Real Estate IRR Calculator

Calculator Inputs

Purchase price

Property acquisition price

Closing costs

Legal, title, and transfer costs

Rehab costs

Immediate renovation or setup costs

Down payment

Initial equity contribution

Loan amount

Outstanding loan balance at sale

Annual rent

Expected yearly rent

Other income

Parking, storage, or fees

Vacancy rate (%)

Income loss from vacancy

Annual operating expenses

Taxes, insurance, repairs, management

Annual debt service

Principal and interest payments

Income growth rate (%)

Yearly rent growth assumption

Expense growth rate (%)

Yearly expense growth assumption

Hold years

Investment holding period

Sale price

Expected disposition value

Selling costs (%)

Brokerage and exit transaction costs

Tax rate (%)

Applied to positive annual and sale gains

Discount rate (%)

Used for NPV comparison

Example Data Table

Input	Example Value
Purchase Price	$350,000
Closing Costs	$12,000
Rehab Costs	$18,000
Down Payment	$90,000
Loan Amount	$260,000
Annual Rent	$42,000
Other Income	$2,400
Vacancy Rate	5%
Operating Expenses	$12,500
Debt Service	$17,500
Hold Period	7 years
Sale Price	$465,000

Formula Used

IRR is the discount rate that makes the net present value of all equity cash flows equal to zero.

NPV formula: NPV = Σ [ Cash Flow_t / (1 + r)^t ]

IRR rule: solve for r where NPV = 0.

Yearly cash flow: (Gross Income − Vacancy Loss − Operating Expenses − Debt Service − Taxes) + Net Sale Proceeds in the final year.

Equity multiple: Total positive cash inflows ÷ Initial equity invested.

How to Use This Calculator

Enter the purchase price, closing costs, rehab costs, and equity contribution.
Add financing details, yearly rent, other income, and expected vacancy rate.
Input annual operating expenses, debt service, and growth assumptions.
Set the holding period, projected sale price, and selling cost rate.
Optionally include a tax rate and discount rate for deeper comparison.
Press Calculate IRR to show summary metrics above the form.
Review the annual schedule, then export the results as CSV or PDF.

Frequently Asked Questions

1. What does IRR show for a property investment?

IRR estimates the annualized return earned from the entire investment timeline. It reflects purchase costs, yearly cash flow, financing effects, and final sale proceeds together.

2. Why can IRR differ from cash-on-cash return?

Cash-on-cash focuses on a single year, usually year one. IRR evaluates every period and weighs timing, which makes it more complete for long holds.

3. Should debt service be included?

Yes, if you want an equity-level IRR. Including debt service shows the investor’s actual cash flow after financing, not just property-level operating performance.

4. What if my project has negative early cash flow?

That is common in real estate. IRR can still be calculated as long as the total cash flow pattern includes both negative and positive values.

5. Why is the sale year so important?

For many deals, a large portion of return comes from sale proceeds. Exit price, selling costs, and loan payoff can significantly change IRR.

6. What does NPV add to the analysis?

NPV compares the deal against a chosen required return. A positive NPV means the investment exceeds that discount rate assumption.

7. Can I use this for flips and rentals?

Yes. It works for short projects, value-add renovations, and longer rentals. Just match the hold period and cash flow assumptions to the strategy.