What does proforma mean in real estate?

I'm looking at a muti-family home as an investment property. The ad for the house says monthly rents equate to $1500 (proforma) per month. What exactly does proforma mean in this context? Thanks in advance!!

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  • 10 years ago
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    Proforma is the income that you project will be obtained from an investment property or a business.

    The definition of proforma in finance is often known "as if basis". For example if a banking underwriter doing your loan says the proforma on your loan application for a duplex is 1200 a month income then maybe he would say our ability to lend to you would be up to 90k or 100k on this deal if you put x down and had good credit.

    For this example maybe the proforma would change if you put new ac unit on the property and put in a swimming pool and added a hot tub and had laundry units with a wet bar out back then your proforma goes from 1200 a month income to 2000 a month income. The duplex might get 600 in rent monthly x 2 units= 1200 x 12 months per year total and ect.You see proforma is projected its not actual income that proven. So proforma is a what if formula used to predict income on an asset.

    If i buy multi family I ask for a schedule E tax return for 2 previous years if its larger then a 4 unit building. If the seller wont give it to me I become highly suspect on any numbers they may attempt to show and feel they are hiding something that would drive up expenses on the apt building.

    Proforma is used in the business market place using comparable assets that are similar in location and character to determine income of future on an asset or in your case a house.

    Often people selling assets will tell you that it can produce x dollars a month that is proforma.

    Usually its the Seller and Realtor or Broker that give you his idea of what the property will produce.

    I find as an active investor I joke about proforma that its the sellers fantasy of what he thinks his property is worth when he is trying to sell it. lol

    Source(s): 20 year developer, investor, income property owner, hard money lender
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  • Anonymous
    5 years ago

    This Site Might Help You.

    RE:

    What does proforma mean in real estate?

    I'm looking at a muti-family home as an investment property. The ad for the house says monthly rents equate to $1500 (proforma) per month. What exactly does proforma mean in this context? Thanks in advance!!

    Source(s): proforma real estate: https://tr.im/7geYy
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  • 3 years ago

    Pro Forma Definition

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  • Tracey
    Lv 4
    4 years ago

    Multiple Listing Service (MLS) Association of real estate Brokers who agree to share Listings with one another.

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  • 4 years ago

    Of course we are taking about " being fully occupied!

  • 10 years ago

    It means that if the property is fully occupied "X" is what you could expect in rents.

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