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CLI Prelicensing > Unit 19 > Flashcards

Unit 19 Flashcards

1
Q

What do you need a license to do in property management?

A

get a commission, also need a broker

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2
Q

Three principal responsibilities of the property manager

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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3
Q

What is the property manager’s job?

A

carry out the goals of the property owners

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4
Q

What is the property manager responsible for?

A

maintaining the owner’s investment and making sure the property earns income

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5
Q

Property Management Clients

A

corporate owners, apartment buildings, owners of small rental residential properties, absentee owners, homeowners associations, investment syndicates, trust, owners of office buildings

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6
Q

Property Management Professional Associations

A

BOMA, BOMI, CAI, IREM, ICSC, NAA, NAHB, NARPM

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7
Q

Management Agreement

A

a contract creating a general agency relationship between the owner and the property manager

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8
Q

What is the first step in taking over the management of a property

A

management agreement

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9
Q

What is a property manager considered?

A

a general agent

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10
Q

What is the property manager’s first responsibility

A

to realize the highest return on teh property in a manner consistent with teh owner’s instructions and applicable law

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11
Q

What is in the management agreement

A
  1. Description of property
  2. time period agreement covers
  3. Definition of the manager’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
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12
Q

What responsibilities is a property manager charged with

A

fiduciary; care, obedience, accounting, loyalty, confidentiality, disclosure

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13
Q

management plan

A

outlines the details of the owner’s objectives with the property, as well as what the property manager expects to accomplish and how, including all financial objectives

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14
Q

What does the property manager analyze in preparing the management plan?

A
  1. owner’s objectives
  2. regional and neighborhood market
  3. specific property
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15
Q

Critical indicators for property manager

A
  1. occupancy
  2. absorption rates
  3. new starts
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16
Q

Types of financial reports

A

operating budget, cash flow, profit & loss statement, budget comparison statement

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17
Q

Operating Budget

A

the projection of income and expense for the operation of a property over a one-year period; based on anticipated revenues and expenses and provides expected profit

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18
Q

Cash flow report

A

monthly statement that details the financial status of the property

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19
Q

Income

A

includes gross rentals collected, delinquent rental payments, utilities, vending machine proceeds, contracts, late fees, storage charges

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20
Q

Expenses

A

fixed and variable expenses

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21
Q

Fixed expenses

A

those that remain fairly predictable

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22
Q

Variable expenses

A

recurring or nonrecurring

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23
Q

What is the most important financial report

A

cash flow

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24
Q

Profit & Loss Statement

A

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

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25
Q

P&L Formula

A

Net Profit Formula

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26
Q

Cash Flow Formula

A

Net Operating Income - Debt Service - reserves

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27
Q

Net Profit

A

Gross receipts - operating expenses- total mortgage payment + mortgage loan principal

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28
Q

Net operating income formula

A

total income - operating expenses

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29
Q

Total Income Formula

A

Gross rental income + other income - losses incurred

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30
Q

Budget comparison statement

A

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

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31
Q

What must property manager consider when setting rental rates

A
  1. rental income must be sufficient to cover property’s fixed charges and operating expenses
  2. rental income must provide a return on investmnet
  3. rate should be comparable with prevailing rates in comparable buildings in the area
  4. current vacancy rate
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32
Q

What does a high vacancy rate indicate

A

poor management, defective or undesirable property, rental rates are too high

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33
Q

What does high occupancy rate indicate

A

rental rates too low

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34
Q

2 biggest property management expenses

A
  1. market

2. advertising

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35
Q

selecting tenants

A

should only select tenants who can meet their financial obligations; must comply with all federal/state/local afair housing laws; premises suitable for tenant

36
Q

What terms of rental payments should be invluded in the lease agreement

A
  1. time and place of payment
  2. provisions and penalties for late payment and returned checks
  3. provisions for cancellation and damanges in case of nonpayment
37
Q

What should a property manager do to make sure a tenant can meet their financial obligations

A

investigate financial references, check wtih local credit bureaus, interview former landlord

38
Q

What is an operating budget based on

A

anticipated revenues and expenses; provides amount of expected profit

39
Q

Maintaining good relations with tenants

A

want good relationship with tenants to have high retention and good reputation

40
Q

3 types of maintenance for property management

A
  1. preventive
  2. repair or corrective
  3. routine
41
Q

Preventive maintenance

A

includes regularly scheduled activities to preserve the long-range value and physical integrity of the building

42
Q

Corrective maintence

A

actual repairs that keep the building’s equipment, utilities, and amentities functioning

43
Q

Routine Maintenance

A

day-to-day duties and providing regularly scheduled upkeep

44
Q

Tenant improvements/build outs

A

construction alterations to the interior of the buildign to meet a tenant’s particular needs

45
Q

Building Related Illness and Sick Building Syndrone (SBS)

A

illnesses that are more prevanlent today because of energy efficiency standards used in construction that make buildings more airtight with less ventilation

