Real Estate Analyst Interview Question:

Explain what is levered IRR?

Submitted by: Muhammad

A levered IRR is just the Internal Rate of Return when you take financing into account. So basically you run a DCF, take out interest payments and calculate the IRR over the hold period. This will be higher mainly because taking on debt juices your returns and more specifically the first year cash flow will be lower because you have debt.
Submitted by: Muhammad