IRR
What is IRR (Internal Rate of Return) in Real Estate?
The Internal Rate of Return, or IRR, is one metric commonly used in financial analysis to evaluate and compare different investments. It represents the percentage rate earned over a defined period of time, calculated on the basis of cash flows. IRR differs from other metrics in that it accounts for the concept of the "time value of money", meaning it is calculated as the discount rate that makes the present value of all cash flows from an investment equal to zero. In more simple terms, it is the rate at which an investment grows or declines. In this sense, you can think of it as a time-sensitive compounded annual rate of return.
Related Terms
Additional Reading
- Decoding Real Estate Return Metrics
- View the IRR performance of deals that have realized on our Marketplace
