What does IRR stand for in real estate finance?

Internal Rate of Return (IRR) is a critical concept in real estate finance that represents the discount rate at which the net present value (NPV) of all cash flows from an investment, such as a real estate property, equals zero. This means that when calculating IRR, an investor is seeking the rate of return at which the investment breaks even when considering the time value of money.

The IRR is often used by real estate investors to evaluate the profitability of investment opportunities, helping them to make decisions about whether to pursue or decline potential deals. A higher IRR indicates a more profitable investment, making it an essential tool in financial analysis.

The other options represent concepts that do not accurately describe IRR. For instance, the term "Internal Rate of Revenue" does not exist in the context of investment evaluation. Similarly, "Incremental Rate of Return" and "Investment Rate of Return" imply different or less specific metrics that do not capture the essence of the time value of money and cash flow evaluation inherent in IRR. Thus, Internal Rate of Return is the correct and widely recognized term used in the field of real estate finance.