DC Property Managers Study Guide Questions and Answers with complete

Management Plan - Answer-Assists the owner in meeting their goals while maximizing the property's value and return. The plan describes in detail the subject property's current use along with it's physical condition, fiscal projections, and operational issues (includes an analysis of the market regional & neighborhood). Organizational and educational programs available to assist in enhancing the property manager's knowledge, identifying resources to resolve issues, and expanding their business network. - AnswerInstitute of Real Estate Management (IREM), National Association of Realtors (NAR), Greater Capital Area Association of Realtors (GCARR), building Owners & Managers Association (BOMA), National Association of Real Estate Brokers, International Council of Shopping Centers (ICSC), and National Property Management Association. Market Analysis - Answer-Focuses on regional and neighborhood evaluations. Includes demographic conditions, geographic features, governmental prospective, existing real estate supply, future developments, and tenant/resident demand Market Analysis & Competitive Property Analysis helps to..... - Answer-Identify the subject property's strengths and weaknesses The Highest & Best Use - Answer-When the property manager considers alternatives to improve the property's weaknesses or further enhance its strengths to improve overall economic performance. Analysis of Alternative - Answer-Looks at the theoretical costs and corresponding increase in rents by making different improvements, even property's redevelopment. When determining the best use of property, alternatives to consider are......... - Answer-Rehabilitate without altering its existing use, Modernize by updating finishes (more efficient equipment), Change the Use of building (including conversion), or Conversion to a condominium m ownership structure. Capital Expenditures - Answer-Projects that help extend the property's life.Physical Obsolescene - Answer-is characterized as a condition of aging (i.e. wear & tear) or deferred maintenance. Examples are worn carpet, peeling paint, a leaking roof, or dead landscaping Functional Obsolescene - Answer-is characterized by old or outdated designs or building systems. Economic Obsolesence - Answer-Represents a loss in value due to outside forces (i.e. location, market conditions). Examples would be an office building, locates in a small town, where the major employer closes. Investment Value - Answer-A value generally used by investors Assessed Value - Answer-The value used by government tax assessment offices Market Value - Answer-The value that is agreed to between a buyer & seller Rules of Ethics for Property Manager - Answer-Loyalty to client, confidentiality, accurate accounting & reporting, protection of owner's funds, conflicts of interest, and compliance with law regulations. An owner can be directly affected by manager's..... - Answer-Improper handling of evictions, unlawful rent collections, failure to return security deposits, not maintaining proper compliance with the Rental Accommodations Division (RAD) The Management Agreement - Answer-is a formal and binding contract that establishes the authority and responsibilities that a manager has on behalf of the owner. Name of the owner & manager, term of agreement, describes the property, describes services provided by manager, identifies who collects rental payments, identifies whose name all service contracts are to be made, when funds are disbursed, whose employees work at the property, bank accounts, fidelity bonds, identifies building licenses, insurance requirements/ who secures policies, and management fees compensation - Answer-Some provisions outlined in the Management Agreement include: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.