Joe DownsCEO & Co-Founder, Belrose Storage Group. Founder, Storage Moguls.

This Pro Forma Will Lose You Money

27 Jan 2026 · 1 min

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Real estate brokers often inflate pro forma projections. A property might show projected NOI of $140,000 but actual trailing-12-month NOI of only $85,000. Using the fake number at a 6% cap rate means you overpay by roughly $900,000.

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The broker shows you a pro forma with a projected net operating income or NOI of $140,000. They assume high income and low expenses, giving you that great number of $140,000. But when you look at the actual T12, the real NOI is only, let's say, $85,000. The income is lower, expenses are much higher than they projected. That's a $55,000 difference in NOI. That's the trap. At a 6-cap, you're overpaying by over $900 grand if you use the pro forma number.