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DC PM Exam with 100% correct Answers
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DC PM Exam with 100% correct Answers
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DC PM Exam with 100% correct Answerssublet/sublease agreement - 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 - Answer -describes in detail the subject property''s current use along
with its physical condition, fiscal projections and any operational issues
analysis of alternatives - 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 - Answer -a condition of aging or deferred maintenance ex)
worn carpets, dead landscaping
functional obsolescence - Answer -old or outdated designs or building system's ex)
equipment that is not repairable b/c parts are no longer made
Economic Obsolescence - Answer -loss in value due to outside forces
gross potential rental income - 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 - 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 - Answer -gross potential rental income + expenses
reimbursements - vacant and credit loss + misc income
operating expenses - Answer -all of the costs associated with running and maintaining a
property ex) real estate taxes, insurance, snow removal
commercial property operating expenses - 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) - Answer -The income projected for an income-producing
property after deducting losses for vacancy and collection and operating expenses.
Debt Service - Answer -includes both interest and principal reduction and is subtracted
from noi
cash flow and projections - Answer -amount of money that remains after debt service is
subtracted from noi
cash flow formula - Answer -gross potential rental income+ expense reimbursements -
vacancy rate + misc income = effective gross income - operating expenses = noi - debt
service
Return on Investment (ROI) - Answer -annual cash flow/ initial cash investment
capital expenditures - Answer -an improvement or betterment to a property that extends
its useful life. Ex) replacement of major mechanical equipment, replacing old appliances
chart of accounts - Answer -used to classify diff types of income it receives and
expenses it pays. each account is assigned an account #
operating statement - Answer -Another name for the income statement, which reports
the profitability of business operations for a specific period of time. Contains all of the
property's actual income and operating expenses for the month and compares it to the
budget
Gross Lease - Answer -property owner pays for all operating expenses. common for
office building leases, property owner pays all operating expenses up to the specified
amount and tenant pays for all operating expenses above that base amount.
net lease - Answer -lease in which the tenant pays some or all of the operating
expenses of the property in addition to rent. common for industrial leases
Percentage Rent - Answer -The amount of rent paid by a retail tenant in addition to the
base rent. It generally is a percentage of tenant store sales above a prespecified
threshold level.
owning property bundle of rights - Answer -right of possession- owner can occupy
property
right of control - w/in laws owner controls use of property
right of exclusion - owner can exclude others from using/entering
right of enjoyment - owner can enjoy the property
right to sell
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