IRR Calculator AI
The Internal Rate of Return (IRR) is the gold standard metric for comparing CRE investments. It accounts for the time value of money, incorporating all cash flows from acquisition through disposition. The CRE Analyst Agent calculates IRR using projected cash flows, rent growth, and exit assumptions.
Formula
IRR = the discount rate that makes the Net Present Value of all cash flows equal to zero
Why It Matters
Unlike cap rate which is a single-year snapshot, IRR captures the full investment lifecycle. It accounts for leverage, rent growth, capital improvements, and sale proceeds. Most institutional investors target 15-20% IRR for value-add deals.
How AgentErgon Helps
Enter acquisition costs, projected NOI, growth assumptions, and exit parameters. The CRE Analyst Agent calculates IRR for your hold period, shows sensitivity to key assumptions, and compares your projected returns to target benchmarks.
Frequently Asked Questions
What is a good IRR for CRE?+
Core deals: 6-10%. Core-plus: 8-12%. Value-add: 12-18%. Opportunistic: 18%+. The right target depends on risk profile and market conditions.
How does leverage affect IRR?+
Leverage amplifies returns (and risk). The AI shows levered vs unlevered IRR to help you understand the impact of your financing decisions.
Can it run sensitivity analysis?+
Yes. See how changes in exit cap rate, rent growth, vacancy, and interest rates affect your IRR. Identify which assumptions have the biggest impact.
Does it account for capital expenditures?+
Yes. Model renovation costs, timing, and the resulting NOI improvement to see how value-add strategies affect overall returns.
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