Discover the Excel Pro Forma Template for R&D that Simplifies Your Processes

Excel pro forma template for R&D

hey in this video I'm going to answer the question what is a pro forma in real estate so if you are in the real estate development or real estate Finance industry and maybe you are looking to get a loan or raise financing from investors and they've asked you for your proforma that may have brought you into a bit of a panic wondering what in the world is a pro forma how do I create one and it's kind of standing in your way between you and raising the capital you need for your project well you've come to the right place I'm going to try to explain this to you in a simple way as possible and show you not only what it means but also how to calculate it and show you a tool that you can use to calculate a proforma for your real estate project before I dive into that just a little bit of background my name is Adam hoxima I'm the co-founder of projection hub we help Founders create Financial projections for various different businesses and industries we do a lot of work in real estate and so that's specifically what I'm going to be talking about today what is a proforma in the real estate industry so with that let's go ahead and dive into today's video okay so we're just going to start with a simple Google question here in definition what does proforma mean in real estate Google says it is a future projection of a property's cash flow or net operating income we'll talk through what that means and how to calculate that but really proforma just means a forecast a future projection based on a set of assumptions and so you need to be able to in order to produce a proforma you need to be able to establish a number of assumptions about your property and and then use that to create a set of forecasted financial statements so I have hold up here our multi-family apartment developer template and so we'll link to this template along with our other real estate related projection templates in the description of the video below so you can grab a template that is best fit for you but I'll just show you kind of what a performer actually is so this is a is a pro forma it's a 10-year projection template for in this case a multi-family apartment complex and what you'll see is our forecasting effective gross income potential gross income up here and then ultimately net operating income down here and so you'll also see you've got a you have a five-year kind of income statement summary here so this might be really what they're looking for when they ask for a pro forma they're probably looking for a forecasted income statement most likely also a cash flow statement and a balance sheet and so that's what all these real estate developer templates will have for you but how do we get to hit this point how do we produce these financial statements so you're going to have a bit of work in order to set up the assumptions that you need in order to actually produce a pro forma so in this example we're looking at a multi-family apartment complex and so we've got you know studio apartments apartments one bedroom and two bedroom apartments we picked a number of units of each type that we have the number of square footage and the rent per square foot that we're going to charge we need to know when we're going to open the or complete the construction of the property when we're going to open them up for rent and how long it's going to take us to kind of reach a stabilized rent for the property we also need to know assumptions like vacancy rates so what percentage of the units do we expect to be vacant we need to know operating expenses on an ongoing basis and so there's different ways that we might forecast or project expenses and they might be on a per unit basis a per square foot basis or an entire property basis you also have salaries and wages you might need to forecast you know maybe you have a property manager for the property you need to input that somewhere you're also going to have a number of financing details so how much debt are you taking out how much Equity are you getting what are the terms of the debt all that's going to affect your your pro form and your projection and so you need to enter in those assumptions here as well and last but not least certainly the construction budget so your construction budget is going to make a big difference and you know what that proforma looks like and whether you end up producing a return for the investor we also have kind of a investor return or distribution tab here and that would allow you to kind of understand and estimate okay if we sell the property in the future based on these Pro formula assumptions at such and such cap rate what kind of internal rate of return so we can see the irr here the internal rate of return for a potential investor it's all you know based on the forecast that we're building so there's a lot here I know that you may have questions and you can go take a look at the links in the description of the video below to maybe find a template perform a template that would be specifically useful for your type of property and there'll be a demo video that really walks through that template in much more detail so depending on your specific situation you could get a much more detailed walkthrough of how to fill that particular template out but in this video we're primarily focused on just answering what does that proforma mean when somebody asks for that in the real estate industry and so hopefully you can have an idea of of what those investors or lenders might be looking for and what you need to do in order to produce that so if you have any questions reach out to us at support projectionhub.com or leave a comment in the comment section of the video below and we'd be happy to help thanks foreign [Applause]