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Chapter 1 : Intro to Real Estate and Real Property > chapter 4 : property management > Flashcards

chapter 4 : property management Flashcards

1
Q

What does BOMA stand for? what type of real estate?

A

Building owners and managers association

Commercial real estate

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2
Q

What does CAI stand for? what type of real estate?

A

Community Associations Institute

Homeowners associations, condominiums, and other planned communities

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3
Q

What does ICSC stand for? what type of real estate?

A

International council of shopping centers

Shopping centers worldwide

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4
Q

What does BOMI stand for? What type of real estate?

A

Building owners and managers institute international

education programs for commercial property and facility management industries

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5
Q

What does NAHB stand for? what type of real estate?

A

National association of home builders

All aspects of home building

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6
Q

What does NARPM stand for? what type of real estate?

A

National Association of Residential Property Managers

Single - family and small residential properties

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7
Q

Property manager there principal responsibilities

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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8
Q

The property manager carries out the goals of the property owners by….

A

making sure the property earns income

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9
Q

Duties / goals of a property manager

A

keeping the physical property in good condition

suitable tenants must be found

Rent must be collected

Hire and supervise employees

Budget and control expenses

Keeping proper accounts

Making periodic reports

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10
Q

Illinois property managers must be

A

licensed managing brokers

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11
Q

property managers who work for property management companies

A

manage properties for a number of owners

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12
Q

property managers who are independent

A

has an agency relationship ; holds more responsibility

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13
Q

the property manager must be a

A

licensed managing broker

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14
Q

first step in taking over the management of any property is to

A

enter into a management agreement with the owner

it creates a general agency relationship between the owner and the property manager

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15
Q

the management agreement should have…

A

description of the property including address

time period of the agreement

definition of the property managers responsibilities ; any limitations / restrictions should be included

clearly states the owner’s purpose (what they need to accomplish)

what authority the manager is to have

reporting : the frequency of periodic reports

management fee :

Allocation costs : states which property manages expenses will be paid by the manager or by the owner

Antitrust provisions : no price fixing

Equal opportunity statement : properties will be available to everyone protected by state or federal law

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16
Q

types of financial reports (5)

A

operating budget

cash flow report

profit and loss statement

budget comparison

budget statement

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17
Q

operation budget

A

the projection of income and expense for the operation of a property over a one year period

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18
Q

income includes (6)

A

gross rental collected

delinquent rental payments

utilities

vending contracts

late fees

storage charges

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19
Q

Type of expenses (3)

A

building personnel

operating expenses

maintenance costs

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20
Q

Fixed expenses that remain constant

A

employee wages

utilities

other basic operating costs

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21
Q

variable expenses

A

recurring or nonrecurring include ;

capital improvements

building repairs

landscaping

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22
Q

Cash flow report

A

a monthly statement that details the financial status of the property

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23
Q

why is the cash flow report most important?

A

it provides a picture of the current financial status of a property

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24
Q

profit and loss statement

A

determines whether the business has made money or suffered a loss

the formula is :

gross receipts - expenses - total mortgage payments (principal &interest) = net profits

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25
Q

budget comparison statement

A

compares the actual results with the original budget

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26
Q

setting rental rates

A

must be sufficient to cover propertys fixed charges and operating expenses

must provide a fair return on the owners investments

should be in line with other buildings rates in the area

current vacancy rent

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27
Q

a rental rate for residential space is stated as

A

monthly rate per unit

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28
Q

a rental space for commercial leases is according to

A

annual rate per square foot

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29
Q

high level of vacancy may indicate

A

poor management, defective/undesirable property

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30
Q

high occupancy rate may mean

A

rental rates are too low

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31
Q

property managers/ leasing agents should accept only those tenants who…

A

can be expected to meet their financial obligations

by checking.

credit
criminal background
eviction history
interviewing former landlord

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32
Q

terms of rental payment is lease agreement

A

time and place of payment

penalties for late payments and retuned checks

provisions for cancelations and damages

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33
Q

every attempt should be made to collect rent without…

A

resorting to legal action since its costly, time consuming and breaks good tenant relations

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34
Q

property managers must put security deposits in a

A

special escrow account by the next business day after a lease is signed

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35
Q

after the security deposit is in the escrow account..

