Certified Property Manager (CPM) Practice
Exam – Questions and Correct Answers
2026
Institute of Real Estate Management (IREM)
1. What is the primary goal of property management?
A. Minimizing tenant complaints
B. Maximizing the property’s net operating income
C. Reducing taxes
D. Maintaining landscaping
Maximizing net operating income (NOI) ensures financial performance, which is
the core objective of property management.
2. Which of the following best defines “effective gross income”?
A. Net rent after expenses
B. Gross potential rent minus vacancy and credit loss plus other income
C. Market rent minus debt service
D. Total income including capital gains
Effective gross income accounts for all income minus losses, reflecting actual
revenue potential.
,3. A management agreement typically includes all of the following EXCEPT:
A. Duties of the manager
B. Compensation terms
C. Reporting requirements
D. Deed restrictions
Deed restrictions are legal limitations recorded on the deed, not part of a
management contract.
4. The economic life of a building refers to:
A. The time until it is condemned
B. The period during which improvements contribute to property value
C. The amortization period
D. The useful life for insurance
Economic life considers value contribution, not physical deterioration or legal
lifespan.
5. A CAM charge refers to costs related to:
A. Capital reserve funds
B. Common area maintenance
C. Casualty insurance
D. Current asset management
CAM refers to expenses like landscaping and hallway maintenance shared by
tenants.
, 6. A property manager's fiduciary responsibilities do NOT include:
A. Care
B. Profit sharing
C. Loyalty
D. Obedience
Property managers must be loyal and obedient to the owner but typically do not
share profits.
7. A reserve fund is primarily used for:
A. Paying taxes
B. Covering marketing expenses
C. Funding capital expenditures and replacements
D. Distributing dividends
Reserves are set aside for large or unexpected capital projects, such as roof
repairs.
8. Which of the following is the best indicator of a property's financial
performance?
A. Occupancy rate
B. Net operating income (NOI)
C. Capitalization rate
D. Cash flow
Exam – Questions and Correct Answers
2026
Institute of Real Estate Management (IREM)
1. What is the primary goal of property management?
A. Minimizing tenant complaints
B. Maximizing the property’s net operating income
C. Reducing taxes
D. Maintaining landscaping
Maximizing net operating income (NOI) ensures financial performance, which is
the core objective of property management.
2. Which of the following best defines “effective gross income”?
A. Net rent after expenses
B. Gross potential rent minus vacancy and credit loss plus other income
C. Market rent minus debt service
D. Total income including capital gains
Effective gross income accounts for all income minus losses, reflecting actual
revenue potential.
,3. A management agreement typically includes all of the following EXCEPT:
A. Duties of the manager
B. Compensation terms
C. Reporting requirements
D. Deed restrictions
Deed restrictions are legal limitations recorded on the deed, not part of a
management contract.
4. The economic life of a building refers to:
A. The time until it is condemned
B. The period during which improvements contribute to property value
C. The amortization period
D. The useful life for insurance
Economic life considers value contribution, not physical deterioration or legal
lifespan.
5. A CAM charge refers to costs related to:
A. Capital reserve funds
B. Common area maintenance
C. Casualty insurance
D. Current asset management
CAM refers to expenses like landscaping and hallway maintenance shared by
tenants.
, 6. A property manager's fiduciary responsibilities do NOT include:
A. Care
B. Profit sharing
C. Loyalty
D. Obedience
Property managers must be loyal and obedient to the owner but typically do not
share profits.
7. A reserve fund is primarily used for:
A. Paying taxes
B. Covering marketing expenses
C. Funding capital expenditures and replacements
D. Distributing dividends
Reserves are set aside for large or unexpected capital projects, such as roof
repairs.
8. Which of the following is the best indicator of a property's financial
performance?
A. Occupancy rate
B. Net operating income (NOI)
C. Capitalization rate
D. Cash flow
