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Sample Pro Forma Single Family Rentals <br />' Net operating income (Nol) is calculated by subtracting total operating expenses from gross effectiveincome. This indicates the amount of income available to pay debt service and provide for ,'debt servicecoverage.l' <br />' "Supportable debt" is then automatically calculated by a fiormula based on the Nol and the assumptions inthe "supportable debt service calculation" grid. ln this example, the calculation assumes a debt service ratioof 1'2, which means that the Nol must be 1.2 times lor 20% higher) than the amount available for debt <br />service. The debt service amount is also calculated automatically based on the supportable debt amount. <br />B. zG.YEAR CASH FLOW PROJECIIOT{ <br />It is a standard requirement of lenders for borrowers to provide a multi-year cash flow projection for aperiod of years equal to the term of the loan, This projection spreadsheet allows users to enter assumptions <br />about inflation in rents and operating costs which automatically calculate increased income and expense <br />amounts for each year. This projection is used primarily to demonstrate that the debt service can be paid in <br />each year.