What is the Internal Rate of Return (IRR) in coliving investments?

The Internal Rate of Return (IRR) in coliving investments is defined as the annual growth rate of the investment. It represents the discount rate at which the present value of future cash flows from the investment equals the initial investment cost. In essence, IRR is a critical metric for investors as it helps them assess the profitability and efficiency of an investment over time.

By calculating the IRR, investors can evaluate the potential returns of a property relative to alternative investment opportunities and determine whether the coliving investment aligns with their financial goals. This metric incorporates not just the profit from property sales but also the income generated from operational activities, such as rent and fees, and the associated costs over the investment period.

In the context of coliving, where the focus is often on generating steady rental income while managing tenant turnover and operational expenses, understanding the IRR provides a comprehensive view of the investment's performance and helps stakeholders make informed decisions.