:

Trailing 12 months of income (month by month)
Operating expenses only (no debt service, no depreciation)
Net Operating Income (NOI)

The T-12 answers one question: "What cash flow does this property generate for debt service?"

Key Differences

Aspect	P&L Statement	T-12
Time Period	Usually calendar year or fiscal year	Trailing 12 months (rolling)
Format	Varies by accounting software	Standardized for lender review
Depreciation	Included	Excluded
Interest/Debt Service	Often included	Excluded
Capital Expenditures	May be included or capitalized	Excluded (separate reserve)
Owner Salary	Often included	Excluded or normalized
Purpose	Tax optimization, business tracking	Loan underwriting
Audience	IRS, accountants, owners	Lenders, underwriters

Why Can't I Just Use My P&L?

Several reasons:

1. Wrong Time Period

Your P&L covers January-December of last year. If you're applying for a loan in September, the lender wants October through September—the most recent 12 months. A T-12 is always current.

2. Wrong Line Items

P&Ls often include items lenders exclude from NOI:

Depreciation: A tax concept, not a cash expense
Mortgage interest: The lender calculates their own debt service
Owner draws: Not an operating expense
One-time expenses: Roof replacement isn't an operating cost

3. Wrong Format

Lenders need to see month-by-month data to identify trends and anomalies. Most P&Ls show annual totals or quarterly summaries—not granular enough for underwriting.

4. Tax Optimization vs. Loan Maximization

Your accountant prepares the P&L to minimize taxable income. That means aggressive expense categorization and maximum deductions. For a loan application, you want to maximize provable income. The goals are opposite.

Your P&L is designed to reduce your taxes. Your T-12 is designed to increase your loan amount. They should never match perfectly.

What About My Schedule E?

Schedule E (from your tax return) is even further from a T-12:

Includes depreciation (large deduction, not a real expense)
May combine multiple properties
Optimized to show losses for tax purposes
Often 12-18 months old by the time you apply for a loan

Lenders review Schedule E for consistency checks, not for underwriting. If your T-12 shows $500K NOI but your Schedule E shows a $50K loss, you'll need to explain the difference (usually depreciation accounts for most of it).

Converting a P&L to a T-12

If your P&L is your starting point, here's how to convert it:

Step 1: Adjust the Time Period

Reconstruct monthly data for the trailing 12 months, not the calendar year.

Step 2: Remove Non-Operating Items

Delete these line items:

Depreciation and amortization
Mortgage interest and principal
Capital expenditures (new roof, HVAC replacement)
Owner salary or management fees above market rate
One-time legal fees (evictions are OK; lawsuits are not)

Step 3: Add Market-Rate Management

If you self-manage, lenders add a management fee (typically 5-8% of Effective Gross Income) to expenses. This "normalizes" the T-12 for comparison.

Step 4: Verify Against Bank Statements

Reconcile your converted T-12 to bank deposits. The variance should be under 3%.

Step 5: Format for Lender Review

Present in a standard T-12 format with monthly columns, category subtotals, and NOI clearly calculated.

When P&L and T-12 Should Match (and When They Shouldn't)

Should Match:

Gross rental income (approximately)
Operating expenses like utilities, insurance, taxes
Repairs and maintenance

Should NOT Match:

Net income (T-12 excludes debt service and depreciation)
Total expenses (T-12 excludes capital items)
Time period (unless P&L happens to be trailing 12)

Lender expectation: Your T-12 NOI will be significantly higher than your P&L net income. If they're similar, something is wrong—either your T-12 includes items it shouldn't, or your P&L is missing legitimate deductions.

The Bottom Line

A P&L tells your accountant how much tax you owe. A T-12 tells a lender how much they can safely lend you. They're different tools for different jobs.

Don't submit your QuickBooks P&L as a T-12. Convert it properly, reconcile it to bank statements, and present it in a format lenders expect. The extra effort directly impacts your loan amount.

A proper T-12 isn't about making your property look better—it's about presenting your property's true cash flow in the language lenders understand.