46
Q

Federal Laws Property Managers should be aware of

A
  1. ADA
  2. Equal Credit Opportunity Act
  3. Fair Housing Act
47
Q

4 Alternative Risk Management Techniques

A
  1. avoid it
  2. control it
  3. transfer it
  4. retain it
48
Q

Avoid it

A

remove the source of risk

49
Q

Control it

A

preparing for an emergency before it happens

50
Q

Transfer it

A

shifting the risk onto another party

51
Q

Retain it

A

deciding that the chances of the event occuring are too small to justify the expense of any other reponse

52
Q

Tenant’s insurance

A

property managers should inform tenants that they have to have renter’s insurance (HO-4) to protect their personal belongings

53
Q

Insurance audit

A

indicates areas in which greater or lesser coverage is recommended and highlights particular risks

54
Q

Common insurance coverage for property owners and managers

A
  1. fire and hazard
  2. flood
  3. consequential loss, use, and occupancy
  4. contents and personal property
  5. general liability
  6. casualty
  7. surety bonds
55
Q

Security of tenants

A

want tenants to feel secure; look out for security of renters

56
Q

Surety Bonds

A

cover an owner against financial losses resulting from an employees criminal acts or negligence whole performing assigned duties

57
Q

Worker’s compensation acts

A

claims for medical or hospital payments for injuries sustained by building employees hurt in the course of their employment

58
Q

Fire and Hazard Coverage

A

coverage against direct loss or damage to property from fire on teh premises; also includes windstorm, hail, smoke damage, civil insurrection

59
Q

Flood Coverage

A

covers flooding caused by heavy raings, melting snow, inadequate drainage systems, failed levees or dams

60
Q

Consequential loss, use and occupancy

A

loss of rent; business interruption; covers the results of disaster

61
Q

Contents and personal property coverage

A

covers building contents and prersonal property during periods when they are not actually located on teh premises

62
Q

Casualty insurance

A

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

63
Q

Multiperil Policies

A

offers an insurance package that includes standard types of commercial coverage

64
Q

General Liability Insurance

A

covers the risks an owner assumes whenever the public enters the building

65
Q

Errors and Ommissions Insurance

A

protects property manager agianst any financial management mistakes

66
Q

2 methods to determine amount of a claim

A
  1. depreciated or actual cash value

2. current replacement cost

67
Q

Depreciated or actual cash value

A

property is insured for what it was originally worth less the depreciation in value that results from use and the passage of time

68
Q

Current replacement cost

A

building or property is insured for what it would cost to rebuild or replace today

69
Q

Coinsurance Clauses

A

require the insured to carry fire coverage equal to 80% a building’s replacement value; usually for commercial policies

70
Q

What is the primary maintenance objective of a property manager

A

protect the physical integrity of the property over the long term

71
Q

Environmental audits

A

identify issues relating ot asbestos, radon, mold

72
Q

Property manager’s primary goal

A

operate and maintain the physical property in such a way as to preserve and enhance the owner’s capital investment

73
Q

Property Manager Specializations

A
  1. Community Association Management
  2. Housing for seniors
  3. Manufactured Homes
  4. Resort Housing
  5. Concierge Services
  6. Asset Management
  7. Corporate Property Manager
  8. Leasing Agent
74
Q

Leasing Agent

A

usually an independent contractor working on a commission basis

75
Q

Corporate property manager

A

allows a corporation to invest in real estate and increase its capital by hiring a property manager

76
Q

Asset management

A

manager monitors a portfolio of properties similar to a securities portfolio by analyzing the performance of the proeprties and making recommendations to the owners of the properties

77
Q

Concierge Services management

A

property manager specialize in training and managing of concierge staff for office buildings and other settings

78
Q

Resort housing managemnet

A

managing second-home and resort rentals, caring for and maintaining often vacant properties, attracting and managing short-term rentals

79
Q

Manufactured homes management

A

build community spirit

80
Q

Senior Housing Managers

A

marketing, facility operation, housekeeping, meal service, social event planning, medical emergency planning

81
Q

Community Association Management

A

assist in providing a comprehensive array of services to volunteer boards

82
Q

ADA readily achieveable modifications

A
  1. ramping or removing an obstacle from an otherwise accessible entrance
  2. lowering wall-mounted public telephones
  3. adding raised letter and Braille marketing on elevator buttons
  4. instsalling auditory signals in elevators
  5. reversing the directin in whcih doors open
83
Q

Who is responsible for determining whether a building meets ADA accessibility requirements

A

usually property manager

84
Q

Equal Credit Opportunity Act

A

prohibits a lender from denying a loan based on a person’s race, color, religion, national origin, sex, maritual status, age or receipt of public assistance

85
Q

ECOA’s affect on property managers

A

manager should use same lease application for every applicant, require credit applications from every applicant, consistancy in evaluating the cinome and debt of applicants and in determining whether to rent to an applicant

86
Q

Fair Housing Act

A

prohibits discrimination in teh sale, rental, or financing of housing based on race, color, religion, national origin, sex, familial status, or dsiability

CLI Prelicensing (23 decks)

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