Real Estate Business Plan Modelling via Monte Carlo Simulation

Real estate investments represent an important component of a complete portfolio strategy, acting as an alternative to bond and stock markets. Because of the specific risks related to this asset class, investing into real estate requires a comprehensive assessment of the financing strategies themselves, as well as a depth evaluation of associated risks and returns. 

After a brief overview of the main characteristics of the real estate sector, in this article we present the Prometeia’s Real Estate Business Plan Model, a fully integrated and macro-based stochastic simulation tool for the evaluation of a real estate investment via Project Financing.

Banks that need to estimate default probabilities for granting medium-long-term credit lines, as well as real estate investment funds interested in assessing the risk and return profile of a new investment are the main targets of this advanced approach based on stochastic macro-based simulations.