A good pro forma model is the foundation of every real estate investment decision. Whether you're underwriting an acquisition, projecting returns for investors, or stress-testing a hold strategy, accuracy and transparency matter. Start with actual lease data. The single biggest source of error in pro forma models is stale or assumed rent rolls. Import your actual lease terms — start dates, expiration dates, rent steps, free rent periods, and options — rather than working from averages. Model vacancy realistically. Stabilized vacancy assumptions should reflect the submarket, not wishful thinking. For lease rollover periods, model the downtime explicitly: months of vacancy, free rent concessions, tenant improvement costs, and leasing commissions. Separate controllable from uncontrollable expenses. Property taxes and insurance escalate differently than management fees and repairs. Growth rates should be applied individually, not as a blanket percentage across all line items. Capital expenditure planning is often the weakest part of a pro forma. Create a reserve schedule based on building condition assessments, not just a flat per-square-foot assumption. Major items like roof replacements and HVAC overhauls should be modeled as discrete events. Finally, build your model for auditability. Every assumption should be traceable, every override documented, and every formula transparent. Your future self — and your investors — will thank you.