DC Property Managers Study Guide
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Answers
Reasons for termination of Management Agreement - ANSWER Sale or transfer of the
property, improper financial reporting, stealing funds, negligence, taking kickbacks or
benefiting directly from discounts from vendors, commingling funds.
Comparison Analysis - ANSWER Helps determine if the subject property's rental rates
are appropriate for the market.
A Comparison Analysis should include: - ANSWER Locational advantages/Accessibility, Curb
Appeal, Interior conditions, quality of finishes, Amenities, Rents per square foot, Operating
expenses per square foot
The purpose of a Budget is to................ - ANSWER Develop a means to track the property's
performance & and to organize various types of income.
Gross Potential Rent - ANSWER The maximum amount of income that a property can generate
from all sources.
Pass-Through Income, Expense Reimbursement, or Recoveries - ANSWER Commercial leases
tenants can be billed for some or all of the property's operating expenses, real estate taxes
and insurance.
Vacancy & Credit Loss - ANSWER When actual income collected is less than Gross
Potential Rental Income (typically a commercial lease)
, Effective Gross Income equation - ANSWER is the net effective of Gross Potential plus (+)
Expense Reimbursements minus (-) Vacancy Credit Loss plus (+) Miscellaneous Income.
Net Operating Income (NOI) - ANSWER Represents the money that remains after the Operating
Expenses are subtracted from Effective Gross Income.
Debt Service - ANSWER includes both interest and principal reduction and is subtracted from
Net Operating Income.
Examples of Capital Expenditures include...... - ANSWER Improvements to a property that
update appearance, replacement of major mechanical equipment (boilers), replacement of
major building system (roof), renovating space, replacing old appliances.
Escrow Accounts & Reserves - ANSWER In order for the owner to prepare for significant
Capital Expenditures, it is common to establish an
Gross Lease - ANSWER The property owner pays all Operating Expenses up to a certain amount.
Commonly found in office spaces.
What does the term "Net Lease" mean when referring to commercial leases? - ANSWER The
tenant pays for some or all Operating Expenses in addition to base rent. Derivatives of this
structure are Net-Net & Triple Net Leases.
- ANSWER
What does the term "Triple Net" mean when referring to commercial leases - ANSWER refers to
commercial tenant paying ALL Operating Expenses including real estate taxes, insurance, roof
maintenance, landscaping, etc. This is the most commonly found in industrial leases.
with questions Solved with Verified
Answers
Reasons for termination of Management Agreement - ANSWER Sale or transfer of the
property, improper financial reporting, stealing funds, negligence, taking kickbacks or
benefiting directly from discounts from vendors, commingling funds.
Comparison Analysis - ANSWER Helps determine if the subject property's rental rates
are appropriate for the market.
A Comparison Analysis should include: - ANSWER Locational advantages/Accessibility, Curb
Appeal, Interior conditions, quality of finishes, Amenities, Rents per square foot, Operating
expenses per square foot
The purpose of a Budget is to................ - ANSWER Develop a means to track the property's
performance & and to organize various types of income.
Gross Potential Rent - ANSWER The maximum amount of income that a property can generate
from all sources.
Pass-Through Income, Expense Reimbursement, or Recoveries - ANSWER Commercial leases
tenants can be billed for some or all of the property's operating expenses, real estate taxes
and insurance.
Vacancy & Credit Loss - ANSWER When actual income collected is less than Gross
Potential Rental Income (typically a commercial lease)
, Effective Gross Income equation - ANSWER is the net effective of Gross Potential plus (+)
Expense Reimbursements minus (-) Vacancy Credit Loss plus (+) Miscellaneous Income.
Net Operating Income (NOI) - ANSWER Represents the money that remains after the Operating
Expenses are subtracted from Effective Gross Income.
Debt Service - ANSWER includes both interest and principal reduction and is subtracted from
Net Operating Income.
Examples of Capital Expenditures include...... - ANSWER Improvements to a property that
update appearance, replacement of major mechanical equipment (boilers), replacement of
major building system (roof), renovating space, replacing old appliances.
Escrow Accounts & Reserves - ANSWER In order for the owner to prepare for significant
Capital Expenditures, it is common to establish an
Gross Lease - ANSWER The property owner pays all Operating Expenses up to a certain amount.
Commonly found in office spaces.
What does the term "Net Lease" mean when referring to commercial leases? - ANSWER The
tenant pays for some or all Operating Expenses in addition to base rent. Derivatives of this
structure are Net-Net & Triple Net Leases.
- ANSWER
What does the term "Triple Net" mean when referring to commercial leases - ANSWER refers to
commercial tenant paying ALL Operating Expenses including real estate taxes, insurance, roof
maintenance, landscaping, etc. This is the most commonly found in industrial leases.
