Multifamily IRR Calculator
Calculate multifamily apartment IRR and equity multiple. Inputs: purchase price, debt, NOI growth, exit cap, hold period, refinance event. Outputs: levered IRR, unlevered IRR, equity multiple, cash-on-cash, average annual return. Use for syndication pro forma evaluation, deal screening, LP underwriting.
Levered IRR vs Unlevered IRR
Unlevered IRR = property's intrinsic return without debt. Use to compare across asset classes (multifamily vs office vs retail). Levered IRR = return on equity after debt service — amplified by leverage. Multifamily deal targets: value-add 15-22% levered IRR; core-plus 10-14%; core 7-9%. Sub-7% on value-add signals overpaying. Sub-15% on heavy value-add signals the operator is underwriting risk poorly.
Equity Multiple — A More Honest Metric
Equity multiple = total cash returned / total equity invested. Less time-sensitive than IRR. Value-add target: 1.8x-2.5x over 5-7 years. Core target: 1.4x-1.8x over 7-10 years. IRR can be gamed with short hold periods (cap-rate compression). Equity multiple cannot — it's straight cash returned. Always check both.
Refinance Events and Cash-Out
Refinance at month 24-36 (after NOI growth) extracts equity tax-free. Pulls deal IRR up substantially. Risk: rates rise above stabilized DSCR — refinance fails. Pro formas often over-assume refinance cash-out. Stress-test: rerun IRR assuming no refi, just hold + sell. If IRR drops below 11% levered → don't invest.
Sale Cap Rate Assumption is the Sensitivity Killer
Exit cap rate sets ~60% of multifamily IRR sensitivity. Pro forma typically assumes exit cap = entry cap. Reality: exit cap usually 25-75 bps higher due to age, market shift. Stress-test: run +50 bp and +100 bp exit cap scenarios. If IRR collapses below 12% with +100bp → don't invest. Promote/waterfall splits also kick in only at hurdle rates (typically 8% pref + 80/20 catch-up + 70/30 after 12% IRR), so model the LP-side IRR specifically not the deal IRR.
Sources: IREM Multifamily Operating Manual, CCIM Course CI 101 (Financial Analysis), NAA NIIPA, Cushman & Wakefield Apartment Market Reports 2024-25. Last updated: May 2026. Not investment advice.
Frequently Asked Questions
What is a good multifamily IRR target?
Value-add: 15-22% levered IRR over 5-7 years. Core-plus: 10-14%. Core: 7-9%. Sub-7% on value-add signals overpaying. Always cross-check with equity multiple (target 1.8x-2.5x for value-add).
Why is exit cap rate so important?
Exit cap rate drives ~60% of IRR sensitivity. Pro forma typically assumes exit cap = entry cap, but in reality exit cap is usually 25-75 bps higher (property ages, market shifts). Stress-test +50bp and +100bp scenarios.
Should I include refinance in IRR calculation?
Refinance can extract tax-free equity at month 24-36 after NOI growth and boost IRR. But many pro formas over-assume refi cash-out. Always stress-test 'no refi' case — if IRR drops below 11% levered, the deal is too dependent on refi.
What does equity multiple show that IRR misses?
IRR can be gamed with short hold + cap compression. Equity multiple = total cash returned ÷ equity invested. Less time-sensitive, harder to manipulate. Always check both.
Does this model GP promote / waterfall?
No — this is the deal-level levered IRR. LP-specific IRR after waterfall (8% pref + 80/20 catch-up + 70/30 after 12% IRR) is typically 200-400 bps lower than deal IRR. Always model the LP waterfall separately.