Real Estate Pro Forma Calculator
5-year projection with stabilization. Current rents → market rents → exit cap rate.
Inputs
Property + Financing
Rents
Operating
Exit
Results
5-Year Cash Flow Trajectory
5-Year Pro Forma
| Year | Gross | NOI | Cash Flow |
|---|---|---|---|
| 1 | $108,000 | $48,664 | -$1,679 |
| 2 | $133,200 | $62,726 | $12,382 |
| 3 | $137,196 | $64,955 | $14,612 |
| 4 | $141,312 | $67,252 | $16,909 |
| 5 | $145,551 | $69,618 | $19,274 |
Sam's Take
A pro forma is only as good as its assumptions about stabilization. The brokers' pro formas always show rents reaching market in year 1 — that's how they justify the price. Reality: turnover is staggered (you can't kick everyone out at once), and rent increases trigger pushback. My realistic stabilization is year 2-3 for value-add multifamily, with maybe 60-70% of the rent gap captured by year 3. Plug those numbers in, then re-run with broker numbers — the gap is the size of the lie.
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What a pro forma actually is
A pro forma is a multi-year financial projection for a real estate deal. It shows what you expect the income, expenses, cash flow, and return to look like — usually broken out year by year, often over 5 to 10 years. For anything bigger than a single-family rental, the pro forma is the standard underwriting tool. It's how you take a static snapshot of a building and turn it into a forecast of what it will do as an investment.
The structure is usually two sets of columns: the "current" column shows the building as it actually operates today, and the "stabilized" or "year N" columns show what it will look like after you do whatever you're planning to do — push rents to market, replace bad tenants, cut wasteful spend, fill vacant units.
The lie inside every broker pro forma
When a broker sends you a pro forma, it's a marketing document. Their job is to sell the building. Almost without exception, broker pro formas do three optimistic things: rents reach full market by year 1, vacancy drops to 2-3% in year 1, and there are zero unexpected capital expenditures over the hold period.
None of that is what real operations look like. After 12+ years running buildings:
- Stabilization takes 2-3 years, not 1. Rolling tenant turnover means rent increases come unit-by-unit as leases expire. Even with a hard renovation push, you don't capture the full market rent gap inside 12 months.
- You'll capture 60-70% of the rent gap, not 100%. Not every turn lands at full market. Some tenants negotiate. Some units rent slightly below comp. Vacancy between turns eats some of the upside. Use 60-70% as a planning number, not 100%.
- Reserve 5-10% for "unexpected" CapEx even on stabilized buildings. Boilers fail. Roofs leak. A water main breaks in March. None of those things show up on the pro forma — but they're as predictable in aggregate as anything else.
Take the broker's pro forma, layer in those three corrections, and what's left is closer to what the deal will actually do. If it still pencils after that, it might be a real deal. If not, you saved yourself.
Exit cap rate — the swing factor everyone underweights
On a 5-year pro forma, the single biggest swing factor in total return is what exit cap rate you assume. A 25 basis point change in the exit cap (say 6.75% to 7.00%) can swing the total return on a value-add multifamily deal by 5-10%. That's not noise — that's most of the deal's IRR sitting in one assumption.
And here's the kicker: exit cap rate is largely outside your control. It's set by where the market is in year 5, which depends on interest rates, capital availability, and the broader economic environment, not on how well you operated the building. Always run a sensitivity analysis: what happens to your return if cap rates expand 50 bps? 100 bps? If the deal still pencils at the worse scenario, you've underwritten conservatively. If it falls apart, you're betting on the macro and calling it a real estate deal.