Property Management Ch11-Ch17
7. Of the following, which method is particularly suited to marketing industrial space? a. Classified ads b. Display ads c. Direct mail d. Radio commercials
c Brochures marketing industrial property include a picture of the premises, brief copy highlighting the property's special features, and an area map, and are sent to a select group of prospective firms
3. An employee of an office building tenant who is responsible for the internal arrangement and furnishing of the leased space is called a a. facilities manager. b. property manager. c. ADA manager. d. compliance officer
a A facilities manager is an employee of a building occupant who is responsible for the internal arrangement and furnishing of the space leased by that employer-occupant, and in some cases, for maintenance of leased space.
2. Of the following essential elements in a good security program, which is the MOST important? a. Emergency prevention b. Problem detection c. Loss confinement d. Damage control
a A program to deal with emergencies threatening life and property is based on four goals, the first and most important of which is prevention. Detection, confinement, and damage control are the other three goals.
2. What is the term used to describe a building built for use as a warehouse but adaptable to light manufacturing? a. General-purpose b. Special-purpose c. Limited-purpose d. Single-purpose
a A warehouse that can be used for storage or adapted for light manufacturing or assembly plants is called a general-purpose building.
16. Elevators can be deadly during a fire because a. the shafts create a chimney effect allowing updrafts of dangerous materials. b. the elevator might tear loose and fall to the basement. c. there is no way to reach trapped occupants. d. they are automatically turned off as part of containing the fire.
a Elevators can be deadly during a fire because the shafts create a chimney effect allowing updrafts of dangerous materials
11. In order to survive and thrive, mold requires a food source and a. moisture. b. strong light source, such as sunshine. c. chlorophyll. d. extreme temperatures
a In order to survive and thrive, mold requires a food source and moisture. As it lacks chlorophyll, it does not require sunshine.
13. One effective method to combat illegal drug activity is to a. organize community watch programs. b. hire off-duty police to act as security guards. c. require a drug test of every occupant as part of the lease qualification. d. refuse to rent to anyone younger than 30
a One of the most effective methods of combating illegal drug activity is to involve the tenants in organizing community watch programs.
17. Federal law now requires that only certified technicians may handle which of the following hazardous materials? a. Chlorofluorocarbons b. Formaldehyde c. Radon d. Lead-based paint
a Only an EPA certified techician, who has passed the EPA-approved exam, should do any work on a refrigeration system, since they know how to remove CFCs without releasing them into the atmosphere
10. Environmental impact statements for major public and private developments may be required by a. the federal government only. b. state governments only. c. local governments only. d. all levels of government.
a The National Environmental Policy Act (NEPA), which went into effect in 1970, requires the preparation of an environmental impact statement (EIS) in advance for every major federal action that would significantly affect the quality of the environment.
5. A building has a physically depreciated cash value of $200,000. The property manager must remem-ber that a. if coinsurance coverage of $160,000 is taken out, the cost will be about equal to "straight" insurance of $100,000. b. "straight" coverage of $50,000 will cost about the same as 80% coinsurance. c. in the event of a loss of $40,000 under an 80% coinsurance policy, the insurer will pay $32,000. d. under an 80% coinsurance policy, if the building is a total loss the insurer will pay $190,000.
a The premium for a building with 50% coverage ($100,000) under a "straight" insurance plan will be about the same as the premium for a policy with an 80% coinsurance clause ($160,000
7. The news media may be interested in reporting emergency situations. The manager should a. permit access if safety is not a factor. b. give details on losses and admit liability. c. not be concerned with rumors because they cannot be confirmed. d. lock out reporters because they never get the story right
a The property manager should cooperate fully with media but retain the authority and control necessary to deal with an emergency. Admissions of liability or speculations about the cause of an accident should be avoided. Every available means of communication should be used to present factual information that will offset rumors
18. What value, if any, is there in cultivating a relationship with reconstruction companies before an emergency? a. They may be more available to someone with whom they have a relationship. b. There is no value unless the manager can provide some kind of "make do" work. c. The manager can expect lower prices after the disaster. d. There is no value as the manager can expect many choices for workmen after a disaster.
a The property manager should cultivate a relationship with reconstruction companies before an emergency as they will be in high demand later. Any relationship might assist in getting work done sooner.
4. When the property manager lowers an insurance premium by increasing the deductible, the man-ager is making an effort to a. avoid risk. b. retain part of the risk. c. control the risk. d. identify the risk.
b A higher deductible on an insurance premium means the property manager is retaining part of the risk, which should reduce the premium amount.
1. A good life safety and security program is based on a coordinated approach including a. electronic techniques and a trained security force. b. the skillful use of equipment, personnel, and procedures. c. management expertise and independent consultants. d. detectors, alarms, and centralized control
b A life safety and security program must be tailored to the tenant's needs, whether the property is commercial, industrial, or residential, and is a three-pronged approach that incorporates skilled used of equipment, personnel, and procedures.
8. In general, persons looking for retail property to rent a. read classified ads. b. look for signs. c. listen to the radio. d. respond to display ads.
b A sign on the vacancy is the most costeffective advertising to attract prospective tenants to the premises.
13. When evaluating a prospective tenant in terms of tenant mix, the manager should look at a variety of the tenant's needs, including the tenant's need for a. access for the disabled. b. parking facilities. c. less expensive rent. d. good manager-tenant relations
b Adequacy of the parking facilities should be considered when evaluating a prospect's needs.
18. If an industrial tenant will sign a longer lease, the owner may be more inclined to a. amortize the mortgage over a shorter term. b. lower the rent. c. withdraw concessions. d. increase the rent.
b As a negotiating point, the tenant's willingness to sign a longer lease might encourage the landlord to lower the rent factor.
12. The Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) provided remedies against hazardous substances in the environment and is popularly known as the a. Education and Recovery Act. b. Superfund Law. c. Federal Insecticide and Rodenticide Regulation. d. Hazard Emergency Rule
b CERCLA is commonly referred to as the Superfund law, so named because of the two trust funds created to help finance cleanup projects and payment of property damage claims.
