Cap Rates vs. IRR in Commercial Real Estate Investments

Return metrics explained

Real estate investing is a popular way to build wealth, and commercial real estate is one of the most common investments. Commercial properties are usually multifamily buildings or office buildings, but they can also include retail spaces and even industrial buildings.

If you’re considering investing in commercial real estate, you may be wondering about the difference between cap rates and internal rate of return (IRR). These two metrics are used to evaluate investments in both residential real estate and commercial real estate.