RE Property management exam guide
UPDATED ACTUAL Exam Questions and
CORRECT Answers
Types of Agency Relationships - CORRECT ANSWER - principal- general agent
employer-employee
Principal- general agent relationship - CORRECT ANSWER - The principal is also known
as the client. This relationship is a fiduciary relationship, which means that it is a relationship
based on trust.a general agent, an individual has the right to represent a principal in a particular
type of trans- action or business. Property managers are a common example of the general
agency relationship in real estate. The property manager is primarily responsible for preserving
the value of an investment property while generating income as an agent for the owners. The
agent's duties may include such activities as:
Securing tenants
Collecting rents
Caring for the premises
Making periodic reports to the owner
Keeping proper accounts
Budgeting and controlling expenses
The employer-employee relationship - CORRECT ANSWER - Some property managers
may be full-time employees of a property owner. This arrangement is often observed with large
,institutions, particularly health facilities, energy companies, hospitality properties, school
districts, and universities.
Dunn & Bradstreet - CORRECT ANSWER - reporting agency that compiles data on
registered businesses. D& S assigns a DUNS# to each business that is registered with it that can
be checked by lenders, government agencies, and property management companies. The DUNS#
(Data Universal Numbering System) is a 9-digit identifier like a Social Security Number for a
business. Banks often check D&B for credit information in order to assess whether or not a
business is a credit risk. The government requires businesses that want federal contracts or grants
to register with D&B.
suburb - CORRECT ANSWER - a residential district located on the outskirts of a city
cities - CORRECT ANSWER - a large town
sub-markets - CORRECT ANSWER - a submarket in an urban neighborhood for luxury
high-rises or a market in the same general neighborhood for lower-rent properties. There can be
several submarkets within the larger neighborhood market.
types of occupancy - CORRECT ANSWER - Physical occupancy- Physical occupancy is a
calculation of the property's occupied units. Physical occupancy is found by dividing the number
occupied units by the number of total units available for rent.
Economic occupancy- economic occupancy is the percentage of potential rental income (gross
potential income) to actual earned rental income over a specified period.
For example, a 6-unit property rents for $900 per unit, giving the property a potential rental
income of $64,800 ($900 /mo × 6 units = $5,400 × 12 mos = $64,800). If only 5 of the units
were rented throughout the year, the earned rental income was only $54,000 ($900 /mo × 5 units
= $4,500 × 12 mos = $54,000).
$54,000/$64,800 = 83% economic occupancy for
the year
, Section 202 programs - CORRECT ANSWER - This HUD-rental assistance program is
designed specifically for the very low-income elderly in need of affordable housing. Households
must contain at least one occupant who is aged 62 or older.
The program provides interest-free capital advances from the federal government to nonprofit
entities for the construction of housing to support the very-low-income elderly. Facilities built
under this program provide their residents with support services like cooking, cleaning, and
transpor- tation while allowing them to live independently.
Capital advances made to nonprofit entities under the Section 202 program do not have to be
repaid as long as the project continues to serve the very-low- income elderly for 40 years.
Co-ops - CORRECT ANSWER - form of ownership where the residents own a
corporation that owns the property. The member-owners do not exactly "own" their units per se,
but ratherpurchase shares (stock) in the corpo-
ration, which gives them proprietaryleases. A proprietary lease grantsthe member-owner, who is
a share-holder in the corporation, the rightto occupy a specific dwelling unit inthe building and to
make use of theproperty's common areas.
For example, a member-owner who owns shares in a co-op building consisting of 4 equally sized
units is responsible for one quarter (25%) of the co-op's debt.
VAWA - CORRECT ANSWER - Violence Against Women Act of 1994
helping to protect the rights of victims including, victims of domestic violence, dating violence,
sexual assault, and stalking; how- ever, it applies mainly to the victims of domestic violence in
public housing or who receive housing assistance or vouchers from housing programs. It does
not apply to private housing that does not receive federal rental assistance. All public housing
authorities and owners and managers of housing programs covered by VAWA must comply with
the law.
Maintenance requests to property managers - CORRECT ANSWER - most common
requests are typically due to HVAC and plumbing issues.
