IREM CPM 2025 QUESTIONS AND ANSWERS RATED A+
✔✔Why are bank loans a good alternative to special assessments when the need for
major expenses (e.g., repairs) arises? - ✔✔While sometimes necessary due to aging
properties, special assessments are unpopular among members in a community
association. Bank Loans may be a more cost effective way to raise large cash sums for
major repairs.
✔✔When the CID has applied for a bank loan, what types of documentation will
thelenders want to review? - ✔✔- Evidence of owner/occupancy
- banks may require that at least 70-75% of the owners of the units also occupy them
- 2-3 years of historical operating records
- The current year's budget with year-to-date information
- Aged Receivables reports
- Most current audit
- Reserve study with reserve plan and funding information
- Tax returns
- Current financial statements
- Board meeting minutes
- Plans, bids, and proposals for anticipated work that needs the financing
✔✔What are the tax consequences related to replacement reserves and/or excess
membership income? Must they be reported as income tax? - ✔✔Consult CIDs attorney
and/or accountant to determine how replacement reserves and/or excess membership
income must be reported.
✔✔What is the most important type of maintenance? Why? - ✔✔Preventive, because it
minimizes breakdowns and prevents the need for corrective and emergency
maintenance work. Ultimately saves money by preventing unexpected expenses
✔✔What are potential consequences of having non-budgeted maintenance expenses
not approved by the Board in advance? - ✔✔Consequences will vary, but the possibility
of large expenses being not being approved could indicate serious financial trouble for
the CID budget, at the least.
✔✔What is the purpose of a maintenance plan? - ✔✔A maintenance plan is a
structured plan created to help achieve the effective and efficient delivery of
maintenance. The goals of a maintenance plan are to preserve,protect, and enhance
the property. The plan consists primarily of detailed descriptions of the specific tasks to
be performed at the property according to a reasonable schedule.
✔✔What are the major components of a maintenance plan? - ✔✔An effective
maintenance plan incorporates the following components:
- Maintenance Goals
- Assessment
, - Planning
- Adding Details
- Providing Leadership
- Financial/Budget Issues
- Evaluation
✔✔What factors should be considered when implementing a maintenance plan? - ✔✔-
Perform ongoing financial management
- Determine resources
- Staff
- Contractor
- Identify tracking tools
- Property inspections
- Work orders
- Technology (software, cameras, PDAs, etc.)
- Monitor inventory and suppliers
- Ensure accurate documentation and record keeping
- Conduct periodic follow-up and communication
✔✔Explain how a well-managed maintenance plan contributes to a property's value. -
✔✔A well-managed maintenance plan contributes to a continuous cycle of benefits for
the property. Proactive maintenance leads to a more attractive property with units in
good condition. As a result, more units are rented, which provides greater operating
funds. This allows the property to become more responsive to resident's needs, which in
turn leads to more satisfied residents and higher renewal rates. If residents are
satisfied, the property has less turnover, fewer vacancies, and lower operating costs.
Ultimately, the property increases in value.
✔✔What is a cost benefit analysis? - ✔✔A cost benefit analysis is a technique designed
to determine the feasibility of a project or plan by quantifying its costs and benefits.
✔✔List three situations in which using a contractor would be cost-effective and three
situations in which using a contractor would not be cost-effective. - ✔✔Advantages
(Cost-Effective)
- Hiring contractors may allow the real estate manager to make better use of staff skills.
- A contractor has more specialized workers.
- A contractor has insurance that is more specific
- The job requires specific licensing from local, state, and/or federal agencies.
- A contractor's greater technical expertise may translate into greater efficiency and
lower costs.
- Equipment service not performed by a certified contractor may void warranties or
insurance coverage.
- The contractor deals with the details of payroll, union negotiations, and training.
- The contractor handles scheduling and monitoring of work.
- The contractor often can purchase parts or supplies more efficiently and more
economically
✔✔Why are bank loans a good alternative to special assessments when the need for
major expenses (e.g., repairs) arises? - ✔✔While sometimes necessary due to aging
properties, special assessments are unpopular among members in a community
association. Bank Loans may be a more cost effective way to raise large cash sums for
major repairs.
✔✔When the CID has applied for a bank loan, what types of documentation will
thelenders want to review? - ✔✔- Evidence of owner/occupancy
- banks may require that at least 70-75% of the owners of the units also occupy them
- 2-3 years of historical operating records
- The current year's budget with year-to-date information
- Aged Receivables reports
- Most current audit
- Reserve study with reserve plan and funding information
- Tax returns
- Current financial statements
- Board meeting minutes
- Plans, bids, and proposals for anticipated work that needs the financing
✔✔What are the tax consequences related to replacement reserves and/or excess
membership income? Must they be reported as income tax? - ✔✔Consult CIDs attorney
and/or accountant to determine how replacement reserves and/or excess membership
income must be reported.
✔✔What is the most important type of maintenance? Why? - ✔✔Preventive, because it
minimizes breakdowns and prevents the need for corrective and emergency
maintenance work. Ultimately saves money by preventing unexpected expenses
✔✔What are potential consequences of having non-budgeted maintenance expenses
not approved by the Board in advance? - ✔✔Consequences will vary, but the possibility
of large expenses being not being approved could indicate serious financial trouble for
the CID budget, at the least.
✔✔What is the purpose of a maintenance plan? - ✔✔A maintenance plan is a
structured plan created to help achieve the effective and efficient delivery of
maintenance. The goals of a maintenance plan are to preserve,protect, and enhance
the property. The plan consists primarily of detailed descriptions of the specific tasks to
be performed at the property according to a reasonable schedule.
✔✔What are the major components of a maintenance plan? - ✔✔An effective
maintenance plan incorporates the following components:
- Maintenance Goals
- Assessment
, - Planning
- Adding Details
- Providing Leadership
- Financial/Budget Issues
- Evaluation
✔✔What factors should be considered when implementing a maintenance plan? - ✔✔-
Perform ongoing financial management
- Determine resources
- Staff
- Contractor
- Identify tracking tools
- Property inspections
- Work orders
- Technology (software, cameras, PDAs, etc.)
- Monitor inventory and suppliers
- Ensure accurate documentation and record keeping
- Conduct periodic follow-up and communication
✔✔Explain how a well-managed maintenance plan contributes to a property's value. -
✔✔A well-managed maintenance plan contributes to a continuous cycle of benefits for
the property. Proactive maintenance leads to a more attractive property with units in
good condition. As a result, more units are rented, which provides greater operating
funds. This allows the property to become more responsive to resident's needs, which in
turn leads to more satisfied residents and higher renewal rates. If residents are
satisfied, the property has less turnover, fewer vacancies, and lower operating costs.
Ultimately, the property increases in value.
✔✔What is a cost benefit analysis? - ✔✔A cost benefit analysis is a technique designed
to determine the feasibility of a project or plan by quantifying its costs and benefits.
✔✔List three situations in which using a contractor would be cost-effective and three
situations in which using a contractor would not be cost-effective. - ✔✔Advantages
(Cost-Effective)
- Hiring contractors may allow the real estate manager to make better use of staff skills.
- A contractor has more specialized workers.
- A contractor has insurance that is more specific
- The job requires specific licensing from local, state, and/or federal agencies.
- A contractor's greater technical expertise may translate into greater efficiency and
lower costs.
- Equipment service not performed by a certified contractor may void warranties or
insurance coverage.
- The contractor deals with the details of payroll, union negotiations, and training.
- The contractor handles scheduling and monitoring of work.
- The contractor often can purchase parts or supplies more efficiently and more
economically
