Equity Multiple & Payback Period Calculator
Calculate equity multiple and payback period for real estate investments. Analyze total returns and investment recovery time.
How it works
Equity Multiple = Total Distributions ÷ Total Invested. Payback Period = years to recover initial investment from cash flow.
Example
$100K invested, $10K annual cash flow, $150K exit = 2.0x equity multiple, 10-year payback.
FAQ
What is a good equity multiple?
1.5x+ is acceptable, 2.0x+ is good, 2.5x+ is excellent. Higher multiples indicate better returns relative to capital invested.
How is equity multiple different from IRR?
Equity multiple shows total return as a multiple of investment, while IRR shows annualized return percentage. Both metrics complement each other.
What's a reasonable payback period?
5-10 years is typical for real estate investments. Shorter payback periods indicate faster capital recovery and lower risk.
Should exit proceeds be included?
Yes, total distributions include both cash flow received during ownership and proceeds from eventual sale of the property.
How do I compare different investment opportunities?
Use equity multiple for total return and payback period for risk assessment. Also consider IRR, cash flow timing, and investment duration.