The Application And Research Of Determining Capitalization Rate Methods Based On The Monte Carlo Method

There are three important methods in the real estate appraisal,as Market Comparison Approach,Cost Approach and Income Approach.Among them,the basic idea of the income approach is easy to understand,which is based on the time value of money,the future profits of the real estate for guidance to calculate the value of the real estate,but its calculation difficulties mainly reflect in net earnings and the capitalization rate,especially the capitalization rate,whose tiny changes will directly effect on the result of the real estate appraisal,indirectly effect on the assets reorganization and rationality of the structural adjustment,the party's legitimate rights and interests in the real estate business,the standardability of the real estate market,the financing risk of the real estate,the collection of the real estate tax.As a result,the calculation of capitalization rate must be quite careful.There are many methods to calculate capitalization rate,which are widely used by the real estate appraisers.However,the subjectivity in some methods is too strong,the estimate costs in some methods are too high.These disadvantages will lead to inaccurate of capitalization rate,existing some man-made factors.Therefore,the paper has compared and researched the existing methods of capitalization rate determined,then it put forward a new method for determining capitalization rate to hope make little contribution for the real estate appraisal industry.In this paper,the research object is capitalization rate,which is vital parameter in income approach in real estate appraisal.The research mode of the paper is finding problem,analyzing problem and solving problem.First,in the first chapter,the paper shows that it is necessary to have future study for the methods of capitalization rate determined from the importance of three levels that are real estate appraisal,income approach and capitalization rate.Then,in the second chapter,the paper has specifically analyzed the essence of capitalization rate.The capitalization rate is investment return rate that is required by the investors,which is not a definite value,but will be affected by many different factors.The capitalization rate is composed by the delay consumption compensation, the inflation compensation and the risk compensation.Next,in the third chapter,the paper has researched the existing methods of capitalization rate determined,compared five methods that are market extraction method,safe interest rate plus risk adjustment value method,compound investment yield rate method,sequence insert approach of investment yield rate and investment structure method of which application principle, applicable scope,advantages and disadvantages. After comparison,the paper summarized these methods' common problems that affected the accuracy of capitalization.Finally,in the fourth chapter,the paper put forward to determine capitalization rate on the monte carlo method. It researched related theory,the feasibility and calculation process of the monte carlo method.In the fifth chapter,the monte carlo method applied in case analysis to calculate capitalization rate,it can prove the validity of this method.With a series of analysis and research,it can be seen that determining capitalization rate on the monte carlo method is an effective method.If this method can successfully applied to real estate appraisal, it has not just offset the disadvantages of existing methods that calculate capitalization rate, but also has driven the informationization construction of real estate appraisal in China, with certain practical significance.