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Ten mistakes AI makes in a T-12 from bank statements when nobody checks
You can ask any AI to turn a year of bank statements into a T-12. If nobody checks it, chances are it made at least one of these mistakes.
And you probably won’t see it. Every mistake below looks right: the months line up, the totals add, NOI looks reasonable for the building, and the AI tells you, with confidence, that the T-12 is done.
Finding them takes real work. A year of a property’s bank statements can hold thousands of transactions. Any one of them can be misread, left out, counted twice or put on the wrong line, and the T-12 will still show normal-looking numbers. The only way to be sure is to check every transaction against the statements. By hand, that can take days.
Why these mistakes are so hard to find
A chat AI writes the answer that seems most likely. It doesn’t go back to the statement to add up the page again, and it doesn’t prove that every transaction landed somewhere. When a deposit doesn’t say what it is, it doesn’t stop and ask. It picks a line that fits. So a wrong T-12 and a right one look exactly the same, and asking the AI to double-check itself doesn’t help: it checks with the same eyes that made the mistake.
And a T-12 is the number a property is priced and financed on. At a 6% cap rate, every $1,000 a year of NOI that isn’t real adds about $16,700 to what the property seems to be worth.
Mistakes AI can make when nobody checks
The ones that cost the most come first.
1. It leaves transactions out
The AI summarises instead of listing, and a handful of small withdrawals never make it onto any line. Each one is small. Together they are expenses the T-12 doesn’t have, and NOI is too high.
2. It counts the owner’s own money as income
The owner moves $40,000 in from another account to cover a short month. To the AI it’s a deposit, and deposits look like income. NOI is $40,000 too high, and at a 6% cap rate the property looks about $667,000 more valuable. The same goes for a refinance that puts a large sum in the account in one day, and for tenants’ security deposits that will be paid back. None of it is income.
3. It puts a transaction on the wrong line
A refund from the electric company lands in rental income. A repair lands in capital work, out of NOI. The words on the statement said what each one was. The line the AI chose says something else.
4. It leaves one-time items in NOI
An insurance payout after a storm, a tenant’s lease buyout, a tax refund, a new roof. Each is real money that won’t happen again. Left in NOI, it makes the year look better or worse than the property earns in a normal year.
5. It types the totals instead of wiring them to the transactions
The T-12 looks finished, but its figures are typed in, not formulas that add up the transactions behind them. Nobody can trace a month of a line back to the deposits and payments in it, and when one transaction is corrected, nothing else moves. The totals may even be right today. There’s no way to show it, to you, a lender or a partner.
6. It misreads a figure
A $14,800 deposit is read as $41,800. A 6 is read as an 8 on a scanned page. The figure looks like any other rent deposit, so nobody questions it. Unless each statement’s transactions are added up and matched to the ending balance the bank printed, nothing shows the mistake.
7. It skips a page, or a whole month
One page of a long statement never gets read, or one month’s file is left out. The T-12 still has twelve columns. One of them is just short, or quietly filled from the month next to it.
8. It counts the same transactions twice
Two statements overlap by a few days, or the same page is read twice. Every transaction on it appears twice on the T-12, as income and expense that never happened.
9. It puts the mortgage payment in operating expenses
The loan payment goes out every month and looks like any other bill. Counted as an operating expense, it takes the whole debt service out of NOI, and every ratio a lender works out from NOI is wrong.
10. It guesses who a check paid
A bank statement shows a check’s number and amount, and nothing else. A $38,000 check could be the property taxes, a new roof or the owner’s personal bill. The AI puts it somewhere, and doesn’t tell you it guessed.
What to do about it
You can catch most of these yourself if you check the T-12 against the bank statements, not by asking the AI. The checks are in How to check an AI-built T-12.
Or let us do it. Our Trailing 12 (T-12) is checked by our own proprietary software. It checks every transaction, every formula and every cell against your bank statements, to make sure each one matches before the workbook reaches you. Anything your statements don’t say is asked about, never guessed.