How to Prepare Your P&L for a Sale

Support your asking price with proof

To buy an apartment building, investors need to understand its profitability.

The Profit & Loss statement (P&L) is what investors use to evaluate the income potential of your property.

But, many sellers don’t track their income and expenses in a way that is useful for buyers to evaluate. They either don’t track their income and expenses at all, or they if they do, it is unconventional, incomplete, and unorganized.

When sellers don’t have a detailed profit and loss statement (P&L) they often struggle to get buyers interested in their assets because it’s difficult for the buyer to know if making money is feasible.

As a result, deals without a P&L often sit on the market with limited attention, or they sell at a discount because investors can’t get comfortable offering full price.

When you sell your apartments, you want to ensure you get the best deal possible.

Preparing your P&L statement before engaging buyers is the single most effective way to avoid leaving money on the table.

The benefits of having a P&L are straightforward: you help buyers understand the value of your property and remove barriers stopping them from writing a compelling offer.

What is a P&L?

The P&L goes by many names

  • Profit & Loss (P&L)

  • Trailing 12-month (T12)

  • Operating Statement (OS)

  • Income Statement (IS)

They are all essentially the same thing.

A profit and loss statement describes the income and expenses associated with a property over a specific period, usually the trailing 12 months.

Unlike the rent roll, which shows only revenue per unit, the P&L shows the sum of all income and expenses.

At the bottom of the P&L is the Net Operating Income (NOI). This is the figure investors are most interested in knowing. It is the earnings (before debt) they will receive by buying your property.

Make a good first impression

Prospective buyers often start their analysis by reviewing the P&L.

Many immediately scroll down to the bottom line to look at the NOI. Only after determining potential earnings do they decide if the property warrants further analysis.

Unfortunately, many listings, especially for small multifamily properties, offer no P&L for buyers to analyze. This lack of proper documentation does not set the seller up for success.

Imagine a buyer reviewing two listings. One has a P&L, and the other doesn’t.

The deal without a P&L requires more work to analyze, as buyers must do their own research and make assumptions about income and expenses. Most buyers won’t spend the time.

Not offering a P&L creates uncertainty, and uncertain minds don’t buy. This is why having a detailed P&L showing the income and expenses for your property is absolutely critical.

Examples - One Good, One Bad

Here is an example of what NOT to provide as a P&L when you sell your property.

(Address redacted)

This property has been on the market for six months at the time of this writing.

What I don’t like about this P&L:

  • Limited detail: There is significant information missing from this P&L. Buyers are left to guess about vacancy, delinquency, and concessions. The expense side also doesn’t detail any management, payroll, marketing, or admin costs.

  • No timeline: There is no way to tell if these are actual numbers from the trailing 12 months or if these numbers represent a different period. These numbers could also be estimates (Pro-forma) - there is no way to know without further information.

  • Inconsistent information: The header says “Yearly Revenue and Expenses”, but the bottom line refers to “Monthly Net Profit”. This may cause confusion. Buyers don’t like confusion.

  • Inaccurate math: If you add all the expenses, it equals $30,885. But the “Total” column shows $30,855. It’s off by $30. Which isn’t that big of a deal, probably just a typo. But it doesn’t instill confidence in the minds of the investors looking to buy your property.

THIS ISN’T AN ANOMOLY.

I see profit and loss statements like this all the time. These listings often sit on the market for a long time and eventually either cancel or sell well below the asking price.

Let’s look at another example, this one is much better.

(Address Redacted)

What I like about this P&L:

  • It’s clear and professionally made

  • It has a clear timeline - from Jan 2023 through Dec 2023

  • It is broken out monthly so buyers can analyze how the asset performed over the year

  • Net income is calculated correctly. Buyers can quickly scroll to the bottom and find NOI.

See how much more professional this appears?

Buyers have ample information to work with and get comfortable with the investment opportunity. The seller and their broker can articulate exactly how the asset is operating and how they arrived at their listing price.

Deals like this still take work to sell, but it’s much easier to get buyers excited about owning a property when the information is presented to them in a clear, concise way.

The profit & loss statement is the best way to present this information.

How to Create a P&L

Here are five ways to ensure you have a clean rent roll:

  • Hire a Professional Bookkeeper or Accountant: They can help you organize your P&L accurately.

  • Hire a Professional Property Manager: Look for one with reporting capabilities.

  • Use Property Management Software: Popular platforms like Appfolio and Buildium can generate detailed P&Ls.

  • DIY Using a Template: Create your own P&L using the template we provided below.

  • Ask MFI Realty Advisors to Assemble It: Contact us today to schedule a time for a consultation. We can help you put together a professional P&L in preparation for a sale.

By preparing a clean, detailed P&L, you can ensure your property stands out in the market and attracts serious buyers, helping you achieve the best possible outcome from your sale.


By the way, I write a weekly newsletter about the multifamily market in the Twin Cities.

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How to Make Your Property Sale-Ready

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How to Prepare Your Rent Roll for a Sale