150: Rookie Reply: Which Rent Numbers Can You Trust When Analyzing a Deal?

Ashley and Tony’s Instagram DMs have been blowing up! This week’s question comes from Collette through Tony’s Instagram direct messages. Collette is asking: Do you make offers based on pro forma or actual rent numbers? If you’re a real estate rookie or a residential-only investor, this may be the first time you’ve heard the term “pro forma” before. A real estate pro forma is simply a spreadsheet or document that projects the estimated financials on a property once capital expenditures, rent increases, or other improvements have been put in. So, should you trust those numbers? Here are some suggestions: Remember to “trust, but verify” and always run your own numbers on projected income Use multiple different investor scenarios: pro forma, current numbers, worst case, etc. Take into account the holding cost of performing a large rehab on a commercial property Calculate your working capital and CapEx budget needed to acquire the property successfully And more in the episode… If you want Ashley and Tony to answer a real estate question, you can post in the Real Estate Rookie Facebook Group! Or, call us at the Rookie Request Line (1-888-5-ROOKIE). Links from the Show Real Estate Rookie Rookie Facebook Group Real Estate Rookie Youtube Channel Rookie Podcast 103: From Restaurant Waiter to 100+ Deals in Only 4 Years w/ Derrick Acuff Instagram BiggerPockets BiggerPockets Rent Estimator BiggerPockets Pro Membership Zillow Craigslist Facebook Marketplace BiggerPockets Calculator Reports Check the full show notes here: https://www.biggerpockets.com/rookie150 Learn more about your ad choices. Visit megaphone.fm/adchoices