A pro forma is a projection: a spreadsheet view of what a property might earn and cost over a future period, from gross potential rent down through vacancy, operating expenses, NOI, debt service, and cash flow. Every listing brochure has one, and every serious buyer builds their own. The word to hold onto is "projection" — a pro forma is a set of assumptions wearing the costume of a financial statement.
The gap between a seller's pro forma and reality is where deals go wrong. Common tells: market rents applied to units that have never achieved them, a thin vacancy allowance, property taxes at the seller's current assessment rather than your post-sale reassessment, and maintenance numbers with no capital reserve. The antidote is to underwrite from actuals — trailing-twelve-month statements, the real rent roll, real tax and insurance quotes — and treat the pro forma as the hypothesis your due diligence has to confirm.
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Written and maintained by the Aptoria editorial team
Editorial method reviewed July 28, 2026. Aptoria reviews scope, source fit, examples, limitations, links, and publication gates. This record does not claim attorney, CPA, lender, appraiser, or other independent professional sign-off.
Related terms
Investing metrics
Effective gross income (EGI)
Effective gross income is the property income expected after vacancy and collection loss, plus eligible other property income, before operating expenses.
Investing metrics
Net operating income (NOI)
Net operating income is effective property income minus normalized property operating expenses, before debt service and owner-level income taxes.
Investing metrics
Cash flow
The cash left over each period after all income is collected and all expenses — including the mortgage — are paid.
Investing metrics
Vacancy loss
The rent a property fails to collect because units sit empty, expressed in dollars or as a percentage of gross potential rent.
Investing metrics
CapEx reserve
Money set aside on a schedule to fund large, infrequent capital expenses like roofs, HVAC systems, and water heaters.
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