What documents do you need to underwrite a real estate deal?
Four documents carry almost all of it: the rent roll, the trailing twelve month operating statement, the offering memorandum, and a debt quote or term sheet. The rent roll says what is leased and until when, the T-12 says what the property actually earned and spent, the memorandum supplies the story and the exhibits, and the quote fixes the loan that the returns depend on. Everything else, from the tax bill to the insurance loss run to the property condition report, exists to confirm or contradict a line one of those four already raised.
The four that do the work
Two of the four are evidence and two are assumptions. The rent roll and the trailing statement report what exists, which is why they are the exhibits everybody asks for first and the two that have to reconcile against each other before anything else is read. The offering memorandum and the debt quote are forward looking: one is the seller's argument, the other is a lender's current view of what it will do, and both change.
A first pass can be run on the first two alone. What it cannot do is size the debt, and since leverage decides most of the levered return, an underwriting without a quote is a property analysis rather than a deal analysis.
| Document | What it answers | What it cannot |
|---|---|---|
| Rent roll | Who is in place, at what rent, until when | Whether the market rent column is real |
| T-12 | What was actually collected and spent | What your taxes and insurance will cost |
| Offering memorandum | The story, the comparables, the exhibits | Anything forward looking |
| Debt quote | Rate, amortization, and the sizing tests | What rates do before you close |
Then the documents that verify
Each of these exists to test a specific line rather than to be read for its own sake, which is why asking for all of them at once and reading none of them is a common and expensive habit.
- The current tax bill and assessment notice, to compute taxes at your basis rather than the seller's
- An insurance loss run and a fresh quote for your coverage, because the trailing premium is frequently irrelevant
- Twelve months of utility bills, which test both the expense line and any reimbursement income
- Three to five years of capital expenditure history, which is a better guide to future spending than any per-unit convention
- A property condition report, which turns deferred maintenance into a funded line in the sources and uses
- The delinquency aging report, which is where bad debt actually lives
- The payroll register and the service contracts, which say whether the expense base survives new ownership
- For commercial, the leases themselves plus any estoppels, since a rent roll summarizes terms the lease actually governs
The order to read them in is not the order they arrive
Start by reconciling the rent roll to the trailing statement. Annualize the current contract rents, subtract vacancy and concessions, and compare to trailing collected revenue. When the two disagree by more than a rounding error, the gap is a fact about the deal rather than a data problem, and finding its cause is worth more than any other hour in the process.
Then normalize the expenses: taxes at your expected reassessed value and the local millage, insurance from a quote, the management fee you will actually pay, payroll for the way you will staff it, replacement reserves added, one-time items stripped. That produces your year one, which is the number the seller's pro forma should be compared against rather than argued with.
Then market rent, from your own comparables and tested against what the property is signing this month net of concessions. Then the debt, sized on all three lender tests at the quoted rate and amortization schedule and taking the smallest answer. Then the exit, which is a forward net operating income capitalized at a rate you have chosen in advance rather than solved for. Then the sensitivity across the two assumptions that turn out to carry the outcome, which is almost always the exit cap rate and rent growth.
What a missing document tells you
A seller who will not produce a delinquency aging report, an insurance loss run or a utility history is telling you something about that line, and the absence belongs in the underwriting as a wider assumption rather than as a blank. The same is true of a rent roll delivered as a flattened image when a native export exists: the checking is the point, and a format that resists checking was chosen.
Anything you cannot get, underwrite conservatively and say so in the memo. A committee can price a stated uncertainty. It cannot price one nobody mentioned.
Getting them into a model
Altyst reads the documents a deal already arrives with, in PDF, Excel, CSV, Word, plain text or a photograph of a page, including scanned pages through OCR, and it can start from a listing link and the asking price when the package has not arrived yet. Each extracted value is proposed with the document and page it came from and a confidence signal, for your review, and you can override any of them.
It reads the rent roll and the trailing statement together and surfaces the places they disagree, which is the reconciliation above, done on the exceptions rather than on the re-keying. What it does not do is decide which side of a disagreement is right. That is the judgment the documents exist to inform.
Related questions
What documents do you need to underwrite a multifamily deal?
At a minimum the rent roll and the trailing twelve month operating statement, which are the two evidentiary documents, plus the offering memorandum for the story and exhibits and a debt quote to size the loan. Verification comes from the tax bill, an insurance quote and loss run, twelve months of utility bills, a capital expenditure history, the delinquency aging report and a property condition report.
Can you underwrite a deal from an offering memorandum alone?
You can produce a screen, not an underwriting. The memorandum's pro forma is the seller's argument, and without the rent roll and the trailing statement there is nothing to test it against. If the exhibits are inside the memorandum, which they often are, then you have the evidence and the marketing in one file and should read the exhibits first.
Do you need the actual leases, or is a rent roll enough?
For multifamily a rent roll is normally enough on a first pass, because the leases are standard and short. For office, retail and industrial the lease governs the recovery structure, the escalations, renewal and termination options and any exclusives, and a rent roll only summarizes them. Any tenant large enough to move the model deserves its lease read, along with an estoppel confirming the terms.
How current does a rent roll and a T-12 need to be?
The rent roll should be within a few weeks of your review and the trailing statement should end no more than a month or two before it, and both should be as of the same date. Different dates make the reconciliation between them meaningless, which removes the single most useful check the two documents provide.
What if the seller will not provide a document?
Treat the absence as information rather than as a gap to fill with an average. Underwrite that line conservatively, state the assumption and its reason in the memo, and make the document a condition of going hard if the line is large enough to matter. A delinquency aging report, an insurance loss run and a utility history are the three most commonly withheld and the three where withholding says the most.
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