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Hi,
I am confused about where to input percentage rent. For Previous Assumptions it says: 6. Use 75% of broker’s pro forma retail sales percentage revenue (i.e. Percentage Rent).
In the Pro Forma template, I don’t think we had a line item for Percentage Rent. I am not sure how to handle this exactly.
Thanks!
Oh, never-mind. I see you just added to to other income. I made a new line item for it. Thanks!
Yes, the income statement we provided in this case hadn’t included a percentage rent line item. You did the right thing adding it manually. This is not uncommon by the way. You’ll often find line items in property income statements that are important enough to your analysis to change your income statement to include it.
For instance, cable income is becoming more and more common in multifamily underwriting but it’s not a common line item on a lot of standard MF income statements. But the cable income number can be substantial (up to $150/unit/mo!). So it makes sense to add the line to your analysis when you see it.
As you mentioned, in my Watch Me Build video here I lumped the Percentage Rent in with Other Income. While not wrong, if I were to do the Watch Me Build over again I’d probably add a separate line item for Percentage Rent given its importance to the analysis.
Thanks for the comment!
Awesome, thanks for the detailed response Spencer! Wow, interesting about cable, great for land lords.
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