Notes

Question 1

Many mortgage lenders require that ___ hire a professional property manager to manage their properties.

Answer 1

Investors

Question 2

The ___ carries out the goals of the property owner by making sure the property earns income

Answer 2

Property manager

Question 3

The property manager has an agency relationship with the ___, which involves greater authority and discretion over management decisions than an employee would have.

Answer 3

Owner

Question 4

In IL, the ___ was created to regulate community association managers, to ensure that managers are qualified to engage in community association management, and to enforce high standards of professional conduct by those licensed.

Answer 4

The Community Association Manager Licensing and Disciplinary Act

Question 5

In IL, what is required to perform community association management activities?

Answer 5

A Community Association Manager License

Question 6

___ assist in providing a comprehensive array of services to volunteer boards in condos and homeowners associations.

Answer 6

Community Association Managers

Question 7

Many states require at least a(n) ___ license or a(n) ___ license for those who specialize in managing community associations

Answer 7

real estate
association management

Question 8

___ monitor a portfolio of properties similar to a securities portfolio by analyzing the performance of the properties and making recommendations to the owners of the properties.

Answer 8

Asset management

Question 9

Real property ___ helps clients decide what type of real estate to invest in (commercial or residential), which property is best to purchase, the best financial sources, and when to dispose of the property

Answer 9

asset management

Question 10

In IL, ___ manage properties for corporations that invest in real estate.

Answer 10

Corporate property managers

Question 11

Hiring a(n) ___ allows a corporation to invest in real estate without having specialized knowledge in property management.

Answer 11

Corporate property manager

Question 12

Property management agreements must be…

Answer 12

in writing

Question 13

In IL, property management requires a(n) ___ and an individual must perform services under supervision of ___.

Answer 13

real estate license, supervision of a sponsoring broker

Question 14

In preparing a management plan, a property manager analyzes what 3 factors?

Answer 14

1) owner’s objectives
2) regional and neighborhood market
3) specific property

Question 15

Management plans also include a budgetary section that lists ___ and ___.

Answer 15

Sources of revenue and anticipated expenses

Question 16

A(n) ___ is a present document that is forward-looking in determining the feasibility of a property owner’s long-term goals for a specific property

Answer 16

management plan

Question 17

What is the first step in taking over the management of any property?

Answer 17

Enter into a management agreement with the owner

Question 18

The ___ creates a general agency relationship between the owner and the property manager, and defines the duties and responsibilities of each party

Answer 18

management agreement

Question 19

The ___ is a guide used in operating the property as well as a reference in case of future disputes between the owner and property manager.

Answer 19

management agreement

Question 20

Management agreements should be…

Answer 20

in writing

Question 21

What 9 things should be included in a management agreement?

Answer 21

1) Description of property
2) Time period the agreement covers
3) Management responsibilities
4) Statement of the owner’s purpose
5) Extent of manager’s authority
6) Reporting
7) Management fee
8) Allocation of costs
9) Equal opportunity statement

Question 22

In a management agreement, the description of the property should include which 2 things?

Answer 22

1) Legal description
2) Street address

Question 23

In a management agreement, the ___ should clearly state what the manager is to accomplish.

Answer 23

Owner’s purpose

Question 24

Residential property managers often earn ___ when they find new tenants for a property.

Answer 24

Commission

Question 25

Rental commissions are usually based on...

Answer 25

Annual rent for the property

Question 26

If an apartment rents for $1,200 per month and the commission payable is 8% of the annual rent, what is the total amount in commission?

Answer 26

$1,152 1200 x 12 = 14400 14400 x 0.08 = 1152

Question 27

The projection of income and expenses for the operation of a property over a 1-year period

Answer 27

Operating budget

Question 28

The ___ is based on anticipated revenues and expenses and serves as a guide for the property's anticipated financial performance

Answer 28

Operating budget

Question 29

___ includes gross rents collected, delinquent rental payments, vending, late fees, and storage fees

Answer 29

Income

Question 30

Any losses from uncollected rental payments or evictions are deducted from the total gross income to arrive at the ___

Answer 30

total adjusted income

Question 31

In some properties, there may be space that is not income producing such as the property manager's office. The rental value of the property that is not producing income is subtracted from the gross rental income to equal the ___ income

Answer 31

Gross collectible

Question 32

AKA Gross billable income or gross rental income

Answer 32

gross collectible income

Question 33

___ expenses remain constant and do not change.

Answer 33

Fixed

Question 34

___ expenses may be recurring or nonrecurring

Answer 34

Variable

Question 35

Employee wages, utilities, and other basic operating costs are ___ expenses

Answer 35

fixed

Question 36

Capital improvements, building repairs, and landscaping may be ___ expenses

Answer 36

variable

Question 37

a monthly statement that details the financial status of the property

Answer 37

cash flow report

Question 38

The most important financial report in property management because it provides a picture of the property's current financial status

Answer 38

Cash flow report

Question 39

Gross rental income + other income - losses = ___

Answer 39

total income

Question 40

Total income - operating expenses = ___

Answer 40

net operating income before debt service

Question 41

net operating income before debt service - debt service - reserves = ___

Answer 41

cash flow

Question 42

A financial picture of revenues and expenses used to determine whether the business has made money or suffered a loss.

Answer 42

Profit and loss statement

Question 43

The profit and loss statement is created from the monthly ___.

Answer 43

cash flow reports

Question 44

The profit and loss statement does NOT include ___.

Answer 44

Itemized information

Question 45

The ___ compares the actual results with the original budget, often giving either percentages or numerical variance of actual versus projected income and expenses.

