Multifamily Mistake #1: Overhyped Proformas

Number one is shooting too high in the pro forma. This is something everybody wants to do especially when they're new. But if you don't understand pro forma it just the performa is essentially projected performance of the property made up of projected expenses, income, debt and cap X. This happens all the time. People acquire a business or project that it's going to be a lot more than it actually becomes and then they lose a lot of money. You know one example HP acquire a software company named Autonomy. They acquired it for like $11.5 billion. Well they projected that it would be worth so much more it didn't happen. They lost billions of dollars. You don't want to be paying on the wrong numbers. What you're if you do that you're going to create the inability to pay your investors and be able to refinance at the proposed plan or sell the property at the proposed plan. So then it creates a lot of headache. Okay.