What is Monte Carlo simulation?
Scenario analysis at scale: assign probability distributions to key inputs (rent growth, vacancy, exit cap, rates), run the DCF thousands of times, and read off a distribution of outcomes, such as the probability IRR falls below the hurdle. Only as good as its input distributions.
Where you will use it: this term comes up in the Real Estate Finance course, and the full course glossary collects every term in one place.
Related terms
From the free Real Estate Finance course by Devon Coombs, CPA, MBA.