When a broker sends you an offering memorandum (OM) for a commercial property, buried in the back of that glossy PDF are three documents that matter more than everything else combined:

The rent roll
The T-12 (trailing 12-month operating statement)
The pro forma (the broker's projection)

Everything else in the OM — the maps, the photos, the market data, the stabilized cap rate — is marketing. These three documents are the actual deal. If you can read them, you can underwrite. If you can't, you're trusting the broker's math, which is a recipe for overpaying.

This course teaches you to read all three, spot the things that matter, and recognize the tricks sellers use to make weak deals look strong.

Document 1: The rent roll

What it is: A table listing every tenant in the property with their lease terms. One row per tenant (or per unit for multifamily).

Typical columns:

Unit / suite number
Tenant name
Square footage
Lease start and end dates
Monthly base rent
Annual rent
Rent per square foot (PSF)
Lease type (gross, NNN, modified gross)
Escalation schedule
Options to renew
Security deposit

What it tells you:

Current occupancy
Who the tenants are (and therefore their credit quality)
When leases expire (your rollover risk)
Whether rents are above or below market
Whether there's concentration risk (one tenant = 40%+ of NOI is dangerous)

The rent roll is the single most important document in any CRE deal. It's also the one brokers manipulate the most, which you'll learn to spot in Lesson 2.

Document 2: The T-12

What it is: "T-12" means "trailing 12 months." It's an operating statement that shows the last 12 months of actual income and expenses, month by month.

Typical rows:

Gross rental income
Vacancy and credit loss
Other income (parking, laundry, CAM reimbursements)
Effective Gross Income (EGI)
Operating expenses (by category)
Net Operating Income (NOI)

Typical columns: 12 months across, plus a "Total" or "Trailing 12" column at the right.

Why it's better than an annual statement:

Shows seasonality (a Florida hotel looks very different in July vs. October)
Shows one-time spikes (a burst pipe in month 4, a lease-up bonus in month 8)
Shows trends (rising expenses, declining occupancy)
Reflects the actual operating reality right now, not some calendar-year snapshot from 14 months ago

The T-12 is where you find normalized NOI — the NOI you'd expect if nothing weird were happening. This is the number you should underwrite to, not the broker's inflated pro forma number.

Document 3: The pro forma

What it is: The broker's projection of future income and expenses — usually for the next 1 to 5 years — used to calculate the "stabilized cap rate" you see in the headline numbers.

Typical layout:

Year 1, Year 2, Year 3, etc. across the top
Rental income growing each year
Expenses growing each year
NOI growing each year
Often highlighted in a glossy summary box at the front of the OM

What it claims: "If you buy this property and execute our business plan, here's what the numbers will look like."

What it actually is: A marketing document written by someone motivated to sell you the property. The assumptions are always optimistic — rent growth, vacancy, expense growth, CapEx. Always. Every single one.

How the three documents relate

Here's the mental model that sharp investors use:

The rent roll tells you the right now — who's paying what, today.
The T-12 tells you the recent past — how the property has actually performed for the last year.
The pro forma tells you the hoped-for future — what the broker wants you to believe.

Your job is to reconcile all three:

Does the rent roll actually add up to the income line in the T-12? (Often it doesn't — concessions, vacancies, bad debt cut the gap.)
Does the T-12 actually support the pro forma Year 1 number? (Often it doesn't — the pro forma assumes rent increases or expense reductions that haven't happened yet.)
Do the pro forma's growth assumptions match reality? (Rent growth of 5% per year in a flat market? Usually fantasy.)

If any of these three don't line up, the broker is telling a story that isn't quite true. Your job is to figure out the actual truth, not the story, and underwrite the real numbers.

What a sharp investor does

Here's what I do (and what MaxLife does on every deal we underwrite):

Ignore the pro forma entirely for the first pass. Read the rent roll and T-12 only.
Calculate my own "normalized NOI" from the T-12 — usually the trailing 12 total minus any obvious one-time items (a pipe burst, a retroactive CAM reconciliation, a one-time legal fee).
Cross-check the rent roll against the income line of the T-12. They should roughly match after subtracting vacancy and concessions.
Apply my own cap rate (based on what similar deals actually trade at, not what the broker says) to get my own offer price.
Use the pro forma only for one thing: understanding what the seller thinks the property could do, so I know how aggressive they'll be on price.

This sequence protects you from broker optimism and forces you to underwrite the real numbers.

What you'll learn in this course

By the end of this course, you'll be able to:

Read a rent roll in under 5 minutes and flag the 3-5 things that matter
Identify the normalized NOI hiding inside any T-12
Categorize operating expenses correctly and spot missing ones
Reconcile a rent roll against a T-12 against a pro forma and find the inconsistencies
Spot the six most common broker tricks (expense omissions, optimistic vacancy, ghost income, above-market rent assumptions, tiny reserves, and "phantom" CAM reimbursements)

Let's start with the rent roll.

What to take away

Three documents drive every CRE deal: rent roll, T-12, and pro forma
The rent roll is the current snapshot, the T-12 is the recent past, the pro forma is the broker's desired future
Never trust the broker's pro forma — build your own from the T-12
Sharp investors reconcile all three to find the real numbers under the marketing
This course teaches you to do that reconciliation quickly and reliably

Next lesson: how to read a rent roll line by line and extract everything it actually tells you.

The Big Three Documents Every CRE Deal Revolves Around