Nobody at the brewery meetup stopped to explain what a T-12 was
Here is a scene worth describing, because it repeats at every local meetup and it is where a lot of people first hit the wall between residential and commercial. Someone reads online for months and finally goes to an in person thing, an investor meetup at the back of a brewery. They expect houses. Almost everything written about wholesaling is houses. The first presenter has a 22 unit apartment building he is trying to assign. Up goes a slide with a number called T-12, another called in place rents versus market rents, and then a table of what the building would do at three different cap rates. Half the room nods. The newer person writes T-12 in their notes with a question mark next to it and keeps writing things down. At the break they ask a woman standing near the taps what T-12 stands for. Trailing twelve, meaning the last twelve months of actual income and expenses, as opposed to whatever the seller says the property could do. Then she asks what they own, and the honest answer is nothing yet, still deciding whether being a landlord is even the goal, and they brace for the brush off. The brush off usually does not come. The good version of that conversation runs twenty minutes and covers why the room cared about that slide at all. Nobody in commercial buys off what the house down the street sold for. They buy off income, and the whole argument in every deal is which income number is real. A sharp listener will add that the presenter's expenses looked too low and bet he left out real management and any reserve for the roof. She may or may not be right about his numbers. The point is that a beginner walks out understanding the shape of the disagreement, which is more than they had walking in. Going back next month and asking another dumb one is the whole method.
