Zachary Vorsteg · Free resourceszacharyvorsteg.com/proforma.html
The property workbench
A clearer view
of the deal.
Model the income, costs and financing behind a rental property. See which assumptions shape the cash flow before you take the next step.
Year 1 at a glance
Illustrative example · Replace the assumptionsUSD · Annual estimates before income tax · Dollars rounded for display
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01 / Make the assumptions yours
Use your own rent roll, quotes and financing terms. The starting example is illustrative, not market data.
Purchase & financing
Start with the acquisition and the cash you need to close.
Rent roll & other income
Rent is monthly. Area is in square feet.
Enter potential monthly rent for each unit, including vacant units. The vacancy allowance below reduces the combined potential income.
Operating expenses
Annual costs of running the property.
Debt service, replacement reserves, leasing commissions and tenant improvements are shown separately below net operating income.
Capital & leasing allowances
Keep property operations separate from cash investment.
These are annual cash-flow budgets, not a lease-by-lease rollover schedule. Keep initial repairs and future improvements separate.
Growth & exit assumptions
Make the holding period and sale assumptions explicit.
03 / Look beyond year one
Cash flow over the holding period.
Each year represents 12 full operating months. Income and expenses grow from Year 1. Loan payments stop at the end of the amortization term.
| Year | Effective income | Operating expenses | Net operating income | Capital & leasing | Debt service | Cash flow | Loan balance |
|---|
On smaller screens, scroll the table sideways to see every column.
At the end of the hold
An exit estimate,
with the costs visible.
Forward-year NOI ÷ exit cap rate, less selling costs and remaining debt. Annual cash flow above excludes these sale proceeds.
From a model to a conversation
Bring the number
you’re least sure about.
A rent assumption, a cost estimate or a model that needs to fit your situation. Tell me what you’re trying to understand.
The model, explained
What goes into the result.
Income, NOI & cash flow
Potential rent and other income are reduced by the vacancy allowance. Operating expenses are then deducted to calculate net operating income (NOI). Replacement reserves, additional reserve allowances, leasing commissions, tenant improvements and debt service are deducted below NOI to calculate cash flow.
Cap rate is NOI divided by the purchase price. Cash-on-cash return is annual cash flow divided by the initial down payment, closing costs and initial repairs. A return is unavailable when its denominator is zero.
Financing & debt coverage
The loan uses a fixed rate and monthly principal-and-interest payments over the amortization term. At 0% interest, payments still repay principal. An all-cash scenario has no debt payment or DSCR.
Displayed debt coverage is NOI divided by annual debt service. Lenders may deduct reserves or use other underwriting adjustments. This is not a lending approval or a loan quote.
Growth, capital costs & exit
Year 1 uses your entered budgets. Income growth applies to all income; expense growth applies to fixed operating expenses and recurring capital allowances. Percentage management follows effective income. Commission and improvement budgets can apply in Year 1 only or recur annually.
The exit estimate uses the next year’s NOI, after the selected holding period, divided by the exit cap rate. Selling costs and remaining debt reduce net sale proceeds. A nonpositive forward NOI or zero exit cap rate does not produce a meaningful capitalized sale estimate.
Scope & privacy
This is a rental-property screening model, not an appraisal, investment recommendation or tax model. It does not model lease rollover, rent-free periods, rent recoveries, refinancing, balloon payments, depreciation, income taxes or partner distributions. Verify property-specific inputs before relying on a result.
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Definition references: Fannie Mae operating statement ↗ · OCC commercial real estate lending ↗
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