Due diligence
Request the Financials: Know What to Ask For
The offering memorandum is a sales brochure. The truth lives in the source documents, and knowing exactly what to ask for is half the job.
The offering memorandum is marketing
An OM is written to sell the property. It leads with pro-forma numbers, peak-season occupancy, and an NOI that quietly leaves out real costs. Treat it as the seller's opening argument, not evidence.
Ask for the source documents
What you actually need is the underlying record: a trailing twelve-month profit and loss (the T-12), the rent roll, the last two or three years of tax returns or full-year P&Ls, bank statements, utility bills, and maintenance records. These are hard to dress up. The T-12 and rent roll together verify income and occupancy against actuals, which is why they matter more than anything in the brochure.
Monthly occupancy beats annual occupancy
Ask for occupancy month by month, not a single annual figure. An annual average of 80% can hide a park that runs 98% for three summer months and 55% the rest of the year. That seasonality changes the value, the financing, and the risk, and the average is designed to smooth it away.
Reluctance is the tell
The gap between what the OM shows and what the source documents reveal is where most overpayments hide. A seller who hesitates to hand over the T-12, the rent roll, or the bank statements is telling you something, and it is rarely good. Serious sellers of clean properties produce the documents quickly.
Put it to work
Drop the OM, the T-12, and the rent roll into RVP Underwriter together and it reads all of them, flagging where the marketing and the actuals disagree. Underwrite a deal free.
Questions
What is a T-12?
A trailing twelve-month profit and loss statement: the property's actual income and expenses for the most recent twelve months. It is the single most useful financial document because it reflects reality rather than projection.
Why does monthly occupancy matter more than annual?
Because an annual average hides seasonality. A park that is full in summer and half-empty in winter can average to a healthy-looking number that misrepresents both the risk and the true stabilized income.
Related guides
Part of the RVP Underwriter guide library: practical guides to underwriting and buying income property. Browse all guides, or read the complete free guide with a full worked example.