4. One of the MOST effective methods to locate a new tenant for an office property is a. direct mail to businesses in a select ZIP code. b. canvassing a list of qualified prospects. c. a classified ad in a trade newspaper such as the Wall Street Journal. d. display ads in a local newspaper
b Canvassing is probably the best prospecting method for leasing office space and is more productive when the list of prospects has been qualified to some extent. Sources such as the Dun & Bradstreet directory and others published by the local chamber of commerce will furnish the manager with some names of firms that may be interested
13. Which of the following poisons could result from an incorrectly vented space heater? a. Radon b. Carbon monoxide c. Mold d. Asbestos
b Carbon monoxide is a by-product of incorrectly burning fossil fuels and one of the reasons that all heaters must be properly vented.
10. Which statement is TRUE concerning emergency procedures? a. Bomb threats are no longer taken seriously. b. Building or floor evacuation routines should be rehearsed on a regular basis. c. There is no way to anticipate a hurricane. d. Procedures for tornadoes and earthquakes are quite different
b Emergency preparedness procedures should include evacuation plans and periodic training sessions should be held to test emergency responses
19. How long is the manager required to retain leadbased paint disclosure records? a. One year b. Three years c. Five years d. Indefinitely
b Federal law requires that lead-based paint disclosure records must be maintained for three years.
14. Which of the following disasters generally offers enough time in advance to issue warnings? a. Tornadoes b. Hurricanes c. Bomb threat d. Earthquake
b Hurricanes are spotted and tracked several days before they hit the mainland, leaving time for managers to prepare for the onslaught of wind and rain. Tornadoes, earthquakes, and bomb threats generally provide little or no time for preparedness
14. How much of a petroleum tank must be buried to cause the tank to be classified as "underground"? a. None; any petroleum tank is considered dangerous b. 10% c. 50% d. 100%
b If 10% of a tank is below grade, it is considered "underground
1. Installing fire sprinklers is an example of a. avoiding the risk. b. controlling the risk. c. retaining the risk. d. measuring the risk.
b Installing fire sprinklers is an excellent risk controlling example. No one wants a fire, but having the sprinklers installed will put it out faster, thus reducing the overall damage
18. Specialists who can MOST effectively market the property are a. resident managers. b. leasing agents. c. manager's assistants. d. supervising property managers
b Leasing agents are experts in learning the prospect's basic needs and desires, and how to handle and overcome objections in order to rent the apartment
7. Which statement is TRUE concerning the insurance available to independent property managers? a. Multiperil insurance protects equipment and supplies. b. The manager should be named as an additional insured under the owner's liability policy. c. Errors and omissions insurance protects against loss of rent because the property manager failed to check a tenant's credit thoroughly. d. Employee dishonesty insurance is never necessary.
b Ordinarily, there is no extra premium charge to the owner for adding the manager as additional insured, and this added coverage protects the property manager in addition to the manager's own insurance.
9. Which of the following is recommended to allevi-ate mold problems? a. Increase humidity b. Decrease humidity c. Follow the advice of the insurance company d. Regularly conduct mold testing
b The best method for dealing with mold is to prevent it in the first place by decreasing humidity. The manager should not wait for a "problem" and then depend on the insurance company.
12. The primary purpose of life safety and security technology is to a. turn on the sprinkler system. b. discover and promptly report an emergency. c. broadcast evacuation instructions. d. prohibit access to elevators.
b The design concept of present-day emergency equipment is to discover and report a fire or other emergency before it further threatens life and property
8. The number one priority in a major emergency is to a. notify next of kin of those injured. b. alert the owner to the nature of the disaster. c. ensure safety of employees, tenants, and the public. d. arrange for an emergency spokesperson
c In the event of a major emergency such as fire, explosion, or natural disaster, the first priority is always the safety and protection of human life. An authorized spokesperson should be designated in advance to represent management on the scene and provide factual information.
17. Why is it important for the property manager to take steps to minimize post-emergency damage? a. Shows the owner that the manager is a responsible worker b. Reassures the tenants that they can quickly resume their occupancies c. Required by insurance companies d. Required by the terms of the management agreement
c Most insurance companies will not cover damages that could have been prevented if proper steps to secure the damage had been taken immediately after the disaster
5. Plastics used in furnishings and finishings may be a. fire retardant. b. noncombustible. c. dangerous because of toxic gases. d. self-extinguishing.
c Neither the landlord nor tenant should use any form of plastics for furnishings or finishing materials, as they produce toxic gases that are hazardous to all tenants. Noncombustible and fire-retardant materials are safer.
18. Which of the following hazards could be leaking from a landfill? a. Chlorofluorocarbons b. Radon c. Polychlorinated biphenyls (PCBs) d. Asbestos
c Polychlorinated biphenyls (PCBs) do not break down in the environment and may be leaking from a landfill
8. Which of the following hazards can generally be greatly reduced through proper ventilation? a. Asbestos b. Lead-based paint c. Radon d. Polychlorinated biphenyls (PCBs
c Radon mitigation consists of sealing the property and then installing fans to take the air out of the property to the outdoors
15. The Environmental Protection Agency has recognized that the least hazardous way to deal with asbestos that is in place in a building is to a. remove it. b. ignore it. c. manage it in place. d. analyze it.
c The Environmental Protection Agency (EPA) has recognized that the least hazardous way to deal with asbestos that is in place in a building is to manage the asbestos by either sealing it (encapsulation) or by enclosing it
20. The property manager should insist that the landlord buy all of the following types of insurance EXCEPT a. flood insurance. b. all risks insurance. c. renter's insurance. d. fire insurance.
c The landlord cannot buy renter's insurance since the landlord does not have an insurable interest in the renter's property
11. Emergency communication with tenants and the media should be a. in writing. b. deferred until the emergency is over and full information is available. c. through an authorized spokesperson. d. released expeditiously as soon as it is learned to avoid delay incurred by verification.
c The property manager should prepare a written statement that can be used as a guideline so that all points will be covered by an appointed spokesperson when communicating with tenants or the media in times of emergency.
