IRR calculator

Internal rate of return from an equity investment and a series of cash flows. No signup, no email.

Equity invested

Year 0, entered as a positive number

Cash flow by year

Distributions each year. Put the sale proceeds in the final year alongside that year’s cash flow.

Year 1

Year 2

Year 3

Year 4

Year 5

Internal rate of return

30.82%

3.13× equity multiple · $4,270,000 net profit

IRR is the discount rate at which the deal breaks even in present-value terms. It rewards money returned early, which is why a refinance in year two can move it more than a better exit price in year five — and why it should never be read without the equity multiple beside it.

Common questions

What is IRR in real estate?: The internal rate of return is the discount rate at which a deal's cash flows have a net present value of zero. In practice it is the annualised return that accounts for both how much you get back and when you get it.
What is a good IRR for a commercial real estate deal?: It depends on risk and hold period. Core stabilised deals often target low double digits; value-add commonly underwrites to the mid-to-high teens; opportunistic and development go higher because more can go wrong. An IRR is only meaningful next to the risk taken to earn it.
What is the difference between IRR and equity multiple?: IRR is time-weighted and the multiple is not. A deal returning 2.0x over three years and one returning 2.0x over eight have the same multiple and very different IRRs. Read them together — IRR alone rewards speed, and the multiple alone ignores it.
Why does refinancing improve IRR so much?: Because IRR weights early money heavily. Pulling equity out in year two shortens the period your capital is exposed, which moves IRR more than a better sale price years later. It is also why IRR can flatter a deal that returned capital early and then underperformed.
Can IRR be calculated with negative cash flows mid-hold?: Yes. A capital call or a year of negative cash flow during a repositioning is entered as a negative figure. Series with several sign changes can technically have more than one mathematical solution, which is another reason to sanity-check IRR against the equity multiple.

The rest of the analyst’s job

The arithmetic is the easy part. Everre does the offering memoranda, the broker opinions of value, the lease abstracts and the rent rolls — the work that usually costs you an analyst. The CRM is free and there are no per-seat fees.

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