A pro forma projects costs, revenues, and returns to determine if a deal pencils.
Land cost, hard costs (55-70% of total), soft costs (20-35% of hard costs), contingency (5-15%).
Build-to-sell: sale price, absorption, commissions. Build-to-rent: NOI = gross rent - vacancy - expenses, capitalized value = NOI / cap rate.
Return on cost, yield on cost, IRR (15-25% target), equity multiple (1.5-2.5x), cash-on-cash.
Stale cost data, ignoring soft cost variability, optimistic absorption, insufficient contingency, no downside modeling.