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Market & Valuation

Equity Multiple

Total dollars returned divided by dollars invested — a simple lifetime return metric.

A $200k investment that returns $500k over the hold = 2.5x equity multiple. Doesn't factor in time; pair with IRR.

Related

Terms

  • IRR (Internal Rate of Return)
  • Cash-on-Cash Return

More in Market & Valuation

  • NOI (Net Operating Income)— Gross income minus operating expenses — excludes debt service, capex, and income taxes.
  • Operating Expenses (OpEx)— Recurring costs of running a property — taxes, insurance, management, maintenance, utiliti…
  • CapEx (Capital Expenditures)— Large periodic replacements — roofs, HVAC, water heaters, appliances — budgeted separately…
  • Vacancy Rate— The percentage of time a rental is expected to sit empty between tenants.
  • Cap Rate (Capitalization Rate)— NOI ÷ Purchase Price — the unleveraged annual yield of a commercial property.
  • Cash-on-Cash Return— Annual pre-tax cash flow divided by the total cash you invested to acquire the deal.

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