3. A modern emergency response system will do all of the following EXCEPT a. discover and report a fire. b. call the fire department. c. vent the smoke out of the building. d. monitor tenant-installed improvements
d A response system installed in a building cannot control tenant-installed furnishings. These systems can discover and report a fire and vent the smoke out of the building. Tenants need to be encouraged to avoid certain products which can be hazardous.
19. The manager of which of the following properties should develop disaster preparedness plans? a. Large high-rise properties b. Commercial properties c. Scattered site housing d. All of the above
d All managers of ALL types of property should develop disaster preparedness plans
15. Which of the following CANNOT be used during a fire emergency? a. Stairwells b. Window exits c. Hallways d. Elevators
d Elevators cannot be used in an emergency. The shafts create a chimney effect allowing updrafts of dangerous materials
6. What type of insurance protects the owner against loss for damage to other persons or their property? a. Extended coverage insurance b. 80% coinsurance c. Business interruption insurance d. General liability and workers' compensation insurance
d General liability insurance covers the legal responsibility for damage to real and personal property of others and for those injured on the premises. Workers' compensation insurance covers employer's liability for injury to workers.
6. Which of the following statements is the MOST accurate concerning electronic life safety and security systems? a. Most older buildings that can accommodate them are equipped with electronic communication systems. b. They can be installed readily by available on-site maintenance personnel. c. Their purchase should not be hampered by budgetary restrictions because lives are at stake. d. Experienced consultants should be used early in their planning
d New and improved equipment is constantly coming on the market and concerned property managers will expand their knowledge of life safety and security technology by consulting with experts to ensure that all elements are carefully coordinated into an effective integrated system
2. All of the following are examples of avoiding risk EXCEPT a. hiring contractors who show evidence of insurance for workers' compensation. b. removing the diving board from the swimming pool. c. arranging environmental assessments. d. managing hazardous properties
d One effective way to avoid risk is to avoid managing properties on which there are hazardous substances.
20. What is one of the aftershocks of a disaster? a. Tenants loyally return to the damaged property. b. Consumers will retain shopping patterns. c. Tenants are not permitted to terminate leases. d. Consumers form new shopping patterns and may not return.
d One of the aftershocks of disaster is that consumers often form new shopping patterns and may not return to the stores they once frequented
4. During an emergency, handling pedestrian and vehicle traffic outside the building is the responsibility of the a. property manager. b. chief of security, who reports to the main entrance and is in charge during an emergency. c. first available LSO (life safety officer). d. local police department.
d Outside the building, pedestrian and auto traffic should be the responsibility of the police department. The personnel of the property management staff, including the property manager, the LSO, and the chief of security, should be assigned specific duties regarding emergencies at the location itself.
9. Preventive maintenance inspections a. are required by all insurance companies. b. cannot be expected to detect plumbing problems. c. do not include structural inspections. d. can identify potentially hazardous defects in electrical systems
d Structural, plumbing, and electrical systems should all have preventive maintenance inspection programs to identify problems before they become hazardous
3. Which of the following would protect the property manager from damages not caused by the manager's own negligence or misconduct? a. Standard fire policy b. Employer liability clause c. Workers' compensation d. Indemnity clause
d The indemnity clause in the management contract can require the property owner to "protect" the manager from any damages not caused by the manager's own negligence or willful misconduct.
16. The standard insurance policy will NOT cover damages from a. fire. b. hail. c. tornadoes. d. flooding
d The standard insurance policy will not insure damages as a result of flooding. Flood insurance must always be purchased separately.
5. The absorption rate is determined a. from the property analysis. b. from the neighborhood analysis. c. from the class of the building (i.e., Class A, B, C, or D). d. by calculating the number of square feet that have historically been leased per year.
d When analyzing demand for office space, the property manager must determine the absorption rate, or the number of square feet that have historically been leased in the market area.
11. The prevailing concern in leasing retail space in a shopping center is the a. business experience of the tenant. b. financial qualifications of the tenants. c. requirement of an equal mix between regional chains and local firms. d. mix of tenant types.
d. The mix of tenant types is a prevailing concern when leasing retail space in a shopping center because stores should be placed so that traffic generated by one benefits the others and so that competition is not a detriment.
3. In managing condominiums and cooperatives, emphasis is on managing for a. value. b. profit. c. the short term. d. absentee owners
a Condominium and cooperative management is concerned mainly with maintaining the integrity of the premises
6. When managing a manufactured home park, income can come from all of the following sources EXCEPT a. providing nursing services. b. renting the site. c. renting the house. d. providing a laundromat on-site.
a A manager of a manufactured home community is unlikely to provide nursing services
6. Which of the following factors was MOST important in the selection of office facilities, according to one survey? a. Cost b. Bus and highway accessibility c. Property environment d. Labor for building maintenance
a A survey conducted by the Journal of Property Management found that, on the average, cost was the overriding concern for most respondents, followed by bus and highway accessibility, environment of the property, and labor market, in that order
16. If an office building lease does not prohibit assignment or subletting, the tenant may assign the space a. freely. b. only to an associated corporation. c. only with any increase being split with the owner. d. after hiring an attorney to obtain full rights to assign the lease.
