IRR formulas when paying cash (SFR)

[Jerry Travioli]

What is a good formula for IRR. and how do you handle the IRR formula when you are paying cash for a property?

When paying cash, what are good IRR results, and for what timeframe (5 or 10 yrs)?

What are typical appreciation factors to apply to: Income, Expenses, and Property value when calculating the IRR?

[Allan C.]

@Jerry Travioli are you planning to calculate by hand or do you have access to excel to derive your IRR?

IRRs for cash deals are lower than leveraged deals by definition. Depending on LTV I'll see half the IRR on a non-leveraged deal vs leveraged, and that's using 5% rent growth and 2% expense growth.

More importantly, you’ll have to define your exit event (ie. sale, refi, etc) within a 5,10 or 15 yr time horizon for simplicity. You can also assume buy and hold in perpetuity, but then you’ll need to determine a terminal value to represent your ongoing cash flow after the last year you’ve modeled.