Every investment is built on assumptions—and those assumptions are vulnerable to change. That’s why sensitivity analysis is a must-have for every deal you underwrite.
With built-in tools to stress test your model against real-world variables—like cap rates, pricing, rent growth, and hold periods—IntellCRE helps you understand the full range of possible outcomes. It’s fast, visual, and critical for building trust with clients and partners.
Here’s how to use it effectively:
Understand Why Sensitivity Analysis Matters
Even a slight change in key assumptions can turn a great deal into a mediocre one—or vice versa. That’s especially true for:
Exit Cap Rate → Small changes have a major impact on exit value and IRR.
Purchase Price → Shifting this can swing returns dramatically.
Rent Growth Projections → These directly affect future cashflow and valuation.
Hold Period → Impacts total returns and financing payoffs.
By using sensitivity analysis, you don’t just model one future—you explore a full spectrum of possibilities.
Step 1: Open Sensitivity Analysis in Your Deal
To get started:
Navigate to a property in your pipeline.
Open the Analysis.
Scroll below the Sale and Property Value sections.
Click Sensitivity Analysis to open the configuration panel.
You’ll see four sensitivity types you can enable:
Exit Cap Rate
Purchase Price
Proforma Rent Growth
Hold Term
Step 2: Configure Your Scenarios
For each sensitivity type:
Set the Number of Steps → Determines how many variations you'll see on either side of your base assumption (e.g., 7 steps = 3 lower, base, 3 higher).
Choose the Increment → This defines how much each scenario shifts (e.g., 0.1% for cap rate, $150K for purchase price, 0.5% for rent growth, 1 year for hold period).
Each variation of dynamically calculates the resulting:
Exit Value
IRR (Internal Rate of Return)
Equity Multiple
This lets you see, at a glance, how sensitive your deal is to market shifts or aggressive vs. conservative assumptions.
Step 3: Interpret the Results
Exit Cap Rate
Lower cap rate → Higher exit value and better returns
Higher cap rate → Lower exit value and reduced IRR
Purchase Price
Lower price → Better return metrics
Higher price → Lower IRR and equity multiple
Proforma Rent Growth
Lower rent growth → Depressed NOI and valuation
Higher growth → Improved return profile
Hold Term
Shorter hold → May reduce total returns
Longer hold → Can improve or impair returns depending on loan terms and market trajectory
Tip: If your projected hold term exceeds your loan term, large balloon payments may create negative cash flows. Always align sensitivity scenarios with financing structure.
Step 4: Share Sensitivity Outputs
Sensitivity analysis isn’t just for internal use—it’s a powerful communication tool. Use it to:
Support pricing recommendations to sellers
Justify target valuations with investors
Explain risk/reward to buyers or partners
You can include sensitivity results in your IntellCRE:
Brochures
Flyers
Property Websites
This adds a layer of credibility and transparency that sets you apart.
Final Thoughts
In commercial real estate, assumptions are everything. With IntellCRE’s sensitivity analysis tools, you can model the impact of uncertainty—and turn risk into insight.
Stop guessing. Start modeling.