Nobody at the brewery meetup stopped to explain what a T-12 was
I've been reading here for months and finally went to an actual in person thing, a local investor meetup at the back of a brewery. I expected houses. Everything I've read about wholesaling is houses.
The first guy who presented had a 22 unit apartment building he was trying to assign. He put a slide up with a number called T-12 and another called in place rents versus market rents, and then a table of what he said the building would do at three different cap rates. Half the room nodded. I wrote T-12 in my notes with a question mark next to it and just kept writing things down.
At the break I asked a woman standing near the taps what T-12 stood for. She said trailing twelve, meaning the last twelve months of actual income and expenses, as opposed to whatever the seller says it could do. Then she asked what I owned and I said nothing yet, I'm still deciding whether I even want to be a landlord, and I braced for the brush off.
She talked to me for twenty minutes. Told me the reason the room cared about that slide is that 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. Then she said the presenter's expenses looked too low and she'd bet he'd left out real management and any reserve for the roof.
I don't know if she was right. But I understood the shape of the disagreement, which is more than I had when I walked in.
I'm slow at this. I'll probably go back next month and ask another dumb one.