IRR / NPV Simulator Calculator
Calculate Internal Rate of Return (IRR) and Net Present Value (NPV) for multi-year real estate cash flows.
How it works
IRR is the rate that makes NPV = 0. NPV is present value of future cash flows minus initial investment.
Example
$100K investment, $10K annual, $150K exit = 15.2% IRR, $57K NPV at 10% discount.
FAQ
What is a good IRR for real estate?
12-15%+ is generally considered good for real estate investments, depending on risk level. Compare to alternatives like stocks (10% historical) and bonds (3-5%).
What's the difference between IRR and NPV?
IRR shows the annualized return rate, while NPV shows total dollar value created. Positive NPV means the investment creates value at your required return rate.
Which is better, high IRR or high NPV?
Both matter. High IRR shows efficiency of capital use; high NPV shows total value creation. Consider both when comparing investment opportunities.
What discount rate should I use for NPV?
Use your required rate of return or cost of capital, typically 8-12% for real estate. Higher rates for riskier investments, lower for stable properties.
Can IRR be misleading?
Yes, with irregular cash flows or multiple sign changes. Also, IRR assumes reinvestment at the IRR rate, which may be unrealistic. Always consider alongside NPV.