Answer 45

Budget comparison statement

Question 46

___ are helpful to identify trends in order to help with future budget planning

Answer 46

Budget comparison statement

Question 47

Rental rates are influenced by...

Answer 47

supply and demand

Question 48

Commercial rents are usually stated according to either ___ or ___ rates per ___.

Answer 48

monthly or annual rates per square foot

Question 49

Residential rent is usually stated as the ___ rate per ___.

Answer 49

monthly rate per unit

Question 50

If the occupancy level of an apartment or office building exceeds 95%, the property manager should...

Answer 50

investigate the rental market to determine whether a rent increase is warranted

Question 51

Residential property managers must always comply with ___ in selecting tenants.

Answer 51

fair housing

Question 52

Fair housing laws do not apply to ___ properties, however their property managers still need to be aware of federal, state, and local anti-discrimination and equal opportunity laws that may govern ___ or ___ properties.

Answer 52

commercial industrial retail

Question 53

Terms of rent payment should be spelled out in the lease agreement and include which 3 things?

Answer 53

1) Time & place of payment 2) Provisions & penalties for late payment and returned checks 3) Provisions for cancellation and damages in case of nonpayment

Question 54

In the event of nonpayment of rent, the property manager should establish a(n) ___ that includes a system of notices and records in compliance with state and local law

Answer 54

Collection plan

Question 55

In the event of nonpayment of rent, every attempt must be made to collect rent without resorting to ___.

Answer 55

Legal action

Question 56

In IL, property managers must put security deposits in a(n) ___.

Answer 56

special escrow account

Question 57

In IL, how are security deposits for leases similar to earnest money for a mortgage?

Answer 57

Both must be deposited into a special escrow account

Question 58

In IL, all brokers must collect all compensation for brokerage services through their ___.

Answer 58

sponsor

Question 59

In IL, residential leasing agents cannot engage in leasing activities for ___ property.

Answer 59

Commercial

Question 60

In IL, security deposits must be deposited into the escrow account by ___ and it must be ___

Answer 60

the next business day after a lease is signed recorded in the journal and ledger

Question 61

In IL, the escrow account for security deposits is non-interest-bearing UNLESS...

Answer 61

The property is residential with 25 or more units

Question 62

When must interest be paid to tenants on security deposits in IL?

Answer 62

If the residential property has 25 or more units

Question 63

A good property manager acts to the benefit of...

Answer 63

Both the owner and occupants

Question 64

Keeping a property in good condition involves which 4 types of maintenance?

Answer 64

1) Preventative (periodic/ seasonal) 2) Repair or corrective (PRN) 3) Routine (daily or ordinary) 4) Tenant improvements

Question 65

__ maintenance preserves the long-range value and physical integrity of the building

Answer 65

preventative

Question 66

What is the most critical maintenance activity?

Answer 66

Preventative

Question 67

What is the most neglected maintenance activity?

Answer 67

Preventative

Question 68

Failure to perform ___ maintenance leads to greater expense in other areas of maintenance

Answer 68

preventative

Question 69

___ maintenance involves actual repairs that keep the building's equipment, utilities, and amenities functioning.

Answer 69

Corrective

Question 70

Repairing a boiler, fixing a leaking faucet, or mending a broken air-conditioning unit are acts of ___ maintenance

Answer 70

Corrective

Question 71

___ maintenance includes daily duties such as cleaning common areas, performing minor carpentry and plumbing adjustments, providing regularly scheduled upkeep of landscaping.

Answer 71

Routine

Question 72

___ maintenance and ___ maintenance are similar in the sense that they both head off problems before they become expensive

Answer 72

Routine and preventative

Question 73

Examples of ___ are repainting or replacing the carpets, gutting the interior and redesigning the space by erecting new walls, adding partitions, and revamping electrical systems.

Answer 73

tenant improvements

Question 74

Title II of the ADA prohibits....

Answer 74

discrimination in commercial properties and public accomodations

Question 75

The ADA requires that property managers ensure that people with disabilities have full and equal access to....

Answer 75

facilities and services

Question 76

The property manager is responsible for determining whether a building meets the ADA's ___ requirements

Answer 76

accessibilitiy

Question 77

If a building is not in compliance with the ADA's accessibility requirements, what must the property manager do?

Answer 77

Prepare & execute a plan for restructuring or retrofitting a building

Question 78

___ involves answering the question: "what happens if something goes wrong?"

Answer 78

Risk management

Question 79

___ protect owners against financial losses resulting from an employee's criminal acts or negligence while performing assigned duties

Answer 79

surety bonds

Question 80

IN IL, the policy type that tenants should ask for is ___, which is designed specifically to cover renters' personal property

Answer 80

HO-4

Question 81

What are the 2 methods used to determine the amount of a claim under an insurance policy?

Answer 81

1) depreciated cash value (aka actual cash value) of the damaged property 2) Current replacement cost

Question 82

When property is not insured for what it would cost to replace it, but rather for what it was originally worth, what method was used to determine the amount of an insurance claim?

Answer 82

Depreciated cash value (actual cash value)

Question 83

When property is insured for the replacement cost, what method was used to determine the amount of an insurance claim?

Answer 83

Current replacement

Question 84

Which type of insurance is more expensive: full replacement cost or depreciated cost?

Answer 84

Full replacement

Question 85

___ insurance provides coverage against losses such as theft, vandalism, and destruction of machinery

Answer 85

Casualty

Question 86

What license is required to work as a property manager?

Answer 86

Broker