
Levered vs. Unlevered IRR: What Real Estate Investors Need to Know
Internal Rate of Return (IRR) is a core metric for evaluating the profitability of income property investments. It is perhaps the one metric that accounts for the interplay between the magnitude and the timing of future cash flows.
From my experience, investors agree that a high rate of return is better than a low rate, but some are less clear about exactly what IRR is and how it’s calculated. So let’s start with some basics—and then dig deeper into levered and unlevered IRR.