Equity multiple calculator.
Equity multiple answers a blunt question: for every dollar in, how many come back? It ignores timing (that’s what IRR is for) but tells you the raw total return over the hold.
The bluntest return question
The equity multiple strips a deal down to its bluntest question: for every dollar in, how many come back? It is total cash returned — every year’s cash flow plus net sale proceeds — divided by the equity you invested. A 2.0x means you doubled your money. What it deliberately ignores is time, which is why it is the natural companion to IRR.
Example. You invest $850,000 and, over a five-year hold, collect $235,000 in cumulative cash flow plus $1,100,000 at sale — $1,335,000 total. That is a 1.57x equity multiple. Strong or weak depends entirely on the hold: a 1.57x in three years is excellent; the same multiple over twelve years is poor.
Frequently asked questions
Multiple and IRR disagree for a reason.
One ignores time, the other is dominated by it, and which you optimise for changes the deal you should do. Send me the property and I'll show both against comps.
Estimates are for planning only and use simplified assumptions — not tax, legal, or investment advice. Verify with your lender, CPA, and a full broker analysis before acting.
Multiple answers a question IRR cannot
Equity multiple is total cash returned divided by cash invested. A 2.0x means you got back twice what you put in. It ignores time completely, which is both its weakness and the reason it is worth reading.
IRR rewards speed. Multiple rewards magnitude. Two deals can show the same IRR while one returns 1.4x over three years and the other 2.3x over nine, and those are entirely different decisions — particularly if you do not have a good use for the money when the fast one pays out.
Reading them together
When IRR is high and the multiple is low, you are looking at a quick partial return of capital rather than a large profit. When the multiple is strong and the IRR is modest, the deal is slow but substantial — often the better outcome for an owner who is not trying to recycle capital constantly.
Neither number says anything about risk. A 2.5x underwritten on aggressive rent growth and a favourable exit is not better than a 1.8x underwritten conservatively; it is a different bet. Test both against a range of exit assumptions before comparing them at all.
Common questions
What is a good equity multiple?
It depends entirely on hold period and risk. A 1.6x over three years and a 1.6x over ten are very different outcomes. Read it alongside IRR rather than on its own.
Why do IRR and equity multiple disagree?
Because one accounts for time and the other does not. A quick return of capital lifts IRR without adding much total profit, while a long hold can build a strong multiple with a modest annualised return.
Does equity multiple include leverage?
It reflects it. The multiple is computed on the equity you actually invested, so debt increases the multiple when the deal works and reduces it faster when it does not.
Tools: deal analyzer · DSCR · IRR · all calculators · Justin Crow, South Florida commercial broker