So look, IRR is cool. You learned about it in biz school, you drop it in every convo you have, you apply it to every investment you’ve ever come across and you might even dream about running endless IRR models.
If I am sitting in NYC at a fund and I have more deals than capital, IRR is an incredible tool to objectively analyze which is the best return for your capital.
But what if youre a rando investor in Idaho and you have the opposite problem. What if you have more capital than deal looks?
You’ve been told by every MBA guy that you need to hurdle 18 % on an IRR.
So you pass and you pass and you wait………
Paradigm #1 in this CRE world, capital is easy, deal sourcing is VERY hard.
If you have capital but very few looks, you may need to lower your threshold just to get into the game.