Is my proforma faulty?

[David Sheeran]

I have a rental property proforma that I have put together and would like to share it with some of you guys. The problem is it's an excel spreadsheet and dont think theres a way to share from the forums. If anyone would be willing to check it out I can email it to you. Message me if interested. Thanks! :mrgreen:

[Bill Gulley]

David,welcome! I see there has been no response so, it sounds like you are proud of your spreadsheet and it may be very comprehensive, but;

IMO, a proforma that goes beyond 12 months is a dream sheet, a way for you to tease or entertain yourself. There are so many unforseen variable that can and generally will affect actual performance that, while you can make a good guess, I have never seen one that was on the bottom line.

IMO, again, lenders want to see your pro forma as part of your loan package. Sorry to tell you, but any good lender does not use the figures you show, they do their own and actually have more data available, nationally and locally, in any given industry than an individual investor would have at hand. More than anything, your numbers are viewed to see more about you than what you plan to make. How you derive at your figures, what you anticipate and yor planned use of funds gives a good indication of your management skills and analytical abilities. You may come up with what they do (big plus for you) and they may accept some of your numbers, but on the whole, they don't base their risks on your computations, But they can and do use them against you too.

So the key with a pro forma for loan purposes is to be very thorough and very conservative in your projections.

Using a written pro forma to show to possible partners of investors is plain dangerous and IMO, should never be done as it will always be seen as, at the least a representation of your deal and may even be seen as a guarantee. When stuff happens and if you ever get to court, you can bet that pro forma will be evidence agaainst you. So, handing out a pro forma is a bad idea IMO. Going over elements of the numbers will be expected by investors to some extent, but I would suggest not to hand out anything that looks like a representation of the success of your deal.

IMO, the key to a good pro forma is keeping close to actual historical data, assume that expenses will increase and income will remain flat, or with proper justification a slight increase.

I believe other have copied and posted other documents here in the past or at least an address to click on, I have no idea how to do that, I'm technologically deficient having been born before 1969, I was not born with the proper DNA! Maybe someone else can tell you how. Good luck!