UPDATED ACTUAL Exam Questions and
CORRECT Answers
Types of Agency Relationships - CORRECT ANSWER - principal- general agent
employer-employee
Principal- general agent relationship - CORRECT ANSWER - The principal is also known
as the client. This relationship is a fiduciary relationship, which means that it is a relationship
based on trust.a general agent, an individual has the right to represent a principal in a particular
type of trans- action or business. Property managers are a common example of the general
agency relationship in real estate. The property manager is primarily responsible for preserving
the value of an investment property while generating income as an agent for the owners. The
agent's duties may include such activities as:
Securing tenants
Collecting rents
Caring for the premises
Making periodic reports to the owner
Keeping proper accounts
Budgeting and controlling expenses
The employer-employee relationship - CORRECT ANSWER - Some property managers
may be full-time employees of a property owner. This arrangement is often observed with large
,institutions, particularly health facilities, energy companies, hospitality properties, school
districts, and universities.
Dunn & Bradstreet - CORRECT ANSWER - reporting agency that compiles data on
registered businesses. D& S assigns a DUNS# to each business that is registered with it that can
be checked by lenders, government agencies, and property management companies. The DUNS#
(Data Universal Numbering System) is a 9-digit identifier like a Social Security Number for a
business. Banks often check D&B for credit information in order to assess whether or not a
business is a credit risk. The government requires businesses that want federal contracts or grants
to register with D&B.
suburb - CORRECT ANSWER - a residential district located on the outskirts of a city
cities - CORRECT ANSWER - a large town
sub-markets - CORRECT ANSWER - a submarket in an urban neighborhood for luxury
high-rises or a market in the same general neighborhood for lower-rent properties. There can be
several submarkets within the larger neighborhood market.
types of occupancy - CORRECT ANSWER - Physical occupancy- Physical occupancy is a
calculation of the property's occupied units. Physical occupancy is found by dividing the number
occupied units by the number of total units available for rent.
Economic occupancy- economic occupancy is the percentage of potential rental income (gross
potential income) to actual earned rental income over a specified period.
For example, a 6-unit property rents for $900 per unit, giving the property a potential rental
income of $64,800 ($900 /mo × 6 units = $5,400 × 12 mos = $64,800). If only 5 of the units
were rented throughout the year, the earned rental income was only $54,000 ($900 /mo × 5 units
= $4,500 × 12 mos = $54,000).
$54,000/$64,800 = 83% economic occupancy for
the year
, Section 202 programs - CORRECT ANSWER - This HUD-rental assistance program is
designed specifically for the very low-income elderly in need of affordable housing. Households
must contain at least one occupant who is aged 62 or older.
The program provides interest-free capital advances from the federal government to nonprofit
entities for the construction of housing to support the very-low-income elderly. Facilities built
under this program provide their residents with support services like cooking, cleaning, and
transpor- tation while allowing them to live independently.
Capital advances made to nonprofit entities under the Section 202 program do not have to be
repaid as long as the project continues to serve the very-low- income elderly for 40 years.
Co-ops - CORRECT ANSWER - form of ownership where the residents own a
corporation that owns the property. The member-owners do not exactly "own" their units per se,
but ratherpurchase shares (stock) in the corpo-
ration, which gives them proprietaryleases. A proprietary lease grantsthe member-owner, who is
a share-holder in the corporation, the rightto occupy a specific dwelling unit inthe building and to
make use of theproperty's common areas.
For example, a member-owner who owns shares in a co-op building consisting of 4 equally sized
units is responsible for one quarter (25%) of the co-op's debt.
VAWA - CORRECT ANSWER - Violence Against Women Act of 1994
helping to protect the rights of victims including, victims of domestic violence, dating violence,
sexual assault, and stalking; how- ever, it applies mainly to the victims of domestic violence in
public housing or who receive housing assistance or vouchers from housing programs. It does
not apply to private housing that does not receive federal rental assistance. All public housing
authorities and owners and managers of housing programs covered by VAWA must comply with
the law.
Maintenance requests to property managers - CORRECT ANSWER - most common
requests are typically due to HVAC and plumbing issues.