A

the security deposit must be recorded in a journal

then recorded into a ledger that contain information about how much ad when the deposit was returned after the lease

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36
Q

no security deposit is returned with interest unless

A

the property is residential with 25 or more units

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37
Q

real estate licensees must ensure that landlords disclose any possible lead-based paint or related hazards from leasing properties built before …..

A

1978

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38
Q

what pamphlet should be given to the tenant for lead based paint in property

A

Federal Lead Hazard Information Pamphlet

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39
Q

if the building is cited as a lead paint hazard the tenants must receive

A

a written notice of the danger unless the owners have a certificate of compliance

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40
Q

when a mitigation order is issued to an owner the oner has

A

90 days to eliminate the hazard

30 days if occupied by a child under 6 or by a pregnant woman

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41
Q

a rental-finding service may not list or advertise any rental unit without…

A

the express written authority of he units owner or agent

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42
Q

the most critical areas of responsibility for a property manager is..

A

risk management

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43
Q

considering a loss the property manager must decide whether it is better to

A

Avoid risk by removing the source of risk

Control risk by preparing for an emergency before it happens

Transfer risk by shifting the risk onto another party

Retain risk by deciding that the chances of the event occurring are too small to justify the expense of any other response

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44
Q

insurance - the audit will indicate areas in which..

A

greater or less coverage is recommended and will highlight particular risks

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45
Q

what is a multi-peril policies

A

a “package” of standard commercial coverages such as fire, hazard, public liability and casualty

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46
Q

insurance - fire and hazard coverage

A

provides coverage against direct loss or damage to property from a fire on the premises

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47
Q

insurance - consequential loss, use, and occupancy

A

covers the results of a disaster, loss of rent or revenue to a business that occurs if the business property cannot be used

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48
Q

insurance - contents and personal property

A

covers building contents and personal property during periods when they are not actually located on the premises

49
Q

insurance - liability

A

a claim paid under this coverage is used for medical senses by a person who is injured in the building as a result of the owners negligence

50
Q

insurance - liability

claims for those art in the course of their employment are covered by…

A

state laws known as workers compensation acts

51
Q

insurance - casualties

A

includes coverage against theft, burglary, vandalism, and machinery damage as well as health and accident insurance

52
Q

insurance - surety bonds

A

surety bonds cover an owners against financial losses resulting from employees criminal acts or negligence while performing assigned duties

53
Q

true or false :

landlord and tenants interests are mutually exclusive

A

false

54
Q

move in inspections - inspecting with a tenant is a

A

must

55
Q

move in inspections - the same checklist form the inspection is the

A

same form used at the time the tenant leaves

56
Q

clear understanding of the lease terms - the managers needs to establish a basic understanding o all the matters relating to the lease terms such as… (6 topic)

A

building rules and regulations

handling maintenance requests

procedures for paying rent

penalties for late payments or no payments

terminating the tenancy

security deposits

57
Q

part of lease - building rules

A

to reference day to day matters such as use of common areas, parking spaces, and building operating hours

58
Q

part of lease- condemnation

A

provides equitable cancellation of the agreement in the event that the tenant is denied use of property because it has been either appropriated or condemned by a government agency

59
Q

part of lease - compliance clause

A

identifies which party is responsible for complying with any new local, state or federal regulations.

60
Q

part of lease - assignment and subletting provisions

A

tenant has the right to assign or sublet his or her interest in the property

61
Q

fire and casualty damage - when a tenants property is damaged or destroyed…

A

the tenant may vacate immediately and notify the owner in writing of the intent to terminate the lease as of the date possession was surrendered

62
Q

fire ad casualty damage - of the portions of the premises are still habitable, the tenant can…

A

vote the unusable area and reduce the rent proportionately

63
Q

fire and casualty damage - for the owners protection the lease should include a clause stating the damage caused by a tenant …

A

will be repaired without a rent reduction and that the owner may take legal action against a tenant. most leases permit the owner to terminate the tenancy if the fire completely destroys the property usefulness

64
Q

tenant improvements - tenants should not be allowed to make alterations to the property without…

A

advance written consent from the owner

65
Q

tenant improvements - tenant improvements to property are classified as

A

fixtures and become part of the real estate

66
Q

security deposit - the property manager must provide a list of the damages and cost to repair to the tenant within

A

30 days of the end of the lease. if the landlord or property manager doe snot provide this list within 45 days the full security deposit must be returned to the tenant immediately.

