What Is Equity Multiple in Real Estate?

The equity multiple is a real estate investment metric that shows how much total cash an investor receives compared to the amount they originally invested. It measures overall returns over the full holding period and is commonly used alongside IRR and Cash-on-Cash Return.

How Equity Multiple Works

Equity multiple compares the total money returned to an investor over the life of the deal (cash flow + sale proceeds) to their initial cash investment.

Formula:

Equity Multiple = Total Cash Received ÷ Total Cash Invested

  • An equity multiple of 2.0x means the investor doubled their money.
  • It includes multi-year cash flow AND profits from selling the property.
  • Unlike ROI, equity multiple is NOT annualized.
  • Often paired with IRR for a complete investment picture.

Example of Equity Multiple

An investor puts $100,000 into a rental property. Over 5 years, they receive:

  • $30,000 in total cash flow
  • $100,000 profit when the property is sold

Total money received = $130,000 cash flow + $100,000 profit = $230,000

Equity Multiple = $230,000 ÷ $100,000 = 2.3x

This means the investor received **2.3 times their investment** over the entire hold period.

Equity Multiple vs. IRR vs. Cash-on-Cash Return

  • Equity Multiple – Measures total return over the entire investment.
  • IRR – Annualized return based on cash flow timing.
  • Cash-on-Cash Return – Measures yearly cash flow relative to cash invested.

Equity multiple shows *how much* money you get back, while IRR shows *how fast* you earn it.

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