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Sample Pro Forma Single Family Rentals Guide to Completing Development and Operating Pro Formas And Cash Flow Projections A. DEVEI-OPMENT PRO FORMA This worksheet is used to calculate your total development budget. lt includes all uses of funds for hard and soft costs as well as sources of funds. From the Operating budget worksheet, it carries over the amount of a mortgage loan that the project can support, then subtracts the mortgage amount and developer equity by formula to determine the required NSP funding amount. Acquisition Costs ln this version separate lines are shown for land and building costs, although these could be combined into one line item if desired. Soft costs related to acquisition, such as the appraisal and closing costs, should be listed under soft costs. Construction Costs The amountshould be estimated until there is a contract, then the actualcontract amount should be entered. Besides the "hard" costs of materials and labor, the contract price will typically include such components as an allowance for the contractor's project-related expenses or "general requirements" such as building permits, fencing around the site, temporary storage for materials, the contractor's overhead/profit, and the cost of a performance bond or letter of credit provided by the contractor to insure that the project will be completed (if required). This amount should also include site improvements such as excavation forfoundations or utilities, grading of the site, walkways, on-site roads, landscaping, outdoor lighting or parking spaces. Estimates of construction costs for single-family rental rehab projects are usually completed by a rehabilitation specialist based on a work write-up. lf substantial rehab or structural repairs are involved, the estimate or a portion thereof might be created by an architect with input from a engineer. ln the case of single-family rental rehab projects funded by NSP, limited off-site infrastructure costs might be included that are crucial to making the home marketable. This could include work repairing contiguous and nearby sidewalks or alleys. lncluding a construction contingency amount outside the construction contract is typical and advisable. Usually, the amount of contingency funds is not shared with the contractor. The contingency is used to fund change orders. Typical contingency amounts for rental rehab projects are IO%lo 15%. Typically, the more carefully the project has been evaluated and specifications identified, the lower the contingency amount needed. Soft Costs . Architectural fees should be based on estimates from an architect. These fees may be based on a certain percentage of the construction contract amount, a fee per dwelling unit, a flat fee for services, or another basis. With rental rehab projects, the specifications and cost estimates are often completed by a rehab specialist, either a specialist on the developer's staff or a contracted specialist. Note that design and construction management costs could be S0 for budgeting purposes if the developer fee has been calculated to pay for all project planning and management costs. . The engineering fee should also include mechanical or structural engineering costs, if any, incurred as part of the design process. . Environmental review costs could include the cost of a third-party contractor completing reviews required to determine clearance; the third-party reviews would need to be approved by the grantee or other "responsible entity". . A survey prior to acquisition may or may not be required by NSP grantees for single-family programs. Prior to providing construction or permanent financing, it may be required by the mortgage lender. A survey can reveal easements that make some of the land unbuildable. . As-is appraisals are required in NSP for foreclosed properties, to determine if the selling price is at least 1% ^L^.,^+h^*^-l'^+.,-1..^ l+i---^^J^-^-+i^^+^^^l-+h^--^--i^--^--^^+L^-^6+;+.,+^--^,,!J^lr^^-6---Ll^