Free calculator · Valuation & Returns
Levered vs Unlevered Returns (IRR)
Builds a full acquisition model with a driver-based NOI forecast, financing, and sale, then solves for unlevered and levered IRR, equity multiple, cash-on-cash, and debt coverage. Inputs span purchase price, closing costs, loan terms, Year 1 NOI and growth, reserves, hold period, and the terminal cap rate.
Interactive Tool
Levered vs Unlevered Returns (IRR)
Acquisition & financing
Operations & exit
Your turn
Underwrite this acquisition and report what the equity has to put up, what it gets back at sale, and what it earns.
The purchase price is $12,000,000 with closing costs of 2.00%. A lender funds 65% of price at 5.50% on a 30-year amortization and charges a 1.00% origination fee, netted out of the funding.
Year 1 NOI is $739,940 growing 3.4% a year, reserves run $350 per unit across 50 units, and the property is sold at the end of Year 5 on the forward NOI at a 6.50% terminal cap, with 2.50% costs of sale and a 1.00% prepayment penalty on the outstanding balance.
Everything the sponsor funds on day one. Within 1% counts as correct.
Net of sale costs, loan payoff, and the prepayment penalty. Within 1% counts as correct.
Annual IRR on the equity cash flows, one per year plus the exit. Within 0.25% counts as correct.
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.
Built by Devon Coombs, CPA, MBA, Teaching Professor of Finance at Santa Clara University.