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CLI Prelicensing > Unit 19 > Flashcards

Unit 19 Flashcards

1
Q

What do you need a license to do in property management?

A

get a commission, also need a broker

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2
Q

Three principal responsibilities of the property manager

A
  1. achieve the objectives of the property owners
  2. generate income for the owners
  3. preserve and/or increase the value of the investment property
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3
Q

What is the property manager’s job?

A

carry out the goals of the property owners

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4
Q

What is the property manager responsible for?

A

maintaining the owner’s investment and making sure the property earns income

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5
Q

Property Management Clients

A

corporate owners, apartment buildings, owners of small rental residential properties, absentee owners, homeowners associations, investment syndicates, trust, owners of office buildings

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6
Q

Property Management Professional Associations

A

BOMA, BOMI, CAI, IREM, ICSC, NAA, NAHB, NARPM

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7
Q

Management Agreement

A

a contract creating a general agency relationship between the owner and the property manager

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8
Q

What is the first step in taking over the management of a property

A

management agreement

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9
Q

What is a property manager considered?

A

a general agent

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10
Q

What is the property manager’s first responsibility

A

to realize the highest return on teh property in a manner consistent with teh owner’s instructions and applicable law

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11
Q

What is in the management agreement

A
  1. Description of property
  2. time period agreement covers
  3. Definition of the manager’s responsibilities
  4. Statement of the owner’s purpose and responsibilities
  5. Extent of the manager’s authority
  6. Reporting
  7. Compensation
  8. Allocation of costs
  9. Liability
  10. Antitrust Provisions
  11. Equal Opportunity Statement
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12
Q

What responsibilities is a property manager charged with

A

fiduciary; care, obedience, accounting, loyalty, confidentiality, disclosure

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13
Q

management plan

A

outlines the details of the owner’s objectives with the property, as well as what the property manager expects to accomplish and how, including all financial objectives

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14
Q

What does the property manager analyze in preparing the management plan?

A
  1. owner’s objectives
  2. regional and neighborhood market
  3. specific property
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15
Q

Critical indicators for property manager

A
  1. occupancy
  2. absorption rates
  3. new starts
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16
Q

Types of financial reports

A

operating budget, cash flow, profit & loss statement, budget comparison statement

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17
Q

Operating Budget

A

the projection of income and expense for the operation of a property over a one-year period; based on anticipated revenues and expenses and provides expected profit

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18
Q

Cash flow report

A

monthly statement that details the financial status of the property

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19
Q

Income

A

includes gross rentals collected, delinquent rental payments, utilities, vending machine proceeds, contracts, late fees, storage charges