a A tenant may assign the space freely unless the lease contains a provision requiring the landlord's written approval and sufficient notice for subletting or assignment
5. Speculative construction of shell industrial buildings a. permits tenants rapid occupancy to their specifications once their lease is signed. b. has not been successful in areas experiencing rapid population growth. c. works best if the building is designed for special-purpose use. d. is not permitted under local building codes
a After signing a lease with a tenant, investors can finish a building in a short time, usually no more than 90 days. This system has been particularly successful in areas experiencing a rapid increase in population
16. Public housing projects for low-income families a. have traditionally been the responsibility of local government. b. include only newly built projects. c. do not involve participation with the private sector. d. were authorized by HUD in the 1940s
a Although public housing projects have traditionally been the responsibility of local governments, under the 1968 Housing and Urban Development Act, the FHA was authorized to encourage private participation in the development and construction of housing for low-income families
12. Which is the MOST effective method of renting apartments? a. Classified ads b. Display ads c. Billboards d. Radio commercials
a Because of its wide audience, newspaper classified advertising is the major vehicle for renting apartments
20. Although cash flow projections appear to be complex a. they are based on figures from the data already gathered. b. the property manager can get the owner's assistance in preparing them. c. they are simple in design and do not contrib-ute to the owner's decision making. d. they are not complex, because they have no impact on tax returns.
a Cash flow projections appear to be complex, but they deal only with previously used data to show the effect that the investment property has on the owner's income in terms of tax benefits
12. All of the following are used as incentives to entice industry to an area EXCEPT a. special taxes levied on new businesses. b. private industry councils. c. special tax incentives. d. industrial revenue bonds.
a Levying a special tax on a new business would discourage an industry from moving to an area. Special tax incentives, private industry councils, and industrial revenue bonds are all designed to encourage an industry to locate to a given locale
19. The Standard Manual of Accounting for Shopping Center Operations is published by the a. Urban Land Institute. b. Institute of Certified Public Accountancy. c. International Council of Shopping Centers. d. Building Owners and Managers Institute
a The Standard is published by the Urban Land Institute and provides retail property managers with a standardized system for reporting income and expense
14. What is the gross floor area of a one-story plant with a constant ceiling height of 11 feet and the following floor plan? a. 4,500 sq. ft. b. 4,464 sq. ft. c. 5,000 sq. ft. d. 43,964 sq. ft.
a The answer is 4,500 sq. ft. Area = 90′ (length) × 50′ (width)= 4,500 sq. ft.
8. The base rate for an office building a. should reflect the amenities of the space and competition in the area. b. is the lowest possible dollar-per-square foot figure. c. is set according to BOMA/ANSI criteria. d. should be calculated according to the New York method.
a The base rate should be significantly higher than the minimum rate and should reflect the features of the property and its current value relative to similar buildings in the area.
13. The management fee for a condominium generally is a. prorated among the occupants according to their interests in the property. b. expressed as a percentage of revenue. c. divided on a per-unit basis. d. greater on units sublet by their owners
a The board of directors or owners' association may allocate to each resident a prorated amount of the management fee, which should be a flat fee and not a percentage fee. This prorated amount is based on the occupant's share of ownership in the property
6. On which factor of the market analysis should rents should be based? a. Comparable value to other properties b. Age of the property c. Employment and income data d. U.S. Census Bureau statistics on population density
a The comparative analysis measures and records data such as size, location, amenities, and rental structures for buildings similar to the subject property. The relative market value of the space then can be set and base rental established for each type of apartment.
9. Showing industrial space to prospects a. often involves showings to several persons at the same time, each interested in a different aspect of the property. b. does not differ from showing office property. c. involves local chamber of commerce officials. d. should be done by a broker who is a member of the SIOR.
a The industrial property manager often has to show a building to a group, and invariably, members of the group will split up to explore their separate concerns
3. Which of the following are generally less profit-able because they require more management time? a. Scattered site housing b. Loft conversions c. Multifamily elevator building d. Garden apartments
a The principal differences between managing scattered sites (single-family homes) and managing apartment buildings centers on geography and time. Because homes are located in various locations, showing property to prospective tenants generally involves unproductive travel to and from each location
1.Unlike a manager of an investor-owned apartment building, the manager of a cooperative or condominium has no responsibility for maintaining a. occupancy levels. b. common areas. c. communication with owners. d. administrative functions.
a The property manager of a cooperative or a condominium works for a group of owner-occupants and therefore has no responsibility for maintaining occupancy levels.
12. The ratio of rentable space to usable space is sometimes called the a. loss factor. b. BOMA method. c. lead factor. d. New York factor
a The ratio of rentable space to usable space is sometimes called the loss factor, a reflection of the efficiency of space utilization on a single-tenancy floor.
19. Collection of rent from tenants in subsidized units a. should follow the same firm policy as in privately owned housing. b. may be flexible because of the subsidies being paid. c. is not of concern because subsidies paid will make up for any losses. d. should allow longer grace periods than a private project.
a The system for rent collection in subsidized units should be as inflexible as in privately owned housing. If delinquencies are tolerated then mortgage and expense payments on the property could be delayed, in addition to rental rates eventually having to be raised to cover the delinquencies
5. Generally, property taxes are assessed separately on each unit in a a. cooperative. b. condominium. c. limited partnership project. d. time-share project.
b Condominium owners finance their own units and real estate taxes are assessed on an individual basis.
1. Industrial real estate is classified according to a. nonconvertibility. b. adaptability. c. distribution factor. d. services provided
b Depending on their adaptability, industrial land and buildings can be classified as general purpose, special purpose, or single purpose.
18. Negotiations for tenant improvements are the MOST complex in a. newly opened centers. b. centers where a long-term tenant has vacated. c. triple net lease negotiations for a freestand-ing building. d. buildings where there is little deferred maintenance.
b In older centers, when a new tenant moves into a previously occupied space, negotiation of tenant improvement expenditures is complicated. It is difficult to differentiate between those improvements that accrue to the tenant's advantage only and those that correct deferred maintenance or increase the inherent value of the property itself.
8. In MOST states, the Articles of Incorporation a. are more stringent than rules and regulations for most cooperatives. b. establish owners' associations under most state laws. c. prohibit time-share arrangements. d. require independent professional management of the owners' association.
b Laws in most states enable and regulate the formation and control of condominiums. They define the property, common elements, easements, and type of ownership
9. The MOST effective method for finding shopping center tenants is a. brochures. b. personal contact. c. direct mail. d. use of public relations firms
b Personal contact solicitation is probably the most effective method of finding shopping center tenants, especially for small properties.
