Quick answer
For each unit, list the unit number, size, tenant or vacant, lease dates, current rent, last increase, deposit, concessions, any subsidy and rent program coverage. Add a trailing twelve-month operating statement with rent collected and every expense by month. Make sure both agree with the leases and bank deposits. Mismatches cause most underwriting questions.
Why these two documents matter so much
On a 5-10 unit building, the lender is lending against the building’s income. The rent roll says what the building should collect. The trailing operating statement, often called a T-12, says what it actually collected and what it cost to run. Together they are the evidence for the loan.
Underwriters check both against the leases and bank statements. When everything agrees, the file moves. When it does not, every difference becomes a question, and each question takes time.
What goes in the rent roll
A lender-ready rent roll lists every unit, including vacant ones, in a single table.
- Unit number, bedroom and bath count, and approximate square footage.
- Tenant name, or “vacant”.
- Lease start date and lease end date, or month-to-month.
- Current monthly rent and the date of the last increase.
- Security deposit held.
- Concessions, rent credits or arrears.
- Subsidy or voucher status, if any.
- Whether the unit is covered by a local rent program, if you know.
Add building-level income on separate lines: parking, laundry, storage or utility reimbursements. Lenders may treat these differently from rent, so keep them visible.
What goes in the trailing operating statement
The T-12 shows income and expenses month by month for the last twelve months. Income should be rent actually collected, not rent billed. Expenses should include everything the owner pays.
- Property taxes and any special district taxes.
- Insurance premiums.
- Owner-paid utilities: water, sewer, trash, gas and common-area electricity.
- Repairs and maintenance, landscaping and pest control.
- Management fees, or a note that the owner self-manages.
- Licenses, registration fees, inspections and rent program fees.
Leave out the mortgage payment, depreciation and one-time capital projects, or list capital work separately. Lenders want the cost of operating the building, not the cost of financing or improving it.
The mismatches that slow files
Most underwriting delays on small buildings come from a handful of mismatches. Fix them before the file goes out.
- Rent roll shows a higher rent than the lease, because of a concession or an increase that was never documented.
- Bank deposits do not match the rent roll, because some tenants pay in cash or rent is deposited to several accounts.
- A unit is listed as leased but the lease has expired and was never renewed in writing.
- Deposits on the rent roll do not match what the owner holds.
- Units counted in the rent roll that are not legally permitted.
- The T-12 shows a much lower expense line than the building’s age and utility setup suggest.
If you are buying
When you buy a building, the seller provides the rent roll and T-12. Treat them as claims to verify. Ask for copies of every lease and compare them line by line. Ask for the deposit ledger. Consider tenant estoppel certificates, in which each tenant confirms the rent, deposit and lease terms in writing.
Then rebuild the T-12 for your ownership. Replace the seller’s property tax with your own estimate after Proposition 13 reassessment. Replace the insurance premium with your own quote. Add a management allowance if the seller self-managed and the lender will count one.
If you are refinancing
For a refinance, the documents are yours. Pull bank statements for the last several months and make sure rent deposits match the rent roll. If you raised rents or re-leased units, have the new leases signed and in the file. If you renovated, keep the permits and final sign-offs together.
A simple habit helps more than anything else: collect rent into one account used only for the building. It makes every future loan easier.
A simple review before you send anything
Before the rent roll and T-12 go to a lender, spend an hour checking them yourself. Pick three units at random and trace each one from the lease to the rent roll to the bank statement. Check that the deposit on the rent roll matches the lease and what you hold. Add up the rent roll and compare it with rent collected on the T-12 for the most recent month. Note any differences and write a one-line explanation for each, such as a concession that ended, a tenant who pays late, or a unit that turned over mid-month.
Underwriters do not expect every building to be perfect. They expect the owner to know where the differences are. A short note that explains them up front reads very differently from the same differences discovered during underwriting.
Frequently asked questions
What documents do California 5-10 unit lenders usually want?
Plan on a unit-by-unit rent roll, copies of the leases, a trailing operating statement (often 12 months), the property tax bill, an insurance quote, the purchase contract or current loan statement and LLC documents. In rent-controlled cities, bring the registration or rent board records.
What is a T-12 on an apartment building?
A trailing twelve-month operating statement: rent collected and every operating expense, month by month, for the last twelve months. Lenders use it to see what the building actually costs to run.
Do lenders count rent paid in cash?
Only if it can be documented. Lenders compare the rent roll with bank deposits. Cash rent that never reaches a bank account is hard to verify.