How to use Risk Analysis for First Year Cap Rate. Cap Rate = Year 1 NOI divided by Price — before debt and before tax. Risk Analysis is useful here when multiple NOI assumptions are uncertain simultaneously — varying them one at a time in Sensitivity Analysis understates the combined risk.

Setup: select Cap Rate as the measure. Add assumptions that affect Year 1 NOI: General Vacancy and Credit Loss (e.g. 0% to 7% range — represents overall credit loss risk). Market Profile Months Vacant on a lease expiring in Year 1 (e.g. Beauty Local — 0 to 12 months; when months vacant varies, reimbursements also stop automatically for that tenant during the vacant period). Market Rent on the same profile (e.g. $15 to $17/SF). TIs on the profile. Add any other assumptions active in Year 1. Click Run — planEASe runs Monte Carlo trials randomly selecting from each assumption range simultaneously.

Reading the results: the graph shows the probability distribution of Cap Rate outcomes — lowest, highest, and average. Example: at a $3 million price the cap rate range is approximately 8% to 9.5% given the combined uncertainty in the entered assumptions. The average shows the most likely outcome; the range shows the risk.

When to use Cap Rate Risk vs Sensitivity: Sensitivity varies one assumption at a time to isolate individual factors. Risk Analysis varies all uncertain assumptions simultaneously to show the combined range of outcomes — more realistic for cap rate underwriting where vacancy, market rent, and TI uncertainty all exist at the same time. Click Another — planEASe asks if you want to keep the same specifications — click Yes to run the same assumptions against a different measure (e.g. Cash on Cash or DCR) without re-entering.