6. Which of the following is a characteristic of stor-age space? a. High investment risk due to tenant instability b. Greater liquidity than light assembly plants c. Limited demand in cold weather d. Greater need for remodeling than office space when leases are renewed
b Storage space, or buildings that are general purpose, require less customization and have tenants who tend to relocate more frequently. As a result, the investment risk of such property is lower and the liquidity higher.
4. Which is a special consideration when managing duplexes and triplexes? a. Showings to prospective tenants do not require many trips to the property. b. Tenants should have a high degree of compatibility. c. Return on investment is quite high. d. Repairs do not require much management time.
b Tenants must be compatible, especially if duplexes and triplexes are in buildings with front, side, and backyards that must be maintained. These common areas require harmonious cooperation among occupants.
12. Studies of tenant mix with regard to percentage of space allocated to various types of stores, based on their merchandise line, have been made by a. Building Owners and Managers Institute. b. International Council of Shopping Centers. c. Institute of Real Estate Management. d. National Association of Corporate Real Estate Executives
b The International Council of Shopping Centers has compiled industry standards to show the percentage of total shopping center space typically allotted to each type of store
17. An industrial building of 11,000 square feet cost $370,500, and the owner wants a 12% annual return on the investment. The minimum rent per square foot the manager should obtain for the space is a. $2.22. b. $4.04. c. $6.23. d. $7.37.
b The answer is $4.04. $370,500 × .12 (desired annual return) = $44,460 ÷ 11,000 sq. ft. building = $4.04 per sq. ft.
13. A one-story plant occupying 200,000 square feet is located on a site containing 600,000 square feet. What is the structural density of the property? a. 30% b. 33% c. 40% d. 12%
b The answer is 33%. 200,000 sq. ft. (plant site) ÷ 600,000 sq. ft. (land site) = 33% structural density.
10. The initial agreement for management of a new condominium is usually between the manager and the a. president of the owners' association. b. developer of the project. c. board of directors of the owners' association. d. mortgage company
b The initial agreement for a new condominium is drawn up between the developer, acting on behalf of the owners, and the property manager. Not until the board of directors is elected does control pass from the developer into the hands of an owners' organization.
10. The show list of apartments to be rented a. should include all vacant apartments. b. is designed for use by the manager. c. is for use by the owner. d. is updated monthly.
b The manager uses this list to show specific apartments available for inspection by prospects.
7. What is the basis for sound tenant relations? a. Numerous rules b. Open lines of communication c. Employing a public relations specialist d. Slow response to maintenance requests
b The manager will build mutually satisfactory landlord-tenant relationships by opening the lines of communication with tenants
2. Which of the following is typical of a neighbor-hood center? a. Incorporates shopping for about 100,000 people b. Serves an area approximately three miles in diameter c. Contains about 10,000 to 30,000 square feet d. Anchored by a junior department store
b The neighborhood shopping center, approximately 100,000 square feet, is designed to provide for customers within a 1.5 mile radius, or 3 miles in diameter
11. What tool can the manager use as a control for marketing and as a source of feedback on market-ing success or failure? a. Ready-to-rent list b. Show list c. Maintenance supervisor's completed work order list d. Price list
b The show list can be used as a control guide for the marketing program. If a traffic count of showings is kept in conjunction with this list, it will also serve as a source of feedback on its success or failure.
9. An older building, recently completely renovated, is located in a popular area amid several prestigious brand new buildings. By BOMA standards, the older building would be classified as a. A. b. B. c. C. d. D.
b This is a Class B building: older, fully renovated to modern standards, prime location, high occupancy, competitive rates
18. Under HUD Section 8 housing, a. the tenant gets housing at no cost. b. housing is rented on a subsidized basis. c. the tenant pays up to 50% of his or her adjusted monthly income. d. the standards for eligibility based on income are the same throughout the United States.
b Under HUD Section 8, housing is rented on a subsidized basis, with the tenant paying up to 30% of his/her adjusted monthly income. Income eligibility for occupants varies according to geographic area and number of dependents in the family.
2. A tenant receiving minimal services MOST likely lives in a a. garden apartment. b. walkup apartment. c. multistory elevator building. d. luxury apartment building
b Walkup apartments are usually found in urban areas and the tenant probably receives the least in the way of extra services and facilities.
11. A labor-intensive industry a. is generally unionized. b. does not require plant facilities with a large parking area. c. has a high ratio of employees per acre. d. requires few in-plant facilities for workers
c A labor-intensive industry, using highly skilled personnel, will have a higher concentration of employees per acre than a labor-extensive industry
19. A recapture provision a. is used by the IRS in assessing penalties for undeclared rental income. b. gives the tenant maximum control over space that may not be needed in the future. c. is for the benefit of the landlord. d. allows the tenant to sublease to a subtenant of his or her choice.
c A recapture provision gives the landlord the right to recover any space that the tenant is unable to occupy or sublease and gives the landlord maximum control of the length of tenants' leases and the economic terms of tenancy agreements.
10. In addition to regular duties, the manager of a mini-storage area may also be required to furnish a. remodeling. b. utilities. c. additional security. d. social activities
c An apartment and office is often provided for a resident manager of a ministorage facility, and the manager often needs to provide additional security in addition to marketing and showing space, leasing, maintaining the grounds, maintaining tenant relations, and monitoring the usage to which the space is put.
2. While longer lease terms are most desirable, to protect the owner from missing out on rising market rates, the lease should contain a. a recapture clause. b. right to assign clause. c. an escalation clause. d. right to sublet clause.
c An escalation clause protects the owner who has entered into a long-term lease by raising the rents to keep pace with the unavoidable annual increases in real estate taxes and operating expenses in addition to keeping up with anticipated increases in market rents.
