Equity multiple is the total cash an investment pays you divided by the total cash you put in. It answers one question: for every dollar invested, how many dollars came back? A multiple of 2.0x means you doubled your money. Anything below 1.0x means you got back less than you put in.
Equity multiple = total cash received ÷ total cash invested
You put $50,000 into a rental: down payment, closing costs and repairs. Over five years it pays $4,000 a year in cash flow, or $20,000. You then sell and walk away with $80,000 after paying off the loan and selling costs. Total cash received is $20,000 + $80,000 = $100,000. The equity multiple is $100,000 ÷ $50,000 = 2.0x, a profit of $50,000 before taxes.
The weakness is that equity multiple ignores time. A 2.0x in five years and a 2.0x in twenty years are very different deals, because in the second one your money was tied up four times as long. That is why it is usually read alongside internal rate of return, which accounts for when each dollar arrives. The multiple also counts the return of your original cash, so 1.0x is break-even, not a 100% gain. A multiple based on a future sale price is only as good as your appreciation assumption.