Real estate development pro forma example, worked line by line
A complete development pro forma for a 48-unit apartment building, from the land closing to the sale: $14,848,230 of total cost including $918,230 of construction interest, $983,520 of stabilized NOI, a 6.62% yield on cost and a 22.6% levered IRR. The project is made up; every number comes from the free pro forma, so you can open it and change any input.
Updated
The project
Pecan Row Apartments is a 48-unit rental building. Land closes in Jan 2026, construction runs 18 months, and the building leases up for 9 months before it is sold at stabilization in Apr 2028.
| Input | Value |
|---|---|
| Land | $2,400,000 |
| Hard costs | $9,600,000 |
| Soft costs | $1,450,000 |
| Contingency | 5% of hard costs |
| Construction loan | 65% of total cost at 7.5% a year |
| Average rent | $2,350 per unit per month, plus $75 other income |
| Vacancy and credit loss | 5% |
| Operating expenses | $7,200 per unit per year |
| Exit | Sale at a 5.5% cap rate, 2% selling costs |
Sources and uses
Uses is where the money goes. Sources is where it comes from (the five parts are in what a development pro forma is). Construction interest sits on the uses side because the loan pays for it, and that makes the loan bigger.
| Uses | Amount | Share |
|---|---|---|
| Land | $2,400,000 | 16.2% |
| Hard costs | $9,600,000 | 64.7% |
| Soft costs | $1,450,000 | 9.8% |
| Contingency | $480,000 | 3.2% |
| Construction interest | $918,230 | 6.2% |
| Total development cost | $14,848,230 | 100.0% |
| Sources | Amount | Share |
|---|---|---|
| Equity | $5,196,880 | 35.0% |
| Construction loan | $9,651,349 | 65.0% |
| Total | $14,848,230 | 100.0% |
Stabilized income
| Gross potential rent (48 units × $2,350 × 12) | $1,353,600 |
| Vacancy and credit loss (5%) | -$67,680 |
| Other income | $43,200 |
| Effective gross income | $1,329,120 |
| Operating expenses | -$345,600 |
| Net operating income | $983,520 |
|---|
The monthly cash flow
Land is paid at closing. Hard costs and contingency follow an S-curve, soft costs are spread evenly, and equity pays first. The $5,196,880 of equity is used up in month 7, Aug 2026. From then on the loan pays, and interest is added to the balance every month until the sale.
| Month | Cost | Equity | Loan draw | Interest | Loan balance |
|---|---|---|---|---|---|
| Jan 2026 | $2,400,000 | $2,400,000 | $0 | $0 | $0 |
| Feb 2026 | $89,063 | $89,063 | $0 | $0 | $0 |
| Mar 2026 | $155,581 | $155,581 | $0 | $0 | $0 |
| Apr 2026 | $280,594 | $280,594 | $0 | $0 | $0 |
| May 2026 | $449,024 | $449,024 | $0 | $0 | $0 |
| Jun 2026 | $640,556 | $640,556 | $0 | $0 | $0 |
| Jul 2026 | $832,087 | $832,087 | $0 | $0 | $0 |
| Aug 2026 | $1,000,517 | $349,975 | $650,542 | $0 | $650,542 |
| Sep 2026 | $1,125,530 | $0 | $1,129,596 | $4,066 | $1,780,137 |
| Oct 2026 | $1,192,048 | $0 | $1,203,174 | $11,126 | $2,983,311 |
| Nov 2026 | $1,192,048 | $0 | $1,210,694 | $18,646 | $4,194,005 |
| Dec 2026 | $1,125,530 | $0 | $1,151,742 | $26,213 | $5,345,747 |
| Jan 2027 | $1,000,517 | $0 | $1,033,928 | $33,411 | $6,379,675 |
| Feb 2027 | $832,087 | $0 | $871,960 | $39,873 | $7,251,634 |
| Mar 2027 | $640,556 | $0 | $685,878 | $45,323 | $7,937,513 |
| Apr 2027 | $449,024 | $0 | $498,634 | $49,609 | $8,436,146 |
| May 2027 | $280,594 | $0 | $333,320 | $52,726 | $8,769,467 |
| Jun 2027 | $155,581 | $0 | $210,390 | $54,809 | $8,979,857 |
| Jul 2027 | $89,063 | $0 | $145,187 | $56,124 | $9,125,045 |
| Aug 2027 | $0 | $0 | $57,032 | $57,032 | $9,182,076 |
| Sep 2027 | $0 | $0 | $57,388 | $57,388 | $9,239,464 |
| Oct 2027 | $0 | $0 | $57,747 | $57,747 | $9,297,211 |
| Nov 2027 | $0 | $0 | $58,108 | $58,108 | $9,355,318 |
| Dec 2027 | $0 | $0 | $58,471 | $58,471 | $9,413,789 |
| Jan 2028 | $0 | $0 | $58,836 | $58,836 | $9,472,625 |
| Feb 2028 | $0 | $0 | $59,204 | $59,204 | $9,531,829 |
| Mar 2028 | $0 | $0 | $59,574 | $59,574 | $9,591,403 |
| Apr 2028 | $0 | $0 | $59,946 | $59,946 | $9,651,349 |
The balance at the sale, $9,651,349, equals the loan of 65% of total cost. The two only match because the loan is sized on a total cost that already includes its own interest.
