Chapter 16: Property Management

Question 1

Leverage

Answer 1

Leverage is using borrowed money to invest in an asset.

If the asset appreciates, the investor earns money on the money borrowed as well as on the money invested.

Question 2

Self-Leaseback

Answer 2

In a sale-leaseback, the owner of commercial property sells the property and then leases it back from the buyer.

This allows the seller to take advantage of certain tax benefits as well as cashing out his investment in the property.

Question 3

Property Management Agreement

Answer 3

The property management agreement creates an agency relationship between a real estate firm and the property owner.

The firm will designate one or more licensees to work as a property manager.

The management agreement spells out the manager’s authority, and should always be in writing and signed by both the manager and the property owner.

Question 4

Property Management Plan

Answer 4

A management plan states the property manager’s strategies for achieving the property owner’s goals.

It includes a plan for the financial management and the physical maintenance of the property.

Question 5

Regional Analysis

Answer 5

A regional analysis includes information about the city or metropolitan area in which the property is located.

This information includes data on trends in occupancy rates, market rental rates, general employment levels, and family size and lifestyle.

Question 6

Neighborhood Analysis

Answer 6

The neighborhood analysis includes information about the neighborhood where the property is located.

This information includes the economic status of the residents, the occupancy rate, whether the population is increasing or decreasing, and how well the properties are maintained.

Question 7

Property Analysis

Answer 7

The property analysis includes information about the property to be managed.

This information includes the number and size of the living units; the appearance of the property; and the physical condition of the building or buildings, including the roofs, walls, windows, hallways, elevators, lobby, and so on.

Question 8

Market Analysis

Answer 8

A market analysis provides the property manager with information about competing properties.

Question 9

Rental Schedule

Answer 9

A rental schedule is a list of the rental rates for the units in a given building.

Question 10

Fixed Expense

Answer 10

A fixed expense is a property management expense that remains the same regardless of rental income (such as property taxes).

Question 11

Variable Expense

Answer 11

A variable expense is a property management expense that varies depending on current management needs (such as repair expenses).

Question 12

Statement of Operations

Answer 12

A statement of operations is a periodic report showing the total money received and disbursed and the overall condition of the property for a given period.R

Question 13

Rent Roll

Answer 13

A rent roll is a report on rent collections, in the form of a list of the total amount of rent earned, both collected and uncollected.

Question 14

Statement of Disbursements

Answer 14

A statement of disbursements is a listing of all of a property’s expenses incurred during a specific operating period.

Question 15

Actual Eviction

Answer 15

Actual eviction involves the physical expulsion of a tenant from a property, such as changing locks on an apartment door.

Question 16

Constructive Eviction

Answer 16

Constructive eviction occurs when the landlord substantially interferes with the tenant’s enjoyment of the property.

Question 17

Unlawful Detainer

Answer 17

An unlawful detainer action is a lawsuit filed by a landlord to evict a tenant who is delinquent in paying rent.

Question 18

Writ of Possession

Answer 18

A writ of possession is a court order that orders a defaulting tenant to move out of a property.