Internal rate of return (IRR) accounts for the time value of money and provides a single percentage that represents the annualized return of an investment over its entire holding period. Unlike cash-on-cash return or cap rate, IRR factors in all cash flows including the initial investment, ongoing cash flow, tax benefits, and the eventual sale proceeds. A higher IRR indicates a more profitable investment on a time-adjusted basis. Real estate syndicators and institutional investors typically target IRRs of 12-20% depending on the risk profile. IRR is particularly useful for comparing investments with different holding periods and cash flow patterns.