The Internal Rate of Return (IRR) tells us a lot about an investment opportunity while factoring time into your invested dollars. This is because the IRR considers the time value of money. A dollar received today is worth more than a dollar received tomorrow, which is mainly due to inflation's natural erosion of the dollar year after year, making the time value of money so crucial in a real estate investment. The Internal Rate of Return (IRR) is calculated by dividing the discounted cash flow. The IRR is impacted by the speed of returns, which means that if investors' cash distributions are made sooner rather than later, they will have a higher IRR on their invested capital.