InsideNoVACRE.com
Contact Brian Snook: (703) 863-1895
--IRR (INTERNAL RATE OF RETURN) CALCULATOR--
What Is IRR and Why Does It Matter in CRE?
Internal Rate of Return (IRR) is one of the most important metrics in
commercial real estate investing. It measures the annualized rate of
return on an investment across its entire hold period — accounting for
the timing and size of every cash flow, including the eventual sale.
Unlike a simple cap rate or cash-on-cash return, IRR captures the full
picture of a deal over time. That's why institutional investors, private
equity firms, and sophisticated CRE professionals use it as their primary
benchmark for comparing opportunities.
How to Use This Calculator:
1. Enter your initial investment (as a negative number — it's money out)
2. Enter each year's net cash flow separated by commas
3. Include your projected sale proceeds in the final year
4. Hit Calculate — your IRR will display as an annual percentage
Example: A $500,000 investment generating $40,000/year for 5 years
with a $650,000 sale would be entered as:
-500000, 40000, 40000, 40000, 40000, 690000
What's a Good IRR for CRE?
- Core/stabilized assets: 7–10%
- Value-add deals: 12–18%
- Opportunistic/development: 18%+
Northern Virginia market context: Given strong demand fundamentals in
NoVA submarkets like Tysons, Reston, and the Route 28 corridor,
well-positioned assets are currently achieving IRRs in the 10–15% range
depending on asset type and leverage.