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.
Enter cash flows for each year of your hold period
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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.
Common questions about IRR and CRE investment analysis.
Our advisors model IRR scenarios across different financing structures to find the deal that maximizes your total return on equity.
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