Commercial & AppraisalAdvanced

What Is IRV Formula?

IRV is the foundational appraisal identity behind every capitalization-rate calculation: Income equals Rate times Value. Rearranged, it solves for whichever variable is unknown.

Most useful for: Commercial Investor

At a Glance

IRV Formula

I=R×V

or:V=I÷R

or:R=I÷V

💡

Given $24,000 in NOI (I) and a 6% cap rate (R), Value = $24,000 ÷ 0.06 = $400,000.

Formula

I = \frac{R \times V   ⇄   V = I}{R   ⇄   R = I} \div V

I = R × V ⇄ V = I ÷ R ⇄ R = I ÷ V

Example

Given $24,000 in NOI (I) and a 6% cap rate (R), Value = $24,000 ÷ 0.06 = $400,000.

Related Terms

Cap Rate Direct Capitalization

More Commercial & Appraisal Terms

Was this explanation helpful?

This definition is provided for general educational purposes and is not financial, legal, tax, or real estate advice. Verify important decisions with appropriately qualified professionals.

← All Commercial & Appraisal Terms Glossary Home

Helpful Resources

Pricing & PlansExplore →Why Trust ReaixoExplore →All Property ReportsExplore →Analyze a PropertyExplore →Sample ReportsExplore →Real Estate GlossaryExplore →Free Home Value EstimateExplore →

Understand a property's costs and risks before you make an offer

Use the free calculator for your own numbers, or analyze a specific home before you commit.

Free calculatorBrowse calculators →Runs in your browser; nothing to sign up for.

Or analyze a specific property: Essential Property Analysis, $19 · Property Decision Analysis, $49 · Professional Property Analysis, $99. You choose the depth before you pay.