Certified Residential Appraiser Practice Exam

Equity dividend can be best defined as:

1. The percentage of rent paid above the minimum

2. The actual income after all expenses

3. The return on investment from income generated by the property

4. The total rent derived from the property

The correct answer is: The return on investment from income generated by the property

Equity dividend refers to the return on investment that an owner receives from the income generated by a property after accounting for all related costs, such as expenses and debt service. In real estate investment, it often expresses how efficiently the equity in a property is being utilized to generate income for the owner. In the context of the provided choices, the correct definition encompasses the idea of measuring the profit derived from the income produced by the real estate asset in relation to the equity invested. This aligns with the concept of cash flow after mortgage payments, leading to a direct indication of the profitability concerning the equity portion of the property. The other options, while related to real estate and investment, do not adequately capture the essence of equity dividend. The percentage of rent paid above a minimum, actual income after expenses, and total rent derived from the property each focus on different aspects of income generation and do not directly address the relationship between the income produced and the equity invested in the property.