What is IRR in Real Estate?
Internal rate of return is a metric that is used to evaluate real estate investments over time. Investors can use it to evaluate the profitability of a potential investment. IRR can also be used by business managers to analyze capital budgeting projects. By calculating IRR, investors can make more intelligent investment decisions. It is a way to compare the future value of a particular real estate investment as if it were valued in today’s dollar. Calculating a property’s current value and its potential future value will help investors determine its risk.