Free calculator · Valuation & Returns
Investment Decision, NPV, IRR & MIRR
Evaluates a single property acquisition on unlevered and levered NPV and IRR, equity multiple, cash-on-cash, and MIRR. Inputs cover purchase price, Year 1 NOI and growth, reserves, hold period, exit cap rate, selling costs, loan terms, and the required returns.
By Devon Coombs, CPA, MBA · Assistant Teaching Professor of Finance, Santa Clara University · Reviewed October 2026
From the author: Devon Coombs, CPA, MBA teaches finance at Santa Clara University and works with corporate teams on practical AI.
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How do you decide whether a rental-property investment creates value?
Project operating cash flows, reserves, and sale proceeds, then discount them at a return appropriate to their risk. Compare unlevered property returns with levered equity returns. A high cap rate or a higher levered IRR alone is not enough to approve an investment.
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Investment Decision, NPV, IRR & MIRR
Property & exit
Financing & hurdles
Unlevered (property level)
Investment value (PV at required return)
$29,489,486
Unlevered NPV (value − price)
−$510,514
Unlevered IRR
7.09%
vs 7.50% hurdle
Net reversion
$32,600,803
fwd NOI ÷ 5.75% − costs
Levered (equity), year by year
Levered IRR
8.57%
vs 9.00% hurdle
Equity multiple
1.48x
on $12,000,000
MIRR
8.41%
reinvest @ 5.0%
Levered NPV
−$221,258
at 9.00%
Mortgage constant
7.19%
Year 1 DSCR
1.27x
Debt yield
9.2%
Understand the numbers
A worked example, step by step
Start with the default $30 million acquisition, $1.65 million year-one NOI, $66,000 reserves, 60% loan-to-value, a five-year hold, and 3% annual NOI growth.
This fixed teaching example is separate from your saved calculator inputs. Enter the assumptions above to reproduce it.
- Going-in cap rate = $1.65 million ÷ $30 million = 5.5%. Cash before debt service in year one = $1.65 million − $66,000 = $1.584 million.
- Initial loan = 60% × $30 million = $18 million. Initial equity = $12 million before any additional acquisition costs.
- At the end of year 5, the model values the sale using year-6 NOI. At 3% growth, that forward NOI is about $1.913 million; divide it by the exit cap rate, then deduct selling costs and the remaining loan for equity proceeds.
5.5% initial cap rate is not the total investment return
What the result tells you
Read NPV at the chosen required return alongside IRR, the equity multiple, and annual cash flow. Leverage changes the equity cash-flow pattern and risk; it does not repair weak property economics.
Assumptions to check
Review acquisition costs, taxes, actual capital spending, financing fees, refinancing, and possible selling delays outside this simplified model. A single exit cap rate and growth path cannot represent every outcome.
Try one change
Increase the exit cap rate by one percentage point, keeping every other assumption fixed. Observe the change in sale value, levered NPV, and equity multiple.
Test it in the calculator ↑Learn the concept
This calculator comes from the free Real Estate Finance course, where the concept is taught with readings, worked examples, and practice questions.
When to use this measure
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Built by Devon Coombs, CPA, MBA, Assistant Teaching Professor of Finance at Santa Clara University.