Chapter 19 Flashcards
A property manager’s first responsibility to the owner should be to
a. keep the building’s occupancy rate at 100%.
b. report all day-to-day financial and operating decisions to the owner on a regular basis.
c. realize the highest return possible consistent with the owner’s instructions.
d. ensure that the rental rates are below market average.
c. realize the highest return possible consistent with the owner’s instructions.
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c. The role of the property manager is to achieve the objectives of the property owner, generate income for the owner, and preserve and/or increase the value of the investment property.
The property manager’s relationship with the owner is most similar to that of a
a. tenant with a landlord.
b. cashier with the owner of a store.
c. stockholder with the board of directors of a corporation.
d. sales associate with the employing broker.
d. sales associate with the employing broker.
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d. A property manager is hired as a general agent with broad authority for a specific activity and for a long time. A sales associate is usually a general agent for the broker.
All of these should be included in a written management agreement EXCEPT
a. a list of the manager’s duties and responsibilities.
b. a statement of the owner’s purpose.
c. a statement identifying the manager’s creditors.
d. an allocation of costs.
c. a statement identifying the manager’s creditors.
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c. A management agreement establishes owner and manager responsibilities, determining who pays for what, all in keeping with the owner’s purpose. It does not include a statement identifying the manager’s creditors.
If an apartment rents for $1,500 per month and the manager receives a 12% commission on all new tenants, how much will the manager receive when renting an apartment, assuming that this commission is calculated in the usual way?
a. $180
b. $1,500
c. $2,160
d. $3,600
c. $2,160
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c. The manager will receive $2,160:
$1,500 per month × 12 months × 12% = $2,160.
What is the annual rent per square foot for a 30 ft × 40 ft property that rents for $2,950 per month?
a. $l.20
b. $2.46
c. $24.65
d. $29.50
d. $29.50
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d. The annual rent is $29.50 per square foot:
30 × 40 = 1,200 square feet; $2,950 × 12 = $35,400; $35,400 ÷ 1,200 = $29.50.
Of these, a high vacancy rate MOST likely indicates
a. rental rates are too low.
b. the property is attractive.
c. building management is effective and responsive.
d. an undesirable property.
d. an undesirable property.
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An elevated level of vacancy may indicate poor management, a defective or undesirable property, or rental rates that are too high for the market or the property.
Which of these is an example of corrective maintenance?
a. Seasonal recharge of refrigerant in an air conditioning unit
b. Picking up litter in common areas
c. Repairing a leaking water heater
d. Moving a partition wall to make a larger office
c. Repairing a leaking water heater
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c. Repairing a leaking water heater is an example of corrective maintenance, which is fixing what is broken. Seasonal servicing is preventive; picking up litter is routine; moving a partition wall is construction.
How can tenants insure their personal belongings in apartments they rent?
a. Pay an extra fee so they are added to their landlord’s commercial insurance
b. Obtain a surety bond
c. Obtain HO-4 or renter’s insurance
d. Obtain errors and omissions (E&O) insurance
c. Obtain HO-4 or renter’s insurance
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c. A surety bond covers an owner against financial losses resulting from an employee’s criminal acts or negligence.
Under the ADA, existing barriers MUST be removed
a. in all public buildings by the end of 2015.
b. only on request from a person with a disability.
c. even though reasonable alternative accommodation is more practical.
d. when removal may be accomplished in a readily achievable manner.
d. when removal may be accomplished in a readily achievable manner.
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d. Existing barriers must be removed when this can be accomplished in a readily achievable manner with little difficulty and at low cost. One example is ramping or removing an obstacle from an otherwise accessible entrance.
A company was moving from one part of the city to another. During the move, a truck carrying computer equipment worth more than $250,000 accidentally ended up in a river, and the equipment was destroyed. Fortunately, the company was insured under several policies. The policy that would most likely cover the computer equipment during the move from one facility to another is a
a. consequential loss, use, and occupancy policy.
b. casualty policy.
c. contents and personal property policy.
d. liability policy.
c. contents and personal property policy.
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c. Contents and personal property insurance covers building contents and personal property during periods when they are not actually located on the business premises. Consequential loss is also called loss of rent or business interruption; casualty covers theft, vandalism, machinery damage; liability covers injuries sustained on the premises.
All of these are principal responsibilities of the property manager EXCEPT
a. forcibly removing tenants for nonpayment of rent.
b. generating income for the owner.
c. preserving and/or increasing the value of the property.
d. achieving the objectives of the owner.
a. forcibly removing tenants for nonpayment of rent.
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a. The property manager may start eviction proceedings but does not carry out the proceedings, which must be carried out by an officer of the court.
What is the purpose of an operating budget for a property manager?
a. It documents the month’s actual income and expenses.
b. It is a guide for the property’s financial performance in the future.
c. It presents current cash flow in a standardized format.
d. It lists the assets, liabilities, and equity of the investment property.
b. It is a guide for the property’s financial performance in the future.
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b. The budget is a forward-looking plan that guides and provides expectations. The cash flow report is a monthly statement that details the financial status of the property. The profit and loss statement documents the actual income and expenses.
What type of plan does a property manager implement to manage renters who do NOT pay their rent in a timely way?
a. Eviction plan
b. Collection plan
c. Foreclosure plan
d. Cash flow plan
b. Collection plan
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b. Property managers must implement methods to collect rent before resorting to legal action that is costly and time-consuming.
One way that property managers meet the goals of ECOA is by
a. disqualifying tenant applicants on the basis of receiving welfare payments.
b. not evaluating certain tenant applicants through the use of credit reports.
c. establishing that certain buildings do not allow children as residents.
d. making sure to use the same lease application for every applicant.
d. making sure to use the same lease application for every applicant.
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d. Equality is the key. It is acceptable to use credit reports; however, managers need to require them for all applicants. ECOA prohibits discrimination on the basis of receipt of public assistance, such as welfare.
According to the Fair Housing Act, what is “steering”?
a. Channeling of protected class members to certain buildings or neighborhoods
b. Encouraging people to rent or sell by claiming that certain protected classes of people will have a negative impact on property values
c. An appropriate method to manage risks associated with rental property ownership
d. A method of providing reasonable accommodation for people with disabilities
a. Channeling of protected class members to certain buildings or neighborhoods
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a. ”Steering” is prohibited under the Fair Housing Act.
“Blockbusting” is encouraging people to rent or sell by claiming that the entry of certain protected classes of people in an area will have a negative impact on property values.