Returns
| Exit value ($983,520 ÷ 5.5%) | $17,882,182 |
| Selling costs (2%) | -$357,644 |
| Net sale proceeds | $17,524,538 |
| Less total development cost | -$14,848,230 |
| Profit | $2,676,308 |
|---|---|
| Margin on cost | 18.0% |
| Yield on cost | 6.62%, +112 bps over the exit cap rate |
| Unlevered IRR | 15.4% |
| Levered IRR | 22.6% |
| Equity multiple | 1.51x |
The levered IRR is well above the unlevered one because the loan costs 7.5% while the project earns more than that. The equity multiple of 1.51x is earned over 27 months, which is why the IRR looks generous next to it.
What moves the result most
Each row changes one input and leaves everything else as modelled.
| Change | Total cost | Yield on cost | Profit | Levered IRR |
|---|---|---|---|---|
| As modelled | $14,848,230 | 6.62% | $2,676,308 | 22.6% |
| Hard costs 10% higher | $15,919,818 | 6.18% | $1,604,720 | 13.4% |
| Rents 5% lower | $14,848,230 | 6.19% | $1,530,670 | 13.5% |
| Exit cap rate 0.5 points higher | $14,848,230 | 6.62% | $1,215,930 | 10.9% |
| Interest rate 2 points higher | $15,093,726 | 6.52% | $2,430,813 | 20.5% |
| Lease-up 6 months longer | $15,194,543 | 6.47% | $2,329,995 | 15.5% |
The cap rate at sale does the most damage, and it is the one input nobody on the project controls. Half a point takes profit from $2,676,308 to $1,215,930. Rents 5% below plan cost $1,145,638 of profit. A 10% hard cost overrun hurts too, but the contingency and the budget exist to catch that one, and nothing in the budget catches a move in cap rates.
What this example leaves out
There is no investor waterfall, preferred equity or mezzanine debt, no loan fees as a separate line, and no taxes. Interest during lease-up is added to the loan rather than paid from rent. The exit is a sale; a hold-and-refinance case is not modelled. The pro forma template lists these limits in full, and the guide to development pro formas explains each part of the model.
Questions
What should a real estate development pro forma include?
Land, hard and soft costs with contingency; the construction loan and its interest; the timeline for construction and lease-up; stabilized income and operating expenses; and the exit, usually a sale at a cap rate. From those come total development cost, yield on cost, profit, IRR and equity multiple.
How do you calculate total development cost?
Add land, hard costs, soft costs, contingency and construction interest. In this example that is $2,400,000 + $9,600,000 + $1,450,000 + $480,000 + $918,230 = $14,848,230.
What is a sources and uses table?
A two-sided summary of the project's money. Uses lists what the money is spent on, and sources lists where it comes from, usually equity and a construction loan. The two sides must add to the same total.
Which input moves a development pro forma the most?
In this example, the exit cap rate. Half a point higher cuts profit from $2,676,308 to $1,215,930, more than a 10% overrun on hard costs does. Every project is different, so run your own numbers in the free pro forma.