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Tool 8: Detailing Revenues/Costs for Selected Option (Pro Forma)

This tool allows you to quantify and outline the various revenues and costs associated with an affordable housing project. The resulting financial statement is known as a “pro forma.” A pro forma can help you understand the full market costs and projected returns of producing units. If you are a private developer, it can also help you “scope out” the business case for development projects.

Please note that the blue cells below are calculation cells and thus, do not require entered information.

Steps:

  1. Under “project revenue,” record the number of units planned (A) and the average sale price per unit (B). Then click the "calculate" button to determine the gross revenue (C).
  2. In row D, record the total commissions and fees associated with your housing project. Then click the "calculate" button to determine the net project revenues (E).
  3. Under "Project Costs", Record the various project costs associated with your housing project. Then click the "calculate" button to total the costs (K).
  4. For row L, click the "calculate" button to determine the net cash flow to the developer before financing.
  5. In row M, enter the financial interest that will accrue on the mortgage for the housing project. You can calculate this using an online calculator.
  6. For row N, click the "calculate" button to determine the net cash flow to the developer.
  7. In row O, enter the cash investment in the housing project provided by investors, banks, government, etc.
  8. For row P, click the "calculate" button to determine the total cash-on-cash return.
  9. In row Q, calculate the annualized cash-on-cash return by dividing the total cash-on-cash return by the number of years required to develop the project.

 

Residential Project Proposals Proposed Units
Required Units
Average size (square feet)
   
Project Revenue
A) Number of Units
B) Average sale price per unit
C) Gross revenue (AxB)
D) Less Commissions and Fees
E) Net Project Revenues (C - D)
   
Project Costs
F) Land Acquisition
G) Planning, Design, Approvals
H) Site work and Building Construction
I) Amenities, Off-site Costs*
J) Management and Overhead
K) Total Project Costs (F+G+H+I+J)
   


L) Net Cash Flow Before Financing (E-K)


M) Financing Interest (based on 25 year mortgage)


N) Net Cash Flow to Developer (L-M)


O) Cash Investment


P) Total Cash-on-Cash Return (N/O)
Q) Annualized Cash-on-Cash Return


* Amenities include gardens, a small play area for children
** Based on 25 year mortgage


            See example    

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