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Internal rate of return (IRR) calculator.

IRR is the return that accounts for the timing of every dollar — the metric most investors actually decide on. Enter your equity, annual cash flow, hold period, and net sale proceeds to solve for it.

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yrs
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Internal rate of return
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Total profit
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Equity multiple
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IRR is the discount rate that makes a deal’s cash flows net to zero — it rewards getting money back sooner. This uses level annual cash flow with all sale proceeds in the final year; a real deal has uneven flows, refinances, and reserves, so treat this as a screen, not underwriting.

Why investors decide on IRR

Internal rate of return is the metric most investors ultimately decide on because it accounts for the timing of every dollar. It blends the equity you invest, the cash flow you collect each year, and the proceeds when you sell into a single annualized, time-weighted return. Getting money back sooner raises IRR; a great exit far in the future is discounted more heavily.

Example. Invest $850,000, collect about $47,000 a year, and sell after five years for $1,100,000 net, and the IRR lands near 18% even though the year-to-year cash-on-cash was only about 5.5%. The exit — appreciation plus loan paydown — does the heavy lifting. Always read IRR next to the equity multiple so a quick, small win doesn’t masquerade as a great deal.

Frequently asked questions

What is IRR in real estate?
Internal rate of return is the annualized return that accounts for the size and timing of every cash flow — the initial equity out, the cash flow during the hold, and the proceeds at sale. Because it weights early dollars more heavily, two deals with the same total profit can have very different IRRs.
What is a good IRR for a commercial deal?
It depends on risk and hold, but many investors target roughly 12–20% IRR on value-add commercial deals and lower on stabilized, lower-risk assets. Judge IRR next to the risk taken and the equity multiple — a high IRR on a short hold can still return little total profit.
IRR vs cash-on-cash — what’s the difference?
Cash-on-cash is a single year’s cash flow divided by cash invested and ignores timing and sale. IRR blends every year’s cash flow plus the exit into one time-weighted return. Use cash-on-cash for year-one yield and IRR for the full hold.

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Estimates are for planning only and use simplified assumptions — not tax, legal, or investment advice. Verify with your lender, CPA, and a full broker analysis before acting.