Monte Carlo Simulations in Excel without 3rd Party Add-ins
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- เผยแพร่เมื่อ 1 มิ.ย. 2024
- This tutorial walks you through how to do Monte Carlo simulations in Excel without using third-party add-ins.
The tutorial is done from the perspective of a commercial real estate professional, modeling the expected value of an apartment building, but the concepts covered are transferrable to other scenarios as well.
00:00 - Introduction
01:08 - Framing the Investment Scenario
02:29 - Building the Initial Discounted Cash Flow (DCF)
06:11 - Adding Probability to Assumptions
09:41 - Running the Monte Carlo Simulation
12:30 - Analyzing Simulation Results
16:00 - Visualizing the Simulation Distribution
To download the file used in this tutorial, visit: www.adventuresincre.com/run-mo...
For other free Excel tips and tutorials, visit: www.adventuresincre.com/catego...
To learn more about the author, go to: www.spencerburton.org
Thank you very much Mr Burton for your videos. It's very helpful for my thesis on risk management for RE.
Best example I've seen. Very easy to follow, thank you.
this was an awesome video, I learned a ton. Thanks!
Very clear and helpful explanation! Thanks
This is the best i have seen. Well explained
Hi Spencer, thanks for the video. Very useful info. One quick question, is there a way to find out the specific assumptions that yield a specific simulation's NPV?
When you create the datatable you put a blank cell in the column input cell. What exactly is that doing? Thanks. Nice example.
Hi there, should I go to Monte Carlo for better understanding this method?
Is the only advantage provided by a monte carlo simulation over a traditional sensitivity analysis just the fact that you can use more than 2 variables? Or is it a better form of analysis as well?
So cool! Thank you!
I am stuck at min:12:05, I have no clue how you came up with those calculations (958.30,1041.7). Could you please explain that? Thank You!
Hi Spencer Burton and other friend, i have a question, Actually i have data which consists of only mean value of population and total number of samples taken from that population to get that population mean, but i wana calculate the sample mean of each nth sample ? is that possible by using Monte Carlo method? if yes how we will do it? please give me simple example...if no, is there any other possibility to predict an estimated values of each sample mean? Note: i have not have any other value like Standard Deviation, Standard error etc
you can use the random number generator plugin (called 'data analysis plugin') which is a free add-on thats preloaded on excel to generator a set of numbers using a given std deviation and mean. then you can plug those numbers into your algebraic function to do the actual simulation
The issue is that since you used the RandBetween function to generate the random values. The graph output could have very well been a straight line from the minimum conditions to the maximum conditions.
This would be extremely powerful if you could have made the random number generator follow a normal distribution.
Please tell me if you know a way of doing it.
Hey Fares - glad the tutorial was helpful! The tutorial is more about teaching how to produce simulations using the Data Table feature, than it is it show the various methods for creating randomness. RANDBETWEEN() is one simple method, among many. Nevertheless, you can check out my Apartment Acquisition Model with Monte Carlo Simulation module, where I use Excel's NORM.DIST() to produce random values that fall in a normal distribution. www.adventuresincre.com/apartment-acquisition-model-with-monte-carlo-simulation-module/
@@adventuresincre amazing man....I'll check it out
Thank you so much. Please see mail from your website.
Please tell me why in most of your models, you choose to use the next 12 months to calculate sales price and not the trailing 12 months.
Mbonisi Ndimande Hi Mbonisi, in the markets I work in, convention is to cap the next 12 months. This is not necessarily the case for all markets, as some cap TTM.
So how do you determine which market to use trailing 12 months and which markets to use next 12 months. Or if possible please provide a link/article/book that we may read to understand it better.
I have one more question. If I am modelling for a value add investment and my rent growth rate for year 1 and 2 are over 10% (10%,13%), but go down after 2 years back to market growth of 3%, how do I run a monte calo simulation on that? Do I tell the program that my growth range is between maybe -0.5% and 13%? (0.5% being just and estimate of lowest growth and 13% being my highest growth due to adding more value the first 2 years). Have watched all your videos and they are really helpful. Only this one where I am not sure what to use on my values.
Since DCF Value only works on unlevered investments, can you run monte carlo on levered investments?
Check out my free monte carlo simulator at niclashummel.com/risk-simulator