Question about what a lender may accept in lieu of a trailing T-12
I have 39 units in South Texas that I have a buyer for and the lender is requiring a trailer T-12 which is totally normal except that the property has gone through an extensive rehab in the last 12 months so all they have right now is a current roll and a pro forma. Is there anything else I can provide to the lender in lieu of a trailing T12 since there was no occupancy?  Obviously the buyer is in contact with the lender and I provided the information but it's been over a week and I'm just trying to offer suggestions to the buyer's agent
[{"id": "ig4qkrx", "text": "Is the property currently stabilized where you would have a month or two of stabilized operations? T-1, T-2, T-3 etc annualized are all useful if you have any stabilized operations. If not, last full year of operations leading up to the rehab plus the stabilized proforma should be enough. A T-12 during rehab isn't useful or meaningful in determining stabilized operations. This is from a multifamily underwriter perspective.", "replies": [{"id": "ig4tpz3", "text": "Great!  Yes, I do have 3 months and will ask about the P&amp;L in the year prior so that should help.  Thanks for the suggestion", "replies": [{"id": "ig4y6m9", "text": "Depends on the lender and extent of renovations.\nWere you completely vacant for the past 12 months or turning over and renovating units gradually.\nThis will help an underwriter get an estimate on operating expenses.\nMake sure to classify most of your repair work as Cap Ex so expenses are not over inflated that can be typical on older, unrenovated buildings.\n\nThe T3 should also help. Especially if you break out monthly occupancy showing how you are now fully leased. This will ensure an underwriter is not using excessive bad debt or vacancy.", "replies": [{"id": "ig65bcm", "text": "Ahh... it is our logical pointy-eared friend again.  Listen to him, I get the feeling this is  not his first rodeo.\n\nLive long and prosper.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ig4qlx9", "text": "A budget should do just fine. Lenders fund plenty of construction loans before there is even a building much less a t-12. You already know what your property taxes and insurance are so thats half the budget done right there. You will probably need to talk to a bridge lender though since your property is not stabilized. Bridge lenders will be more expensive but they will also take more risk and are used to lending on hairy deals. They will size up an interest reserve to get you to stabilization.\n\nAlso t-12s before the rehab will help to substantiate your expense assumptions in that budget", "replies": [], "depth": 1}, {"id": "ig5uwf3", "text": "Doesn\u2019t matter that it was under rehab. They still want a proper T-12 to see the ramp up in collections/NOI.", "replies": [{"id": "ig5v4j8", "text": "It was vacant...the whole property.", "replies": [{"id": "ig6tgdn", "text": "Doesn\u2019t matter. You would still have opex\u2026 \n\nI understand your logic, but some post-close loan reviewer will pick up the file in 6 months and the originator is going to get their balls busted for not having a T-12 in the file. Doesn\u2019t matter that the property was previously vacant. All the reviewer sees is a T-3 that cuts off. \n\nI mean seriously people, why is it so fucking hard to provide a properly formatted T-12 in Excel? I don\u2019t think we\u2019re asking a whole lot here, but collecting a proper T-12 has somehow become the bane of my existence as a lender. /rant", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ig64s5l", "text": "I will throw one more thought in here.  Do you own and/or mange other MF units in the same (or similar) market?  These could show the underwriter your typical costs for the various operating expenses.  These are essentially \"expense comps\" which would support your proforma and budget for the next 12 months.\n\nThe actual properties you operate would carry the most weight, but if you can also document typical expenses in your market for similar properties it might be helpful.\n\nThe key here is that you want to support your proforma/budget to show the lender the numbers you present aren't just wishful thinking to make the deal work.  Or got off some random Reddit post ;)\n\nAnd a last thought is when you get this deal under application with the lender, be sure that you provide all this info to the appraiser the lender uses.  Make sure he/she follows and understands how you got to your numbers.\n\nEdit:  Just figured out this is for a pending sale, not a new loan for you.  However my suggestion stands.  More relevant historical information to support a future assumption will help carry the deal to its profitable conclusion.", "replies": [], "depth": 1}]