A pro forma report gathers current or estimated income and expense data to project the net operating income and cash flow of a property. It’s a tool that business owners, decision-makers, stakeholders, investors, creditors and others use to examine hypothetical conditions. The NOI and cash flow projections from a real estate pro forma are used in other investment property calculations such as cap rate, cash-on-cash return and ROI. A pro forma with an inaccurate NOI and cash flow will cause harm on the other financial metrics and lead to a poor investment decision. Investors and other project stakeholders can look forward or backward, revealing financial information that standard financial statements do not provide.
Most pro formas include sections about revenue, potential gross revenue, expenses and net operating income. A roof is a large and expensive component of any property, it is important not to overlook the following conditions when creating the roofing section of your pro forma.
