Notes

What is a Pro Forma Cap Table?
What is a Pro Forma Cap Table? A Pro Forma is a new investment option that provides real estate investors with equity financing for a purchase or sale of land. Investors do not need to qualify as an individual borrower, have a long term investment plan in place, or have cash on hand. Instead they can access cash through the equity of their existing property held by the investor as collateral.

Investors can sell their shares and purchase new shares at any time during the year, but only if they have first purchased the shares at their current bid price. In order to purchase shares at their current bid price, the investor must first invest in the shares. The same holds true for selling the shares. When an investor purchases shares with a pro forma cap table, the investor must initially invest in the shares at their current bid price. Once the investor makes their initial purchase, they are afforded the opportunity to buy more shares at the current price.

There are start ups of these types of investment structures for investors. The primary benefit is apparent to many. It allows investors to control the risks associated with buying shares from a company. With pro forma cap tables, the rate of return is often dependent upon the financial performance of the company.

An additional benefit of the pro forma cap table is the ability of the investor to access cash flow easily. When investors purchase shares, their ownership interest is immediately vested. This means that an investor actually owns the property after making the initial purchase. This allows an individual the opportunity to use the property as collateral when making major purchases such as home improvements. Another major benefit is the ability for individuals to make substantial increases to their investment without fear of being forced out due to lack of ownership.

Investors are not the only ones who benefit from these types of investment structures. Real estate investors also enjoy the benefits of owning shares in the real estate they are investing in. With pro forma cap tables, investors can purchase shares without having to wait for the initial purchase price. Instead, they can purchase shares at a discounted price. Investors can increase their ownership shares without having to worry about how much they will actually make during the year or the entire year.

In addition to gaining access to greater dividends, investors in these types of investment structures also benefit. The cost of these shares is lower than the price paid for traditional stocks. The profit potential is also much higher. These advantages allow investors to gain a greater return on their investments, which results in greater wealth creation and net worth. The pro forma cap table allows investors to trade shares among themselves without worrying about whether they will actually gain access to additional dividends.

The advantage that investors have when using a pro forma cap table is that there is no limit as to how many shares an individual shareholder can buy. As long as enough investors want to buy shares, then there is no limitation on the number of shares an investor can own. There is also no limit on how many shares a shareholder can buy or sell. This means an investor does not need to wait for the company to receive an appraisal in order to determine the value of its stock. The value of the stock is based solely on the opinions of other shareholders.

Because there is no ceiling on the number of shares an investor can purchase, an investor can choose to buy shares at a higher price per share than the value of the company's stock may have potentially achieved. An investment with a high price per share means that the value of the company's stock may go up over time. However, this investment also allows the investor to take risks. If the company's price per share drops below the investor's strike price, then they could lose money if the investment is not a good one.
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