Who can explain what the "Pro-forma Cap Rate" and "Purchase Cap Rate" actually represent on the BRRRR and Rental Property Calculators?

Before sending the financials to you they will see how they compare to the OM/Pro-forma and they will look for anything that sticks out.

.$2,250.00MONTHLY INCOME,$1,410.26MONTHLY EXPENSES,$839.74MONTHLY CASHFLOW,8.60%PRO FORMA CAP,$19,350.00NOI,$27,750.00TOTAL CASH NEEDED,36.31%CASH ON CASH ROI,11.06%PURCHASE CAP RATE

Each property you do you'll form a new LLC that is strictly for that property and defines ownership/splits by LPs and the GP (Blue Estate LLC).Lastly, you're basically asking for an entire business plan from start to finish.

. * Don't allow financing or a finance contingency (it can be a good indication they are selling above market value)* Don't allow for your own independent property inspection* Are not realistic with their pro forma's (i.e. they don't include vacancy or maintenance projections or use      unrealistically low vacancy factors)* Require you to pay for any renovation upfront* Sell only in cheap. low end neighborhoods* Don't accurately represent the neighborhood/property classification* Don't have consistent rehab standards for all properties* Don't provide a scope of work for the property* Can't provide references of repeat investors* Require you to close before a tenant is in place

If the deal is really that overpriced, you need to illustrate that even in best case scenario (pro forma) conventional financing limits this acquisition to these variables.

A little worse numbers could easily result in negative cash flow.I hope everyone who invests in RE uses well established pro forma work sheets (such as the BP calculators) but it is not the case. 

Mostly these zero appreciation markets sell on poor pro forma that under represents the cost. 

I use a pro forma spreadsheet to evaluate my options, with a slew of inputs, to help me figure out if a potential investment makes sense from day one, and how it likely will look 10 or 20 years down the road as well.

I’ve been doing a lot of reading and listening to podcasts to learn more about the RE investing world and form a foundation of knowledge.