I know a lot of investors use IRR in their analysis but I rarely see anything about MIRR. I would think since this calculation takes into account interest being paid versus the return received on investment income it would a good metric to use.
I would be interested to know if other investors use this formula and to what extent.
I ask because I was recently analyzing 10 unit here is Atlanta I received from an agent. The property is way over priced. However, I ran my analysis and the IRR was 32%, based on my max offer price. But the MIRR is 22%. Would anyone be concerned about the large difference between the two?
Any advice is appropriated.
All the Best,
@Canesha Edwards , I think this is because IRR assumes your cash is being reinvested in other REI projects with the same return. That makes sense if you pile your profits into other, similarly profitable deals.
I think my issue with IRR is that it doesn't account for financing cost. Let's say I am reinvesting profits into similar projects producing the same 15% return. However, if I have to finance any part of the project the rate is being accounted for in the IRR equation. I feel this inflates the numbers.