CH 2 Flashcards
Benefits of Ownership of investment property can include- (4)
- Tax Breaks
- Appreciation
- Cash Flow
- Loan pay down
A property analysis included in a management plan would cover
- Locational advantages and disadvantages
- The physical structure
- Current tenants and rents
What is the pro-forma statement?
A statement as to the expected rents and expenses
Zero-based budgeting is based on
Starting with zero and justifying every budgeted item
A property manager should consider refusal of management when
- Lacks experience to handle property.
- Owner wants manager to avoid repairs.
- Owner refuses any action without prior approval.
A slumlord wants
Max rent with min tenant services
Negative cash flow management involves
Continued infusion of cash by owner
The length of a management contract should
Be related to problems to be corrected and the services to be provided
A management contract can be terminated because of (3)
- Bankruptcy of either party.
- Mutual agreement between the owner and manager.
- Impossibility of performance.
Can a management contract be unilaterally canceled by an owner when the manager has an interest coupled with an agency?
No
Capital Gains
Gains on the sale of a capital asset (real estate) that are subject to a preferred tax rate.
Gross Multiplier
The relationship between gross income and the sale price determined by dividing the sale price by the gross income.
Hold-Harmless Clause
A clause whereby the lessee agrees that they will not hold an owner liable for personal or property losses
Indemnification
To indemnify another party is to compensate that party for loss or damage that has already occurred, or to guarantee through a contractual agreement to repay another party for loss or damage that occurs in the future.
Waiver of Subrogation
An insurer giving up rights to make a claim for a covered loss against the property manager.