67
Q

personal property - a clause should be included that obligates the tenant to…

A

remove personal property from the premises and to broom clean the area at termination of the lease

any property left behind is considered abandoned and may be removed from the premises

68
Q

landlord/manager is generally is responsible for (2 things)

A

Maintaining the property and to provide certain services

69
Q

disclosure and billing : the owner should disclose in writing the…

A

name and address of the property manager and of the person authorized to receive legal notice on behalf of the owner

70
Q

quiet enjoyment : the terms of the lease must limit the cases which the owner or manager is….

A

allowed on the premises

71
Q

quiet enjoyment : most leads allow the owner to enter in…

A

emergencies
necessary agreed-upon repairs
to show the space to possible tenants near the end of a lease

72
Q

quiet enjoyment : a clause should be included to permit showing possible buyers he property in the event…

A

the property is place on the market for sale

73
Q

maintaining the premises : the lease and state statutes often indicate that maintenance and repairs are the responsibility of the..

A

owner

74
Q

maintain the premises: owner tends to the upkeep of

A

common areas
trash removal
Window cleaning
other services

running water
hot water
heat during required season

75
Q

noncompliance with rental agreement: if the owner or property manager fails to perform the required duties he tenant may…

A

sue for damages or terminate the lease by giving the owner the specified notice for breach of contract

76
Q

noncompliance with rental agreement: many leases require the termination proceedings to stop if…

A

the owner begins good faith effort to remedy the breach by the deadline stated

77
Q

noncompliance with rental agreement : if the owner’s noncompliance is willful, the tenant may also obtain / recover …

A

a court injunction and attorney fee’s

78
Q

failure to deliver premises: if the right to possession is not conveyed the tenant doesn’t have to…

A

pay rent. the tenant can terminate the rental agreement or sue

79
Q

failure to deliver premises : it is not uncommon for a property manager to…

A

be unable to deliver possession because the previous tenant has not vacated the premises or because repairs and alterations have not been completed

80
Q

Failure to supply essential services : Constructive eviction occurs when the tenant must…

A

abandon the premises due to owner’s negligence in supplying essential services

81
Q

failure to supply essential services: examples of constructive eviction include

A

failure to supply heat or water
failure to repair premises
other major defaults that render the premises unusable by the tenant

82
Q

failure to supply essential services : for the owner’s protection the lease should require the..

A

tenant to give notice of any failure and all the owner time to remedy the situation

83
Q

tenants can lose their lease by

A

not paying rent on time or at all
seriously damaging the property
annoying other tenants by excessive sounds
etc

84
Q

noncompliance with rental agreement : the owner can deliver a written notice to the tenant stating the nature of the contract so the tenant can…

A

repair the breach within a reasonable time to prevent termination

85
Q

noncompliance with rental agreement : a 5 day notice applies to

A

monetary breaches

86
Q

noncompliance with rental agreement : in Illinois a 10 day notice applies to

A

non - monetary breaches on the part of the tenant

87
Q

if the tenant doesn’t want to fix the damages in the premises the owner may…

A

enter the premises and have the necessary work performed

the bill will be presented in the next rent payment

88
Q

the lease should also state if the owner chooses to terminate the lease…

A

the big comes due immediately on presentation

89
Q

suit for eviction: eviction proceedings can be brought against a tenant for several reasons

A

nonpayment of rent

illegal possession of the premises after termination of lease

unlawful use of the premises

nonpayment of charges attributed to the tenant under the terms of the lease

certain other breaches of the leases

90
Q

when a tenant has failed to perform in one of these areas…

A

the owner may file a court suit for recovery of the premises after giving the tenant required legal notice

91
Q

a court suit for recovery of the premises is commonly known as (3)

A

suit for eviction

suit for possession

forcible entry and detainer suit

92
Q

if the court issues a judgement decree possession in favor of the owner the tenant must..

