DC Property Manager Exam – Questions with 100% Correct Answers | Updated 2024

DC Property Manager Exam – Questions with 100% Correct Answers | Updated 2024 Management Plan - Answer ️️ -1. Current use 2. Current condition 3. Fiscal projections 4. Operational issues Market Analysis - Answer ️️ -Regional and neighborhood evaluation focusing on: 1. Demographic conditions 2. Geographic features 3. Governmental perspective 4. Existing real estate supply 5. Future developments 6. Tenant demand Analysis of Alternatives - Answer ️️ -Theoretical costs and potential for rent increase based on decision to: 1. Modernize 2. Rehabilitate 3. Change 4. Convert Capital Expenditures - Answer ️️ -Projects that help extend a properties useful life. Three Types of Obsolescence - Answer ️️ -1. Physical Obsolescence is characterized as a condition of aging (i.e. wear and tear) or deferred maintenance. 2. Functional Obsolescence is characterized by old or outdated designs or building systems. 3. Economic Obsolescence represents a loss in value due to outside forces (i.e. location, market conditions). Five Types of Property Values - Answer ️️ -1. Investment Value - This is the value that is generally used by investors. It is frequently determined either by calculating the Net Operating Income and applying a Capitalization Rate to it or from Cash Flow by determining the Return on Investment. 2. Assessed Value - This is the value used by government tax assessment offices. Since it is frequently determined using sophisticated mathematical models that are applied to many similar types of properties over a geographic area, it can be less accurate and produce results that are higher or lower than other types of "values". 3. Market Value - This is the value that is agreed to between a buyer and seller. It represents the "meeting of the minds". 4. Depreciated Value - This is used for income tax purposes and affects a property's tax basis. In the past, the Federal Government has implemented accelerated depreciation programs to help promote economic growth. 5. List price - This is only the price that the owner has offered to sell a property for. Rules of Ethics - Answer ️️ -1. Loyalty to the client 2. Confidentiality 3. Accurate accounting and reporting 4. Protection of owner's funds 5. Conflicts of interest 6. Compliance with Laws and Regulations Management Agreement - Answer ️️ -A formal and binding contract that establishes the authority and responsibilities that the manager has on behalf of the owner and in operating the property. It will assist the owner in meeting their goals and objectives as well as maximizing the property's value and return. Grounds for Termination of Management Agreement - Answer ️️ -1. Sale or transfer of the property 2. Improper financial reporting 3. Improper financial reporting 4. Negligence 5. Commingling funds Comparison Analysis - Answer ️️ -The purpose of this analysis is to not only identify physical differences as well as strengths and weaknesses, but also to determine a value for each element and to make adjustments to the subject property's rental rate, up or down, based on the results. Budget Process - Answer ️️ -Occurs annually; purpose being to develop a means to both track the property's performance and to organize the various types of income and expenses. Gross Potential Rental Income - Answer ️️ -The maximum amount of income that a property can generate from all sources. Pass-Through Income, Expense Reimbursements or Recoveries - Answer ️️ -Ways tenants can also be billed for some or all of the property's operating expenses, real estate taxes and insurance. Effective Gross Income - Answer ️️ -Gross Potential Rental Income + Expense Reimbursements - Vacancy and Credit Loss + Miscellaneous Income = Effective Gross Income Operating Expenses - Answer ️️ -All of the costs associated with running and maintaining a property. Such as: 1. Utilities 2. Repairs and Maintenance 3. Real Estate Taxes 4. Insurance 5. Management Fees Operating Expenses (Comercial Properties) - Answer ️️ -Frequently calculated and referred to on a dollars and cents per square foot ($/SF) basis. By using a "unit cost" basis, it is easier to compare the expenses of one property to other similar properties. Net Operating Income (NOI) - Answer ️️ -Represents the money that remains after Operating Expenses are subtracted from Effective Gross Income. A property that produces a positive Net Operating Income indicates that Effective Gross Income exceeds its Operating Expenses. Debt Service - Answer ️️ -Includes both the interest and principal reduction and is subtracted from Net Operating Inco