DC PM EXAM QUESTIONS & ACTUAL
ANSWERS RATED 100% CORRECT
sublet/sublease agreement - Correct Answer ✔✔ a lease agreement between a tenant
a sub-tenant where the original tenant essentially becomes a middle-man between the
landlord and the subtenant assumes both landlord duties to the sub-tenant and tenant
duties to the landlord
management plan - Correct Answer ✔✔ describes in detail the subject property''s
current use along with its physical condition, fiscal projections and any operational
issues
analysis of alternatives - Correct Answer ✔✔ rehabilitate the property w/out altering its
existing use, modernize the property by updating finishes etc., changes the use of the
building or demolish for new development, conversion to condos
Physical Obsolescence - Correct Answer ✔✔ a condition of aging or deferred
maintenance ex) worn carpets, dead landscaping
functional obsolescence - Correct Answer ✔✔ old or outdated designs or building
system's ex) equipment that is not repairable b/c parts are no longer made
Economic Obsolescence - Correct Answer ✔✔ loss in value due to outside forces
gross potential rental income - Correct Answer ✔✔ max amount of income that a
property can generate from all sources. represents the total potential income from all
units/spaces being fully occupied and all amounts owed by residents/tenants being
collected in full
pass through income, expense reimbursements, or recovers - Correct Answer ✔✔
when tenants are billed for some or all of the property's operating expenses. owner will
be reimbursed for some or all of the property's operating expenses ex.) reimbursements
for utilities landscaping, etc.
Effective Gross Income - Correct Answer ✔✔ gross potential rental income + expenses
reimbursements - vacant and credit loss + misc income
operating expenses - Correct Answer ✔✔ all of the costs associated with running and
maintaining a property ex) real estate taxes, insurance, snow removal
commercial property operating expenses - Correct Answer ✔✔ frequently calculated
and referred to based on a dollars and cents per square foot basis ex.) if a commercial
property is 100,000 sf and its annual electricity costs are $225,000 what is electricity
cost per square foot?
, Net Operating Income (NOI) - Correct Answer ✔✔ The income projected for an income-
producing property after deducting losses for vacancy and collection and operating
expenses.
Debt Service - Correct Answer ✔✔ includes both interest and principal reduction and is
subtracted from noi
cash flow and projections - Correct Answer ✔✔ amount of money that remains after
debt service is subtracted from noi
cash flow formula - Correct Answer ✔✔ gross potential rental income+ expense
reimbursements - vacancy rate + misc income = effective gross income - operating
expenses = noi - debt service
Return on Investment (ROI) - Correct Answer ✔✔ annual cash flow/ initial cash
investment
capital expenditures - Correct Answer ✔✔ an improvement or betterment to a property
that extends its useful life. Ex) replacement of major mechanical equipment, replacing
old appliances
chart of accounts - Correct Answer ✔✔ used to classify diff types of income it receives
and expenses it pays. each account is assigned an account #
operating statement - Correct Answer ✔✔ Another name for the income statement,
which reports the profitability of business operations for a specific period of time.
Contains all of the property's actual income and operating expenses for the month and
compares it to the budget
Gross Lease - Correct Answer ✔✔ property owner pays for all operating expenses.
common for office building leases, property owner pays all operating expenses up to the
specified amount and tenant pays for all operating expenses above that base amount.
net lease - Correct Answer ✔✔ lease in which the tenant pays some or all of the
operating expenses of the property in addition to rent. common for industrial leases
Percentage Rent - Correct Answer ✔✔ The amount of rent paid by a retail tenant in
addition to the base rent. It generally is a percentage of tenant store sales above a
prespecified threshold level.
owning property bundle of rights - Correct Answer ✔✔ right of possession- owner can
occupy property
right of control - w/in laws owner controls use of property
right of exclusion - owner can exclude others from using/entering
right of enjoyment - owner can enjoy the property
ANSWERS RATED 100% CORRECT
sublet/sublease agreement - Correct Answer ✔✔ a lease agreement between a tenant
a sub-tenant where the original tenant essentially becomes a middle-man between the
landlord and the subtenant assumes both landlord duties to the sub-tenant and tenant
duties to the landlord
management plan - Correct Answer ✔✔ describes in detail the subject property''s
current use along with its physical condition, fiscal projections and any operational
issues
analysis of alternatives - Correct Answer ✔✔ rehabilitate the property w/out altering its
existing use, modernize the property by updating finishes etc., changes the use of the
building or demolish for new development, conversion to condos
Physical Obsolescence - Correct Answer ✔✔ a condition of aging or deferred
maintenance ex) worn carpets, dead landscaping
functional obsolescence - Correct Answer ✔✔ old or outdated designs or building
system's ex) equipment that is not repairable b/c parts are no longer made
Economic Obsolescence - Correct Answer ✔✔ loss in value due to outside forces
gross potential rental income - Correct Answer ✔✔ max amount of income that a
property can generate from all sources. represents the total potential income from all
units/spaces being fully occupied and all amounts owed by residents/tenants being
collected in full
pass through income, expense reimbursements, or recovers - Correct Answer ✔✔
when tenants are billed for some or all of the property's operating expenses. owner will
be reimbursed for some or all of the property's operating expenses ex.) reimbursements
for utilities landscaping, etc.
Effective Gross Income - Correct Answer ✔✔ gross potential rental income + expenses
reimbursements - vacant and credit loss + misc income
operating expenses - Correct Answer ✔✔ all of the costs associated with running and
maintaining a property ex) real estate taxes, insurance, snow removal
commercial property operating expenses - Correct Answer ✔✔ frequently calculated
and referred to based on a dollars and cents per square foot basis ex.) if a commercial
property is 100,000 sf and its annual electricity costs are $225,000 what is electricity
cost per square foot?
, Net Operating Income (NOI) - Correct Answer ✔✔ The income projected for an income-
producing property after deducting losses for vacancy and collection and operating
expenses.
Debt Service - Correct Answer ✔✔ includes both interest and principal reduction and is
subtracted from noi
cash flow and projections - Correct Answer ✔✔ amount of money that remains after
debt service is subtracted from noi
cash flow formula - Correct Answer ✔✔ gross potential rental income+ expense
reimbursements - vacancy rate + misc income = effective gross income - operating
expenses = noi - debt service
Return on Investment (ROI) - Correct Answer ✔✔ annual cash flow/ initial cash
investment
capital expenditures - Correct Answer ✔✔ an improvement or betterment to a property
that extends its useful life. Ex) replacement of major mechanical equipment, replacing
old appliances
chart of accounts - Correct Answer ✔✔ used to classify diff types of income it receives
and expenses it pays. each account is assigned an account #
operating statement - Correct Answer ✔✔ Another name for the income statement,
which reports the profitability of business operations for a specific period of time.
Contains all of the property's actual income and operating expenses for the month and
compares it to the budget
Gross Lease - Correct Answer ✔✔ property owner pays for all operating expenses.
common for office building leases, property owner pays all operating expenses up to the
specified amount and tenant pays for all operating expenses above that base amount.
net lease - Correct Answer ✔✔ lease in which the tenant pays some or all of the
operating expenses of the property in addition to rent. common for industrial leases
Percentage Rent - Correct Answer ✔✔ The amount of rent paid by a retail tenant in
addition to the base rent. It generally is a percentage of tenant store sales above a
prespecified threshold level.
owning property bundle of rights - Correct Answer ✔✔ right of possession- owner can
occupy property
right of control - w/in laws owner controls use of property
right of exclusion - owner can exclude others from using/entering
right of enjoyment - owner can enjoy the property
