DC PM Exam UPDATED ACTUAL Exam
Questions and CORECT Answers
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functional obsolescence - CORRECT ANSWER - old or outdated designs or building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
Questions and CORECT Answers
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
