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Unit 18: Property Management > Notes > Flashcards

Notes Flashcards

1
Q

Many mortgage lenders require that ___ hire a professional property manager to manage their properties.

A

Investors

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2
Q

The ___ carries out the goals of the property owner by making sure the property earns income

A

Property manager

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3
Q

The property manager has an agency relationship with the ___, which involves greater authority and discretion over management decisions than an employee would have.

A

Owner

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4
Q

In IL, the ___ was created to regulate community association managers, to ensure that managers are qualified to engage in community association management, and to enforce high standards of professional conduct by those licensed.

A

The Community Association Manager Licensing and Disciplinary Act

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5
Q

In IL, what is required to perform community association management activities?

A

A Community Association Manager License

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6
Q

___ assist in providing a comprehensive array of services to volunteer boards in condos and homeowners associations.

A

Community Association Managers

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7
Q

Many states require at least a(n) ___ license or a(n) ___ license for those who specialize in managing community associations

A

real estate
association management

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8
Q

___ monitor a portfolio of properties similar to a securities portfolio by analyzing the performance of the properties and making recommendations to the owners of the properties.

A

Asset management

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9
Q

Real property ___ helps clients decide what type of real estate to invest in (commercial or residential), which property is best to purchase, the best financial sources, and when to dispose of the property

A

asset management

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10
Q

In IL, ___ manage properties for corporations that invest in real estate.

A

Corporate property managers

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11
Q

Hiring a(n) ___ allows a corporation to invest in real estate without having specialized knowledge in property management.

A

Corporate property manager

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12
Q

Property management agreements must be…

A

in writing

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13
Q

In IL, property management requires a(n) ___ and an individual must perform services under supervision of ___.

A

real estate license, supervision of a sponsoring broker

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14
Q

In preparing a management plan, a property manager analyzes what 3 factors?

A

1) owner’s objectives
2) regional and neighborhood market
3) specific property

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15
Q

Management plans also include a budgetary section that lists ___ and ___.

A

Sources of revenue and anticipated expenses

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16
Q

A(n) ___ is a present document that is forward-looking in determining the feasibility of a property owner’s long-term goals for a specific property

A

management plan

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17
Q

What is the first step in taking over the management of any property?

A

Enter into a management agreement with the owner

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18
Q

The ___ creates a general agency relationship between the owner and the property manager, and defines the duties and responsibilities of each party

A

management agreement

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19
Q

The ___ is a guide used in operating the property as well as a reference in case of future disputes between the owner and property manager.

A

management agreement

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20
Q

Management agreements should be…

A

in writing

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21
Q

What 9 things should be included in a management agreement?

A

1) Description of property
2) Time period the agreement covers
3) Management responsibilities
4) Statement of the owner’s purpose
5) Extent of manager’s authority
6) Reporting
7) Management fee
8) Allocation of costs
9) Equal opportunity statement

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22
Q

In a management agreement, the description of the property should include which 2 things?

A

1) Legal description
2) Street address

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23
Q

In a management agreement, the ___ should clearly state what the manager is to accomplish.

A

Owner’s purpose

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24
Q

Residential property managers often earn ___ when they find new tenants for a property.

A

Commission

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25
Q

Rental commissions are usually based on…

A

Annual rent for the property

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26
Q

If an apartment rents for $1,200 per month and the commission payable is 8% of the annual rent, what is the total amount in commission?

A

$1,152
1200 x 12 = 14400
14400 x 0.08 = 1152

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27
Q

The projection of income and expenses for the operation of a property over a 1-year period

A

Operating budget

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28
Q

The ___ is based on anticipated revenues and expenses and serves as a guide for the property’s anticipated financial performance

A

Operating budget

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29
Q

___ includes gross rents collected, delinquent rental payments, vending, late fees, and storage fees

A

Income

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30
Q

Any losses from uncollected rental payments or evictions are deducted from the total gross income to arrive at the ___

A

total adjusted income

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31
Q

In some properties, there may be space that is not income producing such as the property manager’s office. The rental value of the property that is not producing income is subtracted from the gross rental income to equal the ___ income

A

Gross collectible

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32
Q

AKA Gross billable income or gross rental income

A

gross collectible income

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33
Q

___ expenses remain constant and do not change.

A

Fixed

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34
Q

___ expenses may be recurring or nonrecurring

A

Variable

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35
Q

Employee wages, utilities, and other basic operating costs are ___ expenses

A

fixed

36
Q

Capital improvements, building repairs, and landscaping may be ___ expenses

A

variable

37
Q

a monthly statement that details the financial status of the property

A

cash flow report

38
Q

The most important financial report in property management because it provides a picture of the property’s current financial status

A

Cash flow report

39
Q

Gross rental income + other income - losses = ___

A

total income

40
Q

Total income - operating expenses = ___

A

net operating income before debt service

41
Q

net operating income before debt service - debt service - reserves = ___

A

cash flow

42
Q

A financial picture of revenues and expenses used to determine whether the business has made money or suffered a loss.

A

Profit and loss statement

43
Q

The profit and loss statement is created from the monthly ___.

A

cash flow reports

44
Q

The profit and loss statement does NOT include ___.