9. An apartment building consists of ten one-bedroom apartments renting for $180; ten two-bedroom units renting for $210; and ten three-bedroom units that rent for $240. All of the units are rented except for four three-bedroom units. The vacancy rate of the three-bedroom apartments can be expected to decrease by 10% (one of the four vacant will rent) with a $10 rental cut. The property manager should establish which of the following rental schedules? a. One-bedroom units at $180; two-bedroom units at $210; three-bedroom units at $230 b. One-bedroom units at $190; two-bedroom units at $220; three-bedroom units at $250 c. One-bedroom units at $190; two-bedroom units at $220; three-bedroom units at $230 d. Rental schedule should remain the same
c An occupancy rate of 100% for the onebedroom and two-bedroom units could justify a rent increase, with the three-bedroom units then having a rent reduction of $10 each.
14. Which of the following should be carefully explained to tenants? a. When rental payments can be late b. Racial composition of the complex c. When and where rent must be paid d. How to unstop a toilet
c Because many tenants do not take the time to carefully read the lease that they are signing, many managers will take the extra time to highlight key clauses such as when, where, and how rent is to be paid.
1. Before the advent of shopping centers, retail mer-chants tended to congregate a. in scattered neighborhood centers. b. along major roads leading into town. c. in a central business district near major pub-lic transportation junctions. d. in no particular pattern.
c Before the advent of shopping centers, retail merchants tended to congregate in areas accessible to a large number of people, and the result was the establishment of a central urban district located at the focal point of public transportation facilities.
11. Condominium and cooperative managers generally use the same financial reporting system as that used by a. certified public accountants. b. treasurers of corporations. c. managers of apartment buildings. d. owners of single-family homes.
c Condominium and cooperative managers must prepare an annual operating budget, monthly income and expenditure statements, and yearly cash flow reports, but these reports are modifications of the financial reports used by apartment managers due to the complex system of ownership and that the residents are also the owners
4. The condominium legal structure has been more popular than the cooperative because a. more condominiums have been built. b. the occupant is responsible for the interior of the unit occupied. c. condominium owners do not risk losing their units in event of default of the owning association. d. condominium owners may hire professional property managers.
c Condominium owners own their units in fee simple, and the financial failure of any one owner will not affect the others. On the other hand, a cooperative is owned by a corporation and is dependent on every lessee's paying his or her pro rata share.
7. Developing a sense of community spirit is often useful in encouraging referrals in a. a loft building. b. subsidized housing. c. manufactured home parks. d. office parks.
c Creating and inspiring a community feeling is one of the best ways to foster referrals and waiting lists in a manufactured home park
8. Maintaining litter-free grounds and well-trimmed lawns are examples of a. show lists. b. a rental center. c. curb appeal. d. ready-to-rent.
c Curb appeal not only helps attract good tenants, it helps to maintain a positive attitude among current residents.
13. When preparing a market analysis on an office property, the manager should pay close attention to present market conditions and a. average vacancy rates. b. past economic trends. c. current economic trends. d. accessibility to public transportation
c Current economic trends are as significant as present market conditions when assessing the supply and demand for office space in an area.
15. Fannie Mae regulates condominiums a. through the Community Associations Institute. b. in cooperation with HUD. c. by prescribing standards for condominium mortgages that it purchases in the secondary market. d. by veto power over the actions of the board of directors.
c Fannie Mae prescribes standards that must be met before condominium mortgages may be sold on the secondary market. Fannie Mae regulations require, for example, that developers turn over a condominium association to the owners as soon as a specific percentage of units have been sold and that reserve funds for major repairs be established.
4. An industrial company has just completed build-ing a factory to exact specifications. Now it wants to pull its equity out to use for other business pur-poses. Which of the following would MOST likely be utilized to realize this objective? a. Contract for deed b. Installment sale c. Sale-leaseback d. Purchase money mortgage
c In a sale-leaseback arrangement, the corporation gets back its capital investment so that the funds can be reinvested in the business.
20. Proper maintenance of MOST office buildings differs from the maintenance of residential buildings in which of the following ways? a. Maintaining proper lighting b. Elevator operation c. Nighttime cleaning of tenant spaces d. Cleaning of common areas
c Management is usually responsible for cleaning tenants' interior spaces. They must clean at night because the offices are used and occupied during the day
9. When a manager is concerned with the physical design of the property and who may have to handle social events and medical emergencies, he or she may be managing a a. condominium. b. cooperative. c. housing for the elderly. d. planned unit development
c Managers of housing for the elderly must have a real affinity for the aging population and are called upon to facilitate social events, medical emergencies, provide most housekeeping, and provide meals as well as manage the traditional operating reports to owners.
20. HUD contracts with property managers of subsidized housing a. vary widely from place to place. b. require the property manager to develop report forms. c. are generally for a term of years. d. are without regard to qualification for the work.
c Managers who work as independent contractors for HUD usually are employed under a contract for a term of years and duties include taking over the property, preparing repair specifications, and submitting financial reports
2. A PUD is similar in management to a(n) a. triplex. b. public housing development. c. condominium. d. investor-owned apartment project.
c Managing a PUD is very similar to managing a condominium, in that the property manager is expected to see that the property is maintained while at the same time keeping fees as low as possible.
14. The initial sellout of cooperative and condominium properties is a. best done with television advertising. b. often handled by the first homeowners to buy units. c. usually accomplished through display and classified ads. d. first registered with the Securities and Exchange Commission.
c Most large condominium and cooperative projects are advertised in newspapers and local magazines because that form of media publicity can be a cost-effective means of presenting the project to the buying public.
7. MOST prospective tenants interested in retail space find it by a. looking for leasing sites in the classified ads. b. responding to canvassing by the property manager. c. driving through the area in which they wish to locate. d. getting referrals from brokers.
c Most prospective tenants interested in retail space find it by driving around an area and looking for signs.
