Unit 12 - Property Management Flashcards
Broker who for compensation preserves the value of an investment property while generating income as an agent for the owner. Duties include collecting rents, maintaining the property, and keeping up all accounting
property manager
Periodic and necessary expenses essential to the continuous operation and maintenance of an income property
operating expenses
An agency contract between the owner of income property and a management firm or an individual property manager that outlines the scope of the manager’s authority.
property management agreement
The income projected for
an income-producing property after deducting losses for vacancy and collection and operating expenses.
net operating income (NOI)
The anticipated income
from a rental property resulting from potential gross income minus an allowance for vacancy and bad debts
effective gross income (EGI)
The net spendable income from an investment, determined by deducting all operating and fixed expenses from the gross income. When expenses
exceed income, a negative cash flow results.
cash flow
A detailed statement prepared on a periodic basis showing the financial picture of a business through the revenues and expenses; profit and loss
statement.
profit and loss statement AKA
operating statement
Compares actual results with the original budget, often giving either percentages or a numerical variance of actual versus projected income and expenses
budget comparison statement
The money left after debt service has been subtracted from the net operating income and before income tax is paid; also called cash throw-off or cash flow after debt service
before-tax cash flow AKA
cash throwoff
The amount of cash remaining after the owner has reported all income from the property, less appropriate tax deductions and any taxes due
after-tax cash flow
The use of borrowed money to finance an investment.
leverage
That portion of the loan payment directed toward the principal rather than the interest, plus any gain in the property value due to appreciation.
equity buildup
An increase in the worth or value of a property due to economic or related causes, which may prove to be either temporary or permanent; opposite of
depreciation.
appreciation
The gradual reduction of the purchasing power of the dollar, usually related directly to the increases in the money supply by the federal government.
inflation
The act of postponing
necessary maintenance and repairs on rental properties
deferred maintenance
