Does IRR Really Even Matter For Real Estate? | Internal Rate of Return Explained (IRR)

An interesting question I receive all the time is how do I evaluate a real estate deal and how do I calculate IRR (Internal Rate of Return)? There are so many different metrics out there like cash on cash return, a return on investment, a capitalization rate, an annualized rate of return, and even an internal rate of return. It’s easy to get confused, as these metrics are often blended making it hard for the investor to understand what their actual returns will be.

Speaking from experience, the first question I most often receive when presenting a new offering on an apartment syndication is “What’s the IRR?” I rarely get a follow-up question regarding the IRR. It’s almost as if the investor has been conditioned to overlook other investment metrics in order just to focus on a large IRR number. A dirty secret in the industry is that an IRR can be easily manipulated! In this video, I am going to show you some of the assumptions an operator can use to inflate the IRR. This video was inspired by my good friends Brian Burke's new Bigger Pockets book “The Hands-Off Investor: An Insiders Guide to Investing in Passive Real Estate Syndications”. If you enjoyed the video, make sure to check out the book!

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As always, please email us any real estate questions to HelpMe@DeRosaGroup.com and we will answer them on an upcoming episode!

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Видео Does IRR Really Even Matter For Real Estate? | Internal Rate of Return Explained (IRR) канала Derosa Group