Monte Carlo

Alternate Universe Modeling™

Alternate Universe Modeling™

Alternate Universe Modeling™ is our version of doing  Monte Carlo simulations for our  Scenarios. In the simplest terms you take a  Scenario you’ve created. For example, check out Andrea in Ep 1: Andrea Buys 8 Rentals with Down Payments for 2. That does NOT utilize Alternate Universe Modeling™ but we could add variability to: Yearly Rate of Return for money in  Accounts that are invested in the stock market Appreciation Rate for  Properties in the  Scenario Rent Appreciation Rate for  Properties in the  Scenario Mortgage Interest Rates for  Properties you might buy in the  Scenario Inflation Rate for the  Scenario … Read more

Monte Carlo

I just finished writing a new book called How to Achieve Financial Independence and Live Your Passion Regardless of Age or Income: 10 Paths to Financial Independence Analyzed (available on Kindle and a more expensive full color, printed book version from Amazon). In the book, I explained to my 22-year-old son 10 different paths to achieve financial independence and analyzed how quickly he could achieve financial independence with each one. However, in the book, I used assumptions that remain static throughout each plan. As one example, I assumed the stock market returned 8.97% per year, every year without variation. My … Read more

How To Set Up Monte Carlo Runs

Using Monte Carlo simulations is an ideal way to model the unpredictable outcomes of different investment strategies. With regards to the Real Estate Financial Planner™ it allows us to study how a Scenario (collection of Accounts, Properties, Rules, and Goals) responds to randomly generated inputs for variables such as interest rate, appreciation, inflation, and rate of return for stocks, bonds, or other investments. IMPORTANT NOTE: Monte Carlo is only available to Copper Plan Members. Open The Scenario First, from the Scenarios page select the Scenario on which you want to run Monte Carlo. Click the title of the Scenario to … Read more

Using Monte Carlo to Model Real Estate Portfolios

The Real Estate Financial Planner™ software allows you to model how a portfolio of Accounts and Properties perform over time. If you’re modeling your portfolio using static values for variables, you might not see any variation in the results if you rerun a Scenario. Obviously this is not a good model of reality over long periods of time for inputs such as: Appreciation rates on Property values and rents Interest rates as you buy Properties over time Rates of return on your stocks, bonds or other investments Maintenance and capital expenses costs Vacancy rates We’re likely to see variation in … Read more