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20
Q

Expenses

A

fixed and variable expenses

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21
Q

Fixed expenses

A

those that remain fairly predictable

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22
Q

Variable expenses

A

recurring or nonrecurring

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23
Q

What is the most important financial report

A

cash flow

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24
Q

Profit & Loss Statement

A

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

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25
P&L Formula
Net Profit Formula
26
Cash Flow Formula
Net Operating Income - Debt Service - reserves
27
Net Profit
Gross receipts - operating expenses- total mortgage payment + mortgage loan principal
28
Net operating income formula
total income - operating expenses
29
Total Income Formula
Gross rental income + other income - losses incurred
30
Budget comparison statement
compares actual results with the original budget, often giving either percentages or a numerical variance of actual vs. projected income and expenses
31
What must property manager consider when setting rental rates
1. rental income must be sufficient to cover property's fixed charges and operating expenses 2. rental income must provide a return on investmnet 3. rate should be comparable with prevailing rates in comparable buildings in the area 4. current vacancy rate
32
What does a high vacancy rate indicate
poor management, defective or undesirable property, rental rates are too high
33
What does high occupancy rate indicate
rental rates too low
34
2 biggest property management expenses
1. market | 2. advertising
35
selecting tenants
should only select tenants who can meet their financial obligations; must comply with all federal/state/local afair housing laws; premises suitable for tenant
36
What terms of rental payments should be invluded in the lease agreement
1. time and place of payment 2. provisions and penalties for late payment and returned checks 3. provisions for cancellation and damanges in case of nonpayment
37
What should a property manager do to make sure a tenant can meet their financial obligations
investigate financial references, check wtih local credit bureaus, interview former landlord
38
What is an operating budget based on
anticipated revenues and expenses; provides amount of expected profit
39
Maintaining good relations with tenants
want good relationship with tenants to have high retention and good reputation
40
3 types of maintenance for property management
1. preventive 2. repair or corrective 3. routine
41
Preventive maintenance
includes regularly scheduled activities to preserve the long-range value and physical integrity of the building
42
Corrective maintence
actual repairs that keep the building's equipment, utilities, and amentities functioning
43
Routine Maintenance
day-to-day duties and providing regularly scheduled upkeep
44
Tenant improvements/build outs
construction alterations to the interior of the buildign to meet a tenant's particular needs
45
Building Related Illness and Sick Building Syndrone (SBS)
illnesses that are more prevanlent today because of energy efficiency standards used in construction that make buildings more airtight with less ventilation
46
Federal Laws Property Managers should be aware of
1. ADA 2. Equal Credit Opportunity Act 3. Fair Housing Act
47
4 Alternative Risk Management Techniques
1. avoid it 2. control it 3. transfer it 4. retain it
48
Avoid it
remove the source of risk
49
Control it
preparing for an emergency before it happens
50
Transfer it
shifting the risk onto another party
51
Retain it
deciding that the chances of the event occuring are too small to justify the expense of any other reponse
52
Tenant's insurance
property managers should inform tenants that they have to have renter's insurance (HO-4) to protect their personal belongings
53
Insurance audit
indicates areas in which greater or lesser coverage is recommended and highlights particular risks
54
Common insurance coverage for property owners and managers
1. fire and hazard 2. flood 3. consequential loss, use, and occupancy 4. contents and personal property 5. general liability 6. casualty 7. surety bonds
55
Security of tenants
want tenants to feel secure; look out for security of renters
56
Surety Bonds
cover an owner against financial losses resulting from an employees criminal acts or negligence whole performing assigned duties
57
Worker's compensation acts
claims for medical or hospital payments for injuries sustained by building employees hurt in the course of their employment
58
Fire and Hazard Coverage
coverage against direct loss or damage to property from fire on teh premises; also includes windstorm, hail, smoke damage, civil insurrection
59
Flood Coverage
covers flooding caused by heavy raings, melting snow, inadequate drainage systems, failed levees or dams
60
Consequential loss, use and occupancy
loss of rent; business interruption; covers the results of disaster
61
Contents and personal property coverage
covers building contents and prersonal property during periods when they are not actually located on teh premises
62
Casualty insurance
coverage against theft, burglary, vandalism, machinery damage, health and accident insurance
63
Multiperil Policies
offers an insurance package that includes standard types of commercial coverage
64
General Liability Insurance
covers the risks an owner assumes whenever the public enters the building
65
Errors and Ommissions Insurance
protects property manager agianst any financial management mistakes
66
2 methods to determine amount of a claim
1. depreciated or actual cash value | 2. current replacement cost
67
Depreciated or actual cash value
property is insured for what it was originally worth less the depreciation in value that results from use and the passage of time
68
Current replacement cost
building or property is insured for what it would cost to rebuild or replace today
69
Coinsurance Clauses
require the insured to carry fire coverage equal to 80% a building's replacement value; usually for commercial policies
70
What is the primary maintenance objective of a property manager
protect the physical integrity of the property over the long term
71
Environmental audits
identify issues relating ot asbestos, radon, mold
72
Property manager's primary goal
operate and maintain the physical property in such a way as to preserve and enhance the owner's capital investment
73
Property Manager Specializations
1. Community Association Management 2. Housing for seniors 3. Manufactured Homes 4. Resort Housing 5. Concierge Services 6. Asset Management 7. Corporate Property Manager 8. Leasing Agent
74
Leasing Agent
usually an independent contractor working on a commission basis
75
Corporate property manager
allows a corporation to invest in real estate and increase its capital by hiring a property manager
76
Asset management
manager monitors a portfolio of properties similar to a securities portfolio by analyzing the performance of the proeprties and making recommendations to the owners of the properties
77
Concierge Services management
property manager specialize in training and managing of concierge staff for office buildings and other settings
78
Resort housing managemnet
managing second-home and resort rentals, caring for and maintaining often vacant properties, attracting and managing short-term rentals
79
Manufactured homes management
build community spirit
80
Senior Housing Managers
marketing, facility operation, housekeeping, meal service, social event planning, medical emergency planning
81
Community Association Management
assist in providing a comprehensive array of services to volunteer boards
82
ADA readily achieveable modifications
1. ramping or removing an obstacle from an otherwise accessible entrance 2. lowering wall-mounted public telephones 3. adding raised letter and Braille marketing on elevator buttons 4. instsalling auditory signals in elevators 5. reversing the directin in whcih doors open
83
Who is responsible for determining whether a building meets ADA accessibility requirements
usually property manager
84
Equal Credit Opportunity Act
prohibits a lender from denying a loan based on a person's race, color, religion, national origin, sex, maritual status, age or receipt of public assistance
85
ECOA's affect on property managers
manager should use same lease application for every applicant, require credit applications from every applicant, consistancy in evaluating the cinome and debt of applicants and in determining whether to rent to an applicant
86
Fair Housing Act
prohibits discrimination in teh sale, rental, or financing of housing based on race, color, religion, national origin, sex, familial status, or dsiability

CLI Prelicensing (23 decks)

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