Intro to Prop Management

A resident is offered half off of their first month's rent if they sign an 18-month lease at $1,200/month. What is the effective rent for this lease?

$1,166.67/mo

A 56-unit mid-rise apartment building was constructed on a 1.3 acre parcel of land. What is the density for this construction?

. 43 units-per-acre

A lead-based paint disclosure is necessary for any housing built prior to

1978

Bending Birch Apartments contains 3-story buildings, spread over seven acres in the suburbs of a local city. What apartment type would best describe this property?

A garden apartment

What term best describes the diminishing of a building's value because it's design no longer meets current demands for physical use and/or would require extensive retrofitting costs to meet market needs.

A. Functional Obsolescence

_____________: The actual physical area within the rented premises in which the tenant will operate and have exclusive control and possession.

A. Usable Area

Residential leases are typically ____________.

A. gross leases (Chp 11 pt.2 starts)

A retail tenant is required to pay a minimum rent. If their gross sales exceed a predetermined amount, they can be responsible for additional rent. This best describes a(n) ____________________.

B. percentage lease (end CHP 9)

The standard for building measurement was developed by _______________.

BOMA

Which housing type would most likely be concerned with the "Basic Allowance for Housing?"

C. Military Housing

A lease specifies that the tenant is responsible for a fixed monthly rent amount plus the electric and gas utilities. The remaining expenses for the property are the responsibility of the owner. This best describes a(n) _______________.

C. gross lease

The following property is a/an _______________________.

Cannot be determined

Which of the following laws requires credit bureaus to supply information to a person who has been denied credit?

Fair Credit Reporting Act

Which law protects against discrimination in the sale or rental of housing, based on protected classes (ex. race)?

Fair Housing Act

TRUE or FALSE: Building classifications are absolute. A Class A office building in one city, will be a Class A office building in any city.

False ( chapter 12 start)

The Five Dysfunctions of a Team is written as a non-fiction reference text for practical leadership training.

False (5 Dysfunctions Start)

Which law requires that sex offenders register their address with law enforcement?

Megan's Law

Which are potentially more challenging due to inherent management inefficiencies?

Scattered-site housing

Which housing type is most likely to rent "by-the-bed?"

Student Housing

True or False: Real estate leasing and sales commissions, for both sides of the transaction, are generally paid by the owner of the property.

T

A commercial tenant is looking to lease a 12,500 sf space. The base rent is $14/sf/year. The owner offers a concession to reduce the rent by $1/sf/year for the first year of a five year lease. What is the effective rent for this lease?

$13.80

A marketing campaign costs $5,500. It attracts 37 people to inquire about the property and results in 6 new lease agreements. What is the marketing cost per prospect?

$148.65

A manager proposes to install motion sensors for common area lights to reduce their use when no one is around. The upgrade reduces the electric bill by $2,500 over the course of the year. If the cap rate for this building 6.5%, how much value did this improvement add?

$38,462

A five-plex generates $5,000/mo in rent and pays $2,300/mo in operating expenses. Investors have recently purchased comparable buildings, and considering the risk and income potential and the prices they paid, the average return on investment for a cash purchase is 7.25%. What should we expect this property to be valued at in this marketplace?

$446,897

A tenant leases 3,100 sf of usable space with an "R/U ratio" of 1.08 at $2.25/sf/mo. What would their monthly rent be?

$7,533

Order the following dysfunctions as they would appear in the pyramid. (Answer 1 is the bottom of the pyramid and answer 5 is the top)

1. Absence of Trust 2. Fear of Conflict 3. Lack of Commitment 4. Avoidance of Accountability 5. Inattention to Results (5 dyfunctions end)

A marketing campaign costs $5,500. It attracts 37 people to inquire about the property and results in 6 new lease agreements. What is the conversion ratio from prospects to leases?

16.2% (end chp 8)

Banks consider properties with up to ______ units as residential properties, eligible for special owner-occupied financing options.

4

Which is a combination of home ownership and homesite rental?

A. Manufactured home community

The following image is an example of a _______________. A. A. Monument signMonument sign

A. Monument sign

The following image is an example of a _______________. A. Monument sign B. Banner sign C. Project sign D. Directional sign

A. Monument sign

LEED Certification is