Ark7’s Pro-Forma is a financial statement that forecasts a rental property's net operating income using its future potential incomes and expenses to determine its potential return on investment. This document shows how an investment property will perform given certain adjustments such as rising rents, decreasing vacancies, capital improvements, and/or development and expansion. Ark7 uses the following steps to calculate the items in the Pro-Forma:
- Estimate the property's potential gross rental income.
- Estimate the vacancy loss.
- Estimate all future expenses.
- Subtract the projected annual expenses from the property's gross rental income minus vacancy loss.