Pro forma means projection, not fact
Every offering memorandum presents a pro forma: what the property would produce under the seller's assumptions. Those assumptions are chosen to sell the building. Your job is to rebuild the statement from trailing twelve-month actuals and your own operating assumptions.
The eight lines to rebuild first
Vacancy is often shown at 3% or 5% when the market runs 7%. Management is frequently shown at zero because the seller self-manages. Maintenance and capital reserves are commonly absent entirely. Property taxes are almost always shown at the seller's assessed basis rather than reassessed at your purchase price. Insurance is often stale. Utilities may exclude vacant-unit consumption. Ancillary income may assume programs that do not yet exist. And loss to lease is quietly ignored.
Rebuild, then compare
Once you have your own NOI, compute the cap rate at asking price. The gap between that number and the marketed cap rate is the entire negotiation. Our NOI calculator and cap rate calculator handle the arithmetic; the discipline is yours.
Frequently asked questions
What documents should I request?
Trailing twelve-month operating statements, current rent roll, all leases, tax bills, insurance declarations, utility bills, and a capital expenditure history.
What if the seller will not provide actuals?
Treat that as an answer. Underwrite conservatively or move on.