Calculate Internal Rate of Return for your CRE investment. Enter your initial investment, annual cash flows, and exit sale proceeds to see your total annualized return.
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A is saved. Change any input above and B updates — the difference shows on the right.
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The gold standard metric for evaluating CRE investment performance.
IRR is the annualized return that makes the net present value of all cash flows (investment + annual income + sale proceeds) equal to zero. It accounts for the timing and magnitude of every cash flow, making it the most comprehensive return metric for real estate investments.
Cap rate is a single-year, unlevered snapshot. Cash-on-cash is a single-year, levered snapshot. IRR captures the full picture: multiple years of cash flow, appreciation at sale, leverage effects, and the time value of money. It is the metric institutional investors and funds use.
Three components: (1) Annual cash flow from operations (rent minus expenses minus debt service), (2) Property appreciation at sale, (3) Leverage amplification. A property with modest cash flow but strong appreciation can have a higher IRR than one with high cash flow but flat value.
Core (low risk, stabilized): 6–10% IRR. Core-Plus: 8–12%. Value-Add: 12–18%. Opportunistic (development, distressed): 18–25%+. Your target IRR should reflect the risk profile and your cost of capital. Our advisors model scenarios to find the optimal structure.
Every calculator we offer, in one place — run the next number your lender will ask about.
Common questions about IRR and CRE investment analysis.
It depends on strategy: Core (stabilized, low risk): 6–10%. Core-Plus: 8–12%. Value-Add: 12–18%. Opportunistic: 18–25%+. A "good" IRR must exceed your cost of capital and compensate for the risk and illiquidity of real estate vs. other investments.
Simple ROI = Total Profit ÷ Investment. It ignores timing. IRR accounts for WHEN cash flows occur. Getting $100K back in year 1 is better than year 10. IRR reflects this time value of money, making it a more accurate measure of investment performance.
This calculator uses pre-tax cash flows. For after-tax IRR, you would reduce annual cash flows by income taxes and add back depreciation benefits. After-tax IRR is typically 1–3% higher than pre-tax due to depreciation shields. Consult your CPA for your specific tax situation.
Leverage amplifies returns. A $1M property bought with $250K equity (75% LTV) that appreciates 10% to $1.1M gives you $100K profit on $250K invested = 40% return on equity, not 10%. The same effect works in reverse — leverage amplifies losses too.
Equity Multiple = Total Cash Received ÷ Total Cash Invested. A 2.0x EM means you doubled your money. IRR tells you the annualized rate; EM tells you the total magnitude. A 2.0x EM over 5 years ≈ 15% IRR. Over 10 years ≈ 7% IRR. Both metrics together give the full picture.
We model multiple financing structures to find the one that maximizes your IRR. This might mean lower rate, higher leverage, interest-only period, or a specific loan product. The right financing can add 3–5%+ to your IRR on the same property.
Our advisors model IRR scenarios across different financing structures to find the deal that maximizes your total return on equity.
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