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:
- Economic Vacancy (delinquency)
+ Other Income (i.e. laundry, app fees, etc.)
- Property Taxes
- Property Insurance
- Utilities Variable Expenses
- Property Management Fee
- Maintenance - Contract Services
- General Administration
- Payroll (for onsite management)
- Recurring CAPEX
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Check out our other videos:
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Why and How to Screen Prospective Tenants
How to Manage Collections and Delinquency (Property Management)
A Guide to Due Diligence for Buying Houses
How to Find a Bank to Refinance Your Investment Property
Is the Economy on the Edge of a Cliff??? How Should Real Estate Investors Respond?
Buying Portfolios of Houses
The Case for Buy and Hold Real Estate Investment
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