Pro Forma Variations

[Shannon Sadik]

I had a great pro forma and was very familiar with working in it. However, I saw several other pro formas on this site and wanted to compare just to make sure I was doing everything correctly. I have looked at 4 different pro formas and each time I enter in the same numbers for expenses, but get different net operating expenses, cap rates and cash flow every time. Does anyone know why this is occurring and which one I should use? I realize there may be some slight variation in the numbers due to the order of calculations and whether you count PM (10%) x rent collected vs rent expected, but I shouldn't be getting such contrasting numbers. Help! 

[Shannon Sadik]

@David Stott I agree. And I have used that tool as well since you get a few free tries. However, when the numbers on one on pro forma show a negative cash flow and the others do not, it does make me stop and think about the property. I ultimately do not want to buy a property that doesn't make good cash flow, so do need to be able to read the numbers accurately.

Here is Example 1: 

Fair Market Value	$229,000
Discount (%,$)	0%	$-
Purchase Price (Max Offer Price)	$229,000
Percent Down	15%
Down Payment Amount	$34,350
Amount Financed	$194,650
Interest Rate	4.600%
Costs of Repairs (Make Ready)	$2,500
Length of Mortgage (Years)	30
Payment	Monthly	Annual
Monthly Mortgage Payment	$997.86	$11,974.35
Rental Income	Monthly	Annual
Unit A	$1,500.00	$18,000.00
Unit B	$1,500.00	$18,000.00
Gross Rental Income	$3,000.00	$36,000.00
Vacancy Rate	10%
Net Rental Income	$2,700.00	$32,400.00
Expenses	Monthly	Annual
Property Management Fees	$270.00	$3,240.00
Leasing Costs
Maintenance Reserve	$405.00	$4,860.00
Utilities	$58.33	$700
PropertyTaxes	$725.17	$8,702.00
Insurance	$100.00	$1,200.00
Other (Lawn Care, Trash, snow plow, etc)	$-
Total Expenses	$1,558.50	$18,702.00
Net Operating Income	$1,141.50	$13,698.00
Mortgage Payment	$997.86	$11,974.35
Total Cash In (Downpayment + Repairs)	$36,850.00
Net Cash Flow	$143.64	$1,723.65
Investment Analysis
Appreciation Rate (20 YR AVG = 4.4%)	4.4%
Rent Appreciation (20 YR AVG = 3.1%)	3.1%
Cost to Sell Property	7.0%
Cap Rate (9% + good)	6.0%
Rent to Value Ratio (1% + good)	1.3%
Cash on Cash w/ Make Ready Costs (10-15% good)	4.7%