17. The manager of low-cost housing should consider employing a person to handle tenant relations because a. tenants try to take advantage of management with their complaints. b. this person can save the manager time by screening tenant complaints. c. this person can provide extra service to the tenants and gain their cooperation. d. supervising maintenance is a full-time job for the manager
c Rapport between tenants and management can be improved by hiring a person with skills or training such as those demonstrated by a social worker to handle tenant relations. This individual can act as a conduit of information from the residents to the manager and can assist with programs involving tenant participation
11. The New York method has NOT achieved wide acceptance because a. the measurement is too complicated. b. most property managers are suspicious of bigcity innovations. c. it accounts for all of the construction area of a building and is difficult to "sell" to prospects. d. landlords resist it.
c The New York method is not popular in some areas, due to the difficulty of convincing prospective tenants that they should pay for stairwells and elevator shafts, space they cannot actually occupy.
16. How is the rent factor for industrial property expressed? a. Dollars per square yard per month b. Dollars per cubic foot per year c. Percentage of gross return on the leased property d. Dollars per square foot per year
c The annual rental rate for an industrial property is usually based on the owner's rent factor, which is calculated using the percentage of gross return the owner wants to earn on the investment.
15. A variable scale percentage lease sets the monthly rental rate at 6% of gross sales up to and including $15,000, plus 5% of gross sales in excess of $15,000 but not in excess of $30,000, plus 4% of gross sales in excess of $30,000. What would the rental pay-ment be if gross monthly sales were $42,000? a. $1,650 b. $2,070 c. $2,130 d. $2,250
c The answer is $2,130. ($15,000 × .06) = $900 + ($15,000 × .05) = ($750 + $12,000) × .04 = $480
4. Which type of shopping center draws customers from a five-mile radius? a. Neighborhood b. Regional c. Community d. Strip
c The community shopping center draws customers from a 5-mile radius, on about ten acres, and includes from 20-70 stores
17. A recapture clause in a shopping center lease a. is the same as one in an office lease. b. refers to assignment and subletting. c. allows the landlord to terminate a percent-age lease if a certain level of gross sales has not been achieved. d. refers to provisions in the Internal Revenue Code.
c The recapture clause in a shopping center lease is a right by the landlord to terminate a percentage lease if gross sales have not reached the level anticipated during negotiations and does not refer to assignment or subletting.
16. Responsibility for controlling the daily operations of an apartment building rests with the a. on-site janitor. b. property manager. c. resident manager. d. on-site maintenance employee
c The resident manager is responsible for the daily physical operation of the building, whereas the property manager oversees the general welfare of several buildings.
17. Preventive and corrective maintenance of resi-dential units is generally coordinated by the a. maintenance supervisor. b. supervising property manager. c. resident manager. d. assigned maintenance person
c The resident manager is usually responsible for supervising all maintenance activities
19. Which of the following typifies the property man-ager's role in industrial property maintenance? a. Leases are generally gross leases, so there is little requirement for the property man-ager's involvement. b. Few tenants hire professional clean-ing crews, so the property manager must arrange for daily cleaning of tenant space. c. Tenants provide much of the interior maintenance required for their own space through their own facility operations, so property managers generally need not be concerned with maintaining tenant space. d. Maintenance steps differ significantly from residential, office, or commercial property
c The steps involved in the upkeep of industrial property are basically the same as those for residential, office, or commercial property. However, because tenants assume some or all of the maintenance of their interior spaces, industrial property managers generally only need to maintain the grounds and building exterior.
15. The manager measures all of the space on one floor. Then the manager subtracts the square footage for the restrooms, janitor closets, and elevator. The resulting square footage is called a. dominant area. b. construction area. c. usable area. d. rentable area
c The usable area is the number of square feet that can actually be occupied. It excludes portions of the building normally associated with the core of the building, such as restrooms, janitor closets, and rooms containing equipment for the building.
16. Overlapping obligations of landlords, co-owners, and tenants are customarily set forth in a. the property manager's rules and regulations for tenant conduct. b. franchise agreements. c. reciprocal easement agreements. d. Library of Shopping Center Forms for Man-agement and Operations.
c These overlapping obligations of the landlord, co-owners, and tenants are set forth in the basic documents establishing the center, primarily in the reciprocal easement agreement
3. A building is still quite usable and in fairly good condition. However, the supporting pillars are placed only ten feet apart and the walls are solid. It is nearly impossible to thread computer cable in the walls. This property is a. currently unmarketable. b. physically obsolete. c. functionally obsolete. d. technically depreciated.
c This property is functionally obsolete. Although it is physically intact and can be used for some purposes, the fact that the support pillars are so close together and that it is difficult to "hide" computer cables may induce prospective tenants to seek a building with a more modern design
5. Neighborhood boundaries are important in a resi-dential market analysis because a. they influence transportation facilities. b. they affect employment data. c. they dictate the type of construction by affecting zoning. d. economic conditions in the neighborhood may affect the rental schedule.
d Economic conditions in the neighborhood will definitely affect the rental schedule.
1. Which of the following types of apartment com-munity is MOST likely to be located in downtown urban areas? a. Garden apartment complex b. Walkup apartments c. Multistory elevator building d. High-rise luxury property
d A high-rise luxury property will more likely be located in a downtown urban area or any area where land is scarce and expensive. The building goes up, not out.
15. Which of the following leases describes a common industrial lease? a. A gross lease puts most of the basic prop-erty expense on the tenant. b. A straight percentage lease requires the tenant to assume real estate tax and assess-ment payments in addition to the rental payment. c. A simple-net lease requires payment of the mortgage in addition to taxes in addition to rent. d. A triple-net lease requires the tenant to pay taxes, assessments, insurance, and mainte-nance in addition to the rent
d A lease for an industrial tenant is most often a triple net lease under which the tenant pays the taxes, assessments, insurance, and maintenance in addition to the rent. The gross lease puts most of the expense on the landlord and is generally used for residential leasing. Percentage leases are used in retail and the tenant would not make a mortgage payment for the landowner!
