Pro Formas Are Fake

What else needs to be said?

Yes, you want to build a pro forma of any investment property you are looking at, but you should never rely on a seller-provided pro forma. They're all fake. Indeed, since everyone knows they're fake, even an honest seller/agent has to provide a fake pro forma because if they don't, buyers will just assume the realistic prediction is fake as well.

So, never trust a pro forma. Instead, we'll tell you what to look for from a seller and how to build your own.

Joe Fairless' book: https://www.amazon.com/Best-Ever-Apar...

Basic Components of Pro Forma:
Gross Income
- Vacancy
- Economic Vacancy (delinquency)
+ Other Income (i.e. laundry, app fees, etc.)

Fixed Expenses
- Property Taxes
- Property Insurance
- Utilities Variable Expenses
- Property Management Fee
- Maintenance - Contract Services
- General Administration
- Marketing
- Payroll (for onsite management)
- Recurring CAPEX

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