Internal Rate of Return (IRR)

IRR is a metric that shows the total annual return an investment is expected to generate over time, factoring in both cash flow and appreciation. It’s expressed as a percentage and used to compare different investments with varying timelines and income patterns. The higher the IRR, the more attractive the investment—at least on paper. IRR is especially useful in 1031 exchange planning or portfolio strategy where timing matters. At Meridian, we use IRR in detailed models to help investors understand how a property’s projected performance aligns with their long-term goals.