IRR stands for “Internal Rate of Return”.  Once you invest in a property as an equity holder, the total return you receive corresponds to the residual cash flow left over after expenses, capital improvement spending, and debt service payments are made and then a final payment at the end of the investment period when the property is sold, and debt holders are paid off.  IRR is the common way to express this total return and is reported as a percentage. You can think of it as an annual return on investment.  Mechanically, the IRR is calculated as the discount rate that would make the projected cash flows to the investors over the target investment period equivalent to the initial investment made.