Keyword Analysis & Research: syndication irr


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Frequently Asked Questions

How does IRR work in real estate underwriting?

When underwriting a deal, you set income and expense assumptions based on how the property is currently operating, market rates, and conversations with your expert property management company. The output of your underwriting is the projected ongoing cash flow and sales proceeds. IRR assumes that distributions are paid annually.

What is included in the IRR calculation?

Typically, the IRR calculation includes the ongoing distributions plus profits at sale. If there is a refinance or supplemental loan, those proceeds are included in the IRR calculation.

What is the difference between IRR and cash on cash return?

Unlike cash-on-cash return and equity multiples, IRR takes into account the time value of money (i.e., $100 received today is worth more than $100 received in 5 years). Typically, the IRR calculation includes the ongoing distributions plus profits at sale.


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