Chapter 14-The Investment Decision Flashcards
What is the first step in successfully managing an investment?
Developing a concept of the business and establishing a vision of the firm’s direction-establishing the mission.
What approach should a company take in arriving at an investment decision?
The proper approach is a thorough and accurate analysis of financial trends combined with an approach that is multifaceted and specific to the company and its goals.
The first in successfully managing an investment involves developing a:
a. management hierarchy
b. performance plan
c. company mission
d. performance evaluation
c. company mission
Define core competencies.
Core competencies are the unique capabilities that give an individual or a business a competitive advantage; they are what one does well.
The central issue in an investment decision is the owner’s:
a. qualifications
b. objectives
c. background
d. aggressiveness
b. objectives
Businesses that have failed recently are notorious for their fixation on:
a. long-term investment
b. cautious investment
c. short-term profits
d. long-term ownership
c. short-term profits
What is a major source of new leasing referrals?
Satisfied tenants
How do a company’s core competencies contribute to success?
By allowing companies to focus on doing what they do best.
Under the income approach to value, how will a small change in the net operating income of a property impact the property’s value?
It can have a drastic effect on property value.
The manager can directly affect the value of a property through all of the following means except:
a. leasing more space at market rates
b. raising rents to new levels
c. hiring more building staff
d. reducing operating expenses
c. hiring more building staff
How can a distinction be made between risk and uncertainty?
The distinguishing feature between risk and uncertainty is that in dealing with uncertainty, one does not know the probabilities of each alternative.
What is the best way for a property manager to make decisions?
- know his or her goals
- has clearly defined criteria for reaching these goals that change very little
- knows alternative ways to reach those goals
- can evaluate the alternatives wit respect to all the criteria and reach an overall judgement about each alternative
- will choose the alternative that he or she believes will produce the best result
List the general activities that can lead to building a good reputation and retaining and attracting clients?
provide adequate services
fulfill a tenant’s desire for comfort and convenience
foster a spirit of fair dealing
properly use a tenant as a referral source
use diplomacy when dealing with tenants
What is the most critical element of any investment decision, and what is acceptance of it based on?
Most critical is the willingness to accept the risks involved. It is based on the owner’s objectives.
Retention of tenants is based mainly on the property manager’s ability to:
a. provide good service
b. administer lease conditions
c. be diplomatic
d. keep rents stable
a. provide good service
