IRR Calculator

What IRR Calculator does

How to use the Altyst IRR Calculator

1. 1

   Enter the equity invested at close (down payment, closing costs, and capital funded at acquisition)

2. 2

   Input the year-one net operating income after vacancy and operating expenses but before debt service and taxes

3. 3

   Specify the annual NOI growth percentage (compounds from year two)

4. 4

   Enter the annual debt service (principal and interest, held flat across the hold period)

5. 5

   Set the hold period in years and the net sale proceeds to equity after selling costs and loan repayment

IRR Calculator FAQ

How is the IRR different from the total return or equity multiple?

IRR is the annualized rate that makes the net present value of all cash flows zero, while equity multiple shows total profit divided by total equity invested. A project can have a high equity multiple over a long hold period but a modest IRR, or a high IRR with a short hold and low total profit.

Why do net sale proceeds differ from the sale price?

Net sale proceeds to equity are the sale price minus selling costs and the remaining loan balance. Since many published IRRs use the full sale price without deducting these amounts, the figure can be overstated; this tool uses the net amount to equity for a more realistic return calculation.

Can I model a scenario with no debt service?

Yes. Setting the annual debt service to zero calculates the unlevered IRR, which reflects the return generated by the property's income alone, without the impact of financing costs.

What does the discount rate field do?

The discount rate is used to calculate the net present value of the cash flow series. Setting it to your required return lets you see whether the IRR exceeds your target; the NPV will be positive if the IRR is higher than the discount rate and negative if it is lower.