proforma

Definition

A financial forecast showing what a property could theoretically earn under perfect conditions with perfect tenants in a perfect world. The real estate equivalent of a dating profile.

Example Usage

The proforma projected 95% occupancy and zero maintenance costs, leading experienced investors to immediately cut the projections in half.

Origin

Latin 'pro forma' meaning 'for the sake of form,' adopted in accounting and financial projections

Fun Fact

The gap between proforma projections and actual performance is often called the 'optimism tax' by seasoned investors.

Source: Commercial real estate investment terminology

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