6. A mixed-use development encompasses a. single-family, duplex, and multifamily hous-ing in one subdivision. b. a mixture of light, medium, and heavy indus-try in a single development. c. tenants of various ethnic backgrounds. d. a combination of two or more types of uses, such as retail, office, and residential in the same complex
d A mixed-use development generally includes a combination of retail, office, and residential areas.
5. Which of the following businesses require the greatest number of parking places? a. Fabric store b. Bike shop c. Dry cleaners d. Restaurant
d A restaurant will have the most demand for parking because there are more customers who stay longer.
8. What is the primary objective of the industrial manager? a. Developing planned industrial parks b. Arranging for a compatible tenant mix c. Finding a location with the lowest transpor-tation costs d. Matching a particular property with a spe-cific firm
d Because of the nature of industrial property, it is essential that the manager match tenant and location by analyzing the market and qualifying prospective tenants
15. Of the following, which is MOST likely to be pre-pared by the resident manager? a. Monthly income expense statement b. Semiannual balance sheet c. Operating budget d. Property condition, work performed, and jobs anticipated in the following week
d Because the property manager is not usually in daily contact with each building, the resident manager should submit weekly reports on the condition of the property, the work performed, and jobs anticipated for the upcoming week.
1. All of the following are useful when marketing office property EXCEPT a. brochures. b. signs. c. direct mail d. classified ads.
d Brochures, signs, and direct mail are useful when marketing office property. Classified ads are more useful when marketing residential property.
10. Large retail properties are promoted through dis-play ads usually placed in a. newspaper pullout sections. b. the real estate advertising section of newspapers. c. ads in the classified section of the local newspaper. d. the financial section of metropolitan newspapers.
d Display ads are usually placed in the financial section of metropolitan papers to promote large retail properties
20. Smaller living quarters and the increasing need to store many business records have led to the popularity of a. mixed use developments. b. planned use developments. c. foreign trade zones. d. ministorage areas
d Ministorage units fulfill a latent need within the real estate market by providing space for homeowners to store surplus possessions and businesses a place for old records that would otherwise occupy more expensive office space.
14. Open or closed work spaces for more than one person are referred to as a. office space. b. special facilities space. c. miscellaneous areas. d. multipersonnel areas.
d Multipersonnel areas are open or closed work spaces for more than one person, as opposed to single office spaces, which are meant to serve a single occupant
7. Office space is designated Class A, B, C, or D on the basis of guidelines a. based on absorption rate. b. officially approved by law and published by BOMA. c. set by the local zoning boards. d. based on age, location, and market position
d Office space is often referred to as Class A, B, C, or D, based on unofficial guidelines published by the Building Owners and Managers Association International, and is determined by three major factors: age, location, and market position (rental rates).
17. Generally, the cost of tenant alterations and remodeling expenses above the building standard in an office property is the responsibility of the a. property manager who negotiated the lease. b. split equally between the lessee and lessor. c. lessor. d. lessee.
d Tenants requiring alterations or additions beyond those itemized on the building standard list must contract and pay for these services independently.
20. Accounting statistics of centers may be compared to other centers by referring to the a. Experience Exchange Report. b. International Council of Shopping Centers' Standard Marketing for Shopping Centers. c. reports of the National Association of Certi-fied Public Accountants. d. Dollars & Cents of Shopping Centers
d The Dollars & Cents of Shopping Centers publishes the industry-wide compilation of financial reports on shopping centers from which a property manager can determine how well the shopping manager is doing compared to similar centers.
14. A merchant signs a lease that sets a minimum monthly rental rate of $600, or 6% of gross sales. If rent is computed on a monthly basis, what is the total amount of rent paid in the fourth quarter if gross sales were $8,000 in October, $11,000 in November, and $12,000 in December? a. $1,860 b. $1,800 c. $1,920 d. $1,980
d The answer is $1,980. ($800 × .06) = [$480] $600; ($11,000 × .06) = $660 + ($12,000 × .06) = $720.
19. All of the following could be used as an additional revenue stream EXCEPT a. cleaning deposits. b. parking and storage fees. c. vending and laundry machines. d. deposits per child.
d The answer is deposits per child. The fair housing laws prohibit charging deposit fees based on the number of children who will occupy the dwelling.
18. The purpose of a building standard is to a. ensure that the building is finished in compliance with fire codes. b. fix the amount the prospective tenant must pay, in addition to rent, for all alterations that need to be made to the space. c. fix insurance rates uniformly in any given state. d. list those amenities and alterations that a building owner will provide to an incoming tenant without charg
d The building standard outlines the amenities and alterations that the landlord furnishes as part of the rent. Tenants (lessees) requiring alterations or additions beyond those itemized on the building standard list must contract and pay for these services independently
12. With regard to insurance, the condominium owner must a. buy separate flood insurance. b. provide extra liability insurance. c. be written in as a co-insured on the common elements. d. purchase an HO-6 condominium policy
d The condominium owner must purchase a condominium policy, commonly called HO-6.
10. According to the BOMA method of measuring office space, a. rentable space includes elevator shafts and lobbies. b. columns used to support the building are deducted from the total area. c. a factor must be included giving weight to the availability of in-building parking. d. construction area is determined by a procedure similar to the New York method
d The construction area is computed by measuring to the outside finished surface of permanent outer building walls and is sometimes called the New York method
13. A manager who assumes maintenance responsi-bilities because there is no on-site help is MOST likely found in a. luxury high-rise. b. large garden apartments. c. medium-size garden apartments. d. small walkup apartments.
d The manager of a smaller property with little or no on-site staff should be versatile enough to make minor repairs
3. MOST regional shopping centers are a. U-shaped. b. cluster-design. c. T-shaped. d. dumbbell-shaped
d The stores in shopping centers are generally placed in dumbbell or double dumbbell patterns.
