PSI-Chapter 19 - Property Management

Question 1

The 3 part role of the PROPERTY MANAGER is to…

Answer 1

1. Achieve the objectives of the property owners.
2. Generate income for the owners, and
3. Preserve and/or increase the value of the investment property.

Question 2

A Property Manager is typically considered a…

Answer 2

GENERAL AGENT, meaning they do more than 1 thing for the client. They wear many hats.
Note: in TN, licensed real estate professionals are permitted to manage properties for others.

Question 3

The first step in taking over the management of any property is to enter into a?

Answer 3

MANAGEMENT AGREEMENT, a contract creating a general agency relationship between the owner and the property manager.

Question 4

The management agreement should be in writing, and it should include what points?

Answer 4

1. Description of the property.
2. Time Period the agreement covers.
3. Definition of the management’s responsibilities.
4. Statement of the owner’s purpose and responsibilities.
5. Extent of the manager’s authority.
6. Reporting.
7. Compensation.
8. Allocation of costs.
9. Liability.
10. Antitrust provisions.
11. EQUAL OPPORTUNITY STATEMENT - an agreement that the property will be shown, rented, and otherwise made available to all persons, regardless of race, color, religion, sex, disability, national origin, or family status, and to any class of person protected by local, state or federal law.

Question 5

What is a CASH FLOW REPORT?

Answer 5

A cash flow report is a MONTLY statement that details the financial status of the property. The cash flow report is THE MOST important financial report because it provides a picture of the current financial status of a property.

Question 6

When a property manager is maintaining a property, what is their primary objective?

Answer 6

1. Preventive
2. Repair or corrective
3. Routine
   It is to protect the physical integrity of the property over the long term.

Question 7

What is Preventive Maintenance?

Answer 7

Preventive maintenance includes regularly scheduled activities such as painting and seasonal servicing of appliances and systems.
Preventive is the most critical and the most neglected maintenance responsibility.

Question 8

What is Corrective Maintenance?

Answer 8

This involves the actual repairs that keep the building’s equipment, utilities, and amenities functioning. (broken toilets, leaky faucet, replacing air conditioning, etc)

Question 9

What is Routine Maintenance?

Answer 9

This includes such day-to-day duties as performing minor carpentry and plumbing repairs, and providing regularly scheduled upkeep of heating, air-conditioning and landscaping.

Question 10

As a Property Manager, the Americans with Disabilities Act requires that a prospective tenant who is visually impaired is provided a lease agreement that is…

Answer 10

in large easy-to-read type or that is printed in Braille as required.

Question 11

Property Managers need to ensure that their marketing practices do not violate fair housing laws. BLOCKBUSTING and STEERING mean what?

Answer 11

BLOCKBUSTING - is encouraging people to rent or to sell a property by claiming that the entry of a protected class of people into the neighborhood will have a negative impact on property values.
STEERING - is the channeling of protected class members to certain buildings or neighborhoods.

Question 12

RISK MANAGEMENT involves answering the question, What happens if something goes wrong? The property manager must decide whether it is better to…

Answer 12

AVOID IT - by removing the source of risk
CONTROL IT - by preparing for an emergency before it happens
TRANSFER IT - by shifting the risk onto another party
RETAIN IT - by deciding that the chances of the event occurring are too small to justify the expense of any other response.

Question 13

The 4 alternative risk management techniques are…

Answer 13

ACTOR:
A-Avoid
C-Control
T-Transfer
Or
R-Retain