A proforma is a financial roadmap for your development, but what exactly does it include? While a proforma can be detailed and complex, the most essential components are:
- Revenue Projections
This includes any income your project will generate:- Rental Income – Expected revenue from leased units
- Sales Revenue – Projected earnings from unit sales
- Costs & Budget
Your costs are broken down into several key areas:- Land Costs – Purchase price, site prep, and related fees
- Hard Costs – Construction, materials, and labour
- Soft Costs – Design, management, taxes, municipal fees, financing, and insurance
- Contingency Costs – A financial buffer for unexpected expenses
Project Success Tip:
Once you’ve outlined your budget, test different scenarios. Ask:
- What happens if construction costs increase by 10%?
- How would rising interest rates impact financing?
- If costs go down, what’s the minimum selling price or lease rate needed to stay profitable?
Staying conservative on revenue projections early on helps ensure your project remains viable, even through market shifts.