Real estate IRR calculator
Your return on a rental property from the day you buy it to the day you sell: every year's cash flow, the loan you pay down, and what the sale leaves after the lender is repaid, rolled into one yearly rate.
Year by year
Scroll the table sideways to see every column.
| Year | Rent | Vacancy | Expenses | NOI | Debt service | Cash flow |
|---|---|---|---|---|---|---|
| 1 | $60,000 | $3,000 | $21,000 | $36,000 | $36,838 | −$838 |
| 2 | $60,000 | $3,000 | $21,000 | $36,000 | $36,838 | −$838 |
| 3 | $60,000 | $3,000 | $21,000 | $36,000 | $36,838 | −$838 |
| 4 | $60,000 | $3,000 | $21,000 | $36,000 | $36,838 | −$838 |
| 5 | $60,000 | $3,000 | $21,000 | $36,000 | $36,838 | −$838 |
| 6 | $60,000 | $3,000 | $21,000 | $36,000 | $36,838 | −$838 |
| 7 | $60,000 | $3,000 | $21,000 | $36,000 | $36,838 | −$838 |
| 8 | $60,000 | $3,000 | $21,000 | $36,000 | $36,838 | −$838 |
| 9 | $60,000 | $3,000 | $21,000 | $36,000 | $36,838 | −$838 |
| 10 | $60,000 | $3,000 | $21,000 | $36,000 | $36,838 | −$838 |
The sale
Where the profit comes from
What IRR measures
The internal rate of return is the one yearly rate that, earned on every dollar you put in, would produce exactly the cash you get back, when you get it back. Unlike cash-on-cash return, it covers the whole hold rather than one year, and it counts timing: cash that arrives in the first year is worth more than the same cash in the tenth.
Your return and the property's
The calculator gives two. IRR on your cash follows your own money: the down payment, closing costs and repairs going in, each year's cash flow after the mortgage, and the sale proceeds after the loan is paid off. Property IRR treats the purchase as if it were paid in cash, so it measures the building rather than the financing. The gap between them is what the loan does to you.
On the example, borrowing at 7.25% turns a property returning 5.3% into 0.3% on your cash. The loan costs more than the property earns, so every borrowed dollar pulls the return down.
The assumptions are the answer
An IRR needs a forecast: how rent and costs will change, how long you hold, and what a buyer will pay. None of that is known on the day you buy, and this site does not suggest values for any of it. The example starts with nothing changing, which is a baseline rather than a prediction. With rent and costs both rising 2.0% a year instead, the same deal returns 7.3% on your cash over the same 10 years. The grid beside the results shows how far the answer moves when one guess is off, and it is worth reading before the headline figure.
Why the sale is priced on the next year's income
A buyer at the end of your hold is paying for the income they will collect, which is the following year's. So the exit cap rate is applied to the NOI of the year after the sale. Applying it to the last year you own the property instead prices the sale a full year of growth too low.
When there is no IRR, or more than one
If every cash flow goes the same way, as when a deal never returns any cash at all, no rate balances them and the calculator shows a dash rather than a number. If money goes in, comes out, then goes in again (years of positive cash flow and then a sale that nets less than the loan, say), two different rates can both balance the flows. Neither is the deal's return, so the calculator lists them and does not pick one.
What this leaves out
Every figure is before tax: no depreciation, no tax on the income and none on the sale. Capital spending during the hold, like a new roof, is not part of NOI, so if the property will need it, the cash flows here are too high. Refinancing is not modelled. Each year's cash is counted at the end of the year, although rent really arrives monthly, which slightly understates the return.