Monte Carlo Simulation
10,000 scenarios varying appreciation, rent growth, maintenance, and investment returns.
Monte Carlo Simulation
Rather than a single point estimate, Torvani runs 10,000 simulated scenarios for each analysis. Each scenario draws from distributions calibrated to historical data:
- Home appreciation -- metro-specific distribution from FHFA HPI historical data
- Rent escalation -- distribution from BLS CPI Shelter component
- Maintenance costs -- fat-tailed distribution accounting for major repairs
- Investment returns -- historical S&P 500 return distribution for opportunity cost
The result is a complete cost distribution with expected cost, median, 5th percentile (best case), and 95th percentile (worst case) -- so you can make decisions based on your risk tolerance.