Cash Flow Guys Podcast

The term equity multiple is used by syndicators/deal sponsors as a fancy way to discuss return on investment. Google Definition: Equity multiple is a metric that calculates the expected or achieved total return on an initial investment. It’s calculated through an equity multiple formula that divides the total dollars received by the total dollars invested. Equity Multiple = Total Distributions / Total Invested Capital Example 1:  An investor purchases a property for $100,000;  The property is sold for $200,000.    The deal produces a 2x equity multiple.  If the investor only receives $150,000 back, the deal delivers a 1.5x equity multiple. Example 2:  An investor purchases a property for $100,000;  The property pays $7,000 a year in net operating income;  The investor sells the property for $165,000 after six years In this case, the equity multiple calculations would be $207,000 divided by the initial purchase price of $100,000, or a 2.07x equity multiple. Example 3:  Leverage Example:  An investor purchases