Free calculator
IRR Calculator
An IRR calculator finds the internal rate of return — the annualized, time-weighted return that sets a deal's net present value to zero. Enter the initial investment, annual cash flow, hold period, and sale proceeds below to compute IRR and equity multiple for a buy-hold-sell scenario.
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Formula
IRR = the discount rate r where Σ [ Cash Flowₜ ÷ (1 + r)ᵗ ] = 0
Frequently asked questions
- What is a good IRR for real estate?
- Targets vary by strategy and risk: core, stabilized deals may target lower-teens IRRs, while value-add and opportunistic deals target higher returns to compensate for execution risk. IRR should always be read alongside the equity multiple and hold period.
- Why does IRR need the timing of cash flows?
- IRR is time-weighted — a dollar received sooner is worth more than the same dollar later — so the same total profit produces a higher IRR over a shorter hold. That's why IRR can differ sharply from a simple equity multiple.
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