XIRR is a spreadsheet function, available in Excel and Google Sheets, that calculates an internal rate of return from a series of cash flows using the specific date each one occurs. The standard IRR function assumes cash flows land at perfectly even intervals, one per period. Real estate cash flows rarely cooperate: a capital call in January, quarterly distributions timed by the equity waterfall, refinance proceeds mid-hold, and sale proceeds on whatever day the deal closes.
XIRR handles that irregular timing by day-counting each flow against a 365-day year, which makes it the practical tool for a limited partner tracking the annualized return on an actual investment rather than a modeled one. The calculation needs at least one negative flow, the capital going in, and at least one positive flow coming back. Like any IRR figure, the result is best read alongside other measures, such as equity multiple, covered in this guide to common real estate return metrics.
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