A

Itemized information

45
Q

The ___ compares the actual results with the original budget, often giving either percentages or numerical variance of actual versus projected income and expenses.

A

Budget comparison statement

46
Q

___ are helpful to identify trends in order to help with future budget planning

A

Budget comparison statement

47
Q

Rental rates are influenced by…

A

supply and demand

48
Q

Commercial rents are usually stated according to either ___ or ___ rates per ___.

A

monthly or annual rates per square foot

49
Q

Residential rent is usually stated as the ___ rate per ___.

A

monthly rate per unit

50
Q

If the occupancy level of an apartment or office building exceeds 95%, the property manager should…

A

investigate the rental market to determine whether a rent increase is warranted

51
Q

Residential property managers must always comply with ___ in selecting tenants.

A

fair housing

52
Q

Fair housing laws do not apply to ___ properties, however their property managers still need to be aware of federal, state, and local anti-discrimination and equal opportunity laws that may govern ___ or ___ properties.

A

commercial
industrial
retail

53
Q

Terms of rent payment should be spelled out in the lease agreement and include which 3 things?

A

1) Time & place of payment
2) Provisions & penalties for late payment and returned checks
3) Provisions for cancellation and damages in case of nonpayment

54
Q

In the event of nonpayment of rent, the property manager should establish a(n) ___ that includes a system of notices and records in compliance with state and local law

A

Collection plan

55
Q

In the event of nonpayment of rent, every attempt must be made to collect rent without resorting to ___.

A

Legal action

56
Q

In IL, property managers must put security deposits in a(n) ___.

A

special escrow account

57
Q

In IL, how are security deposits for leases similar to earnest money for a mortgage?

A

Both must be deposited into a special escrow account

58
Q

In IL, all brokers must collect all compensation for brokerage services through their ___.

A

sponsor

59
Q

In IL, residential leasing agents cannot engage in leasing activities for ___ property.

A

Commercial

60
Q

In IL, security deposits must be deposited into the escrow account by ___ and it must be ___

A

the next business day after a lease is signed
recorded in the journal and ledger

61
Q

In IL, the escrow account for security deposits is non-interest-bearing UNLESS…

A

The property is residential with 25 or more units

62
Q

When must interest be paid to tenants on security deposits in IL?

A

If the residential property has 25 or more units

63
Q

A good property manager acts to the benefit of…

A

Both the owner and occupants

64
Q

Keeping a property in good condition involves which 4 types of maintenance?

A

1) Preventative (periodic/ seasonal)
2) Repair or corrective (PRN)
3) Routine (daily or ordinary)
4) Tenant improvements

65
Q

__ maintenance preserves the long-range value and physical integrity of the building

A

preventative

66
Q

What is the most critical maintenance activity?

A

Preventative

67
Q

What is the most neglected maintenance activity?

A

Preventative

68
Q

Failure to perform ___ maintenance leads to greater expense in other areas of maintenance

A

preventative

69
Q

___ maintenance involves actual repairs that keep the building’s equipment, utilities, and amenities functioning.

A

Corrective

70
Q

Repairing a boiler, fixing a leaking faucet, or mending a broken air-conditioning unit are acts of ___ maintenance

A

Corrective

71
Q

___ maintenance includes daily duties such as cleaning common areas, performing minor carpentry and plumbing adjustments, providing regularly scheduled upkeep of landscaping.

A

Routine

72
Q

___ maintenance and ___ maintenance are similar in the sense that they both head off problems before they become expensive

A

Routine and preventative

73
Q

Examples of ___ are repainting or replacing the carpets, gutting the interior and redesigning the space by erecting new walls, adding partitions, and revamping electrical systems.

A

tenant improvements

74
Q

Title II of the ADA prohibits….

A

discrimination in commercial properties and public accomodations

75
Q

The ADA requires that property managers ensure that people with disabilities have full and equal access to….

A

facilities and services

76
Q

The property manager is responsible for determining whether a building meets the ADA’s ___ requirements

A

accessibilitiy

77
Q

If a building is not in compliance with the ADA’s accessibility requirements, what must the property manager do?

A

Prepare & execute a plan for restructuring or retrofitting a building

78
Q

___ involves answering the question: “what happens if something goes wrong?”

A

Risk management

79
Q

___ protect owners against financial losses resulting from an employee’s criminal acts or negligence while performing assigned duties

A

surety bonds

80
Q

IN IL, the policy type that tenants should ask for is ___, which is designed specifically to cover renters’ personal property

A

HO-4

81
Q

What are the 2 methods used to determine the amount of a claim under an insurance policy?

A

1) depreciated cash value (aka actual cash value) of the damaged property
2) Current replacement cost

82
Q

When property is not insured for what it would cost to replace it, but rather for what it was originally worth, what method was used to determine the amount of an insurance claim?

A

Depreciated cash value (actual cash value)

83
Q

When property is insured for the replacement cost, what method was used to determine the amount of an insurance claim?

A

Current replacement

84
Q

Which type of insurance is more expensive: full replacement cost or depreciated cost?

A

Full replacement

85
Q

___ insurance provides coverage against losses such as theft, vandalism, and destruction of machinery

A

Casualty

86
Q

What license is required to work as a property manager?

A

Broker

Unit 18: Property Management (3 decks)

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