What is a pro-forma?
- Definition
- A financial model often used in real estate to predict future cash flows and total investment returns.
A pro-forma attempts to take into account all the variables such as potential gross income, vacancy allowance, expenses, and future interest rates among others, to model what anticipated returns on a project may be.
It is always important to remember that a pro-forma is a forward-looking projection or estimation and should not be relied upon as fact or a guarantee of performance. Investors should always verify or conduct their own due diligence for accuracy of assumptions.
