Please explain in more depth IRR
@ Llewelyn A. -
You posted this on another thread:
"Mike, Jay, like both of you, I buy based on Internal Rate of Return (IRR) Analysis, not on calculations that only tell you what the current year return gives you.
I met a few BP members recently and showed them how large the Returns are and it's quite shocking. Those investing in Cash Flow ONLY calculations versus the overall return such as IRR don't realize how much money they are leaving on the table.
I don't blame them because it's just so easy to do those other simple calculations such as CoCR and to think that's the only thing you really need to know.
The problem is that you don't know what you don't know until you learn something sophisticated and then you realize that the stuff you learned before just wasn't good enough to achieve MASSIVE returns.
I think the best kept secret is these more sophisticated calculations such as IRR.
The problem is even if I let the secret out of the bag, there will probably be 90% of Investors that will say it's too difficult to understand. And I agree! It really is difficult because it requires a mental and business shift of paradigm.
But like everything, if you put in quality work, you can get quality rewards."
Can you go into more depth about IRR?
I found this article to be helpful in understanding IRR: https://www.crowdstreet.com/what-internal-rate-ret...
Am I on the right track? I guess I'm not seeing what is so magical about this formula yet...or why it "requires a business shift of paradigm"?
Thanks