A

peaceably leave or an officer of the court will forcibly remove the tenant and the tenant belongings (eviction)

93
Q

default : the lease should include a clause that if the tenant defaults on rent payments

A

he owner can terminate the tenancy

94
Q

bankruptcy : property managers should review bankruptcy default clauses in leases with an attorney to…

A

determine proper procedure to follow if a tenant declares bankruptcy

95
Q

illegal activities : language in the lease should be very clear prohibiting certain activities such as

A

drug trafficking

felony crimes

threatening other tenants or the manager

96
Q

bargaining factors : market conditions at the time of the end of the lease influence the terms for the new lease such as (3)

A

the length of the new lease term

the extent of repairs alterations or redecorating to be done

the amount of rent to be paid

97
Q

concessions (benefit) : if the economy is going through inflation the rent will…

A

rise and there will be shorter leases

98
Q

concessions (benefit) : if the economy is going through a deflation then…

A

leases are better off extended to keep the same high rent for a longer period of time

99
Q

construction : repairs, alterations, redecorating will be influenced by

A

market conditions

100
Q

proper notice : the manager can avoid complications with a holdover tenancy by

A

communicating with the tenant before lease expires

101
Q

proper notice : residential tenants can be approached

A

90 days before lease expiration

102
Q

a 100% occupancy level indicates

A

low rent compared to the market and its time for an increase

103
Q

required notice : the owner must give the tenant a checklist after terminating tenancy stating..

A

expected cleaning

post occupancy inspections

return of security deposit

104
Q

if a good tenant decides to move

A

the manager should contact him/her immediately to find out with the decision was prompted by poor management

105
Q

exit interview : an exit interview should be made with the tenant to

A

analyze the results and reason behind the tenant turnover

106
Q

refusal to renew : the manager may refuse to renew the lease by..

A

giving the tenant appropriate notice of termination

107
Q

refusal to renew : the manager who does not renew a lease should have…

A

demonstrable proof of just cause for the refusal

108
Q

inspection of the premises : after lease termination the manager should inspect the space with the tenant ….

A

to document the condition of the apartment through photos and videos

109
Q

inspection of the premises : the same checklist during move in …

A

determines any damages done
the tenant should also be required to sign the inspection checklist on move-out.

110
Q

return of security deposit : if the landlord does not provide a list and estimated cost of the damages by 45 days after the end of lease

A

the security deposit is immediately returned

111
Q

Retention for damages : acceptable grounds for keeping part or all of the security deposit typically include

A

damages to the premises

unauthorized, non - standard, or irreversible decorating

excessive cleaning expenses

unauthorized alterations

112
Q

last months rent : where landlords do not utilize a security deposit but instead a non- refundable move in fee which means

A

the tenants do not have any invested money they can use to pay the last months rent

113
Q

reasons for eviction includes (8)

A

noncompliance with building rules

violation of the law

excessive use of utilities

illegal drug activity

misrepresentation or fraud

excessive occupants on the premises

abuse of fixtures

unauthorized pets

114
Q

notice before eviction suit : if possible before legal action can be taken the tenant must always be given a

A

notice of the breach or improper conduct and an opportunity to rectify the situation

115
Q

eviction suit : in the event the tenant does not leave voluntarily

A

it will be necessary to file a legal action for possession

116
Q

eviction process : if the tenant fails to appear at court

A

a default judgement is given to the landlord

117
Q

eviction notice : if the tenant does appear at court

A

a trial must be held to determine the matter

118
Q

actual removal : if the tenant refuses to vacate th property even after the court rules for the landlord

A

the landlord must secure a court order and the sheriff or constable serving the court will physically remove the ten from the property

119
Q
A

Chapter 1 : Intro to Real Estate and Real Property (12 decks)

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