IRR Calculator
Annualized return including hold-period cash flows and exit.
What it does
Computes Internal Rate of Return (IRR) from your initial investment and a series of annual cash flows (include sale proceeds in the final year if applicable).
Why it matters
IRR reflects the time value of money and total return over the hold—not just year-one cash flow. Use it alongside cap rate and cash-on-cash for buy-and-hold and value-add exits.
How to Use
- 1Enter total cash invested: Down payment, closing costs, rehab funded at purchase, and reserves.
- 2Enter annual cash flows: Pre-tax cash flow for each year of the hold. Add net sale proceeds to the last year if modeling an exit.
- 3Read IRR: Compare to your hurdle rate. If IRR is NaN, check that at least one year has positive inflow.
IRR Calculator
Include net sale proceeds in the final year if modeling an exit.
IRR (annualized)7.11%
Best Practices & Benchmarks
- •Typical hurdle rates by strategy: stabilized/core 8–10%, value-add 12–15%, opportunistic/development 18%+. IRR below your hurdle rate means the deal doesn't meet your return threshold.
- •IRR is highly sensitive to exit assumptions. A small change in exit cap rate (e.g., 5.5% vs. 6.0%) can shift IRR by 2–4 percentage points. Stress-test your exit before committing.
- •IRR favors early cash flows over later ones due to time value of money. A deal returning capital quickly looks better in IRR than one with the same total profit paid out later.
- •Use IRR alongside cash-on-cash return, not instead of it. A high IRR with low annual cash flow may require years of negative-cash-flow tolerance.
- •Include every equity outflow as a negative: initial investment, capital calls for repairs, and any additional equity contributions during the hold period.
Related Terms
Want the full picture?
These calculators use your assumptions. Temelios pulls real comps and census data so your vacancy, rent, and expense inputs are grounded in reality.
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