Financual Management Flashcards
What information do you need in order to complete a financial analysis on a property?
The income statement
When doing a financial analysis, why do you need to identify the GPR first?
All other income and expenses are measured and evaluated as a percentage of GPR
What are the three primary types of income you will look for/calculate?
EGI
NOI
CF
What is a chart of accounts?
A list of accounts to which revenue and expenses are posted and show up on the general ledger
What is used to generate an income statement?
Entries in the general ledger
Benefits of minimizing financial loss
Increases financial success of property
Improves property performance
Makes your job easier
What are the main types of financial loss you should work to prevent?
Vacancy loss
Offline and nonrevenue units
Bad debt
Concessions and discounts
During the rent collection process, what things should you consider before occupancy?
Screening process
Rent collection policy
Inclusion of the policy in the lease, orientation materials
During the rent collection process, what is the purpose of resident communication efforts?
To facilitate the rent collection process
Why would you want to create a buffer for rent collections?
To help you remain on good terms with residents
To ensure timely and complete payments
What are characteristics of variable expenses?
They can vary as conditions change
Many are associated with occupancy
What are capitol expenses
Costs for large improvements that have an economic useful life beyond one year
Describe a cost benefit analysis
Process of weighing a potential expense against a potential benefit
What is the most important thing to keep in mind when developing a budget?
The owners property objectives and investment goals
What are the steps to the budget development process?
Identify goals
Gather information
Assign numerical values
When would you develop rehab or renovation budget?
When a property is being rehabbed or undergoing retrofitting/modernization
What are the three tips to developing budgets covered today?
Be prepared
Use historical numbers
Seek input
What is extrapolation/annualizatiin?
Estimating future information by extending known information
How do you analyze variances?
Compare budget to actual numbers
Look at events in the property or in your submarket or region.
Are increased expenses favorable or unfavorable variances?
Unfavorable
Once you’ve analyzed and can explain variances, what should you do next?
Determine what, if any, action to take
What is the benefit to the investor resulting from an investment?
Return
What is the purpose of measuring performance?
Shows if goals are met and drives investment decisions
If a down payment is 200,000 and the cash flow generated is 20,000, what is the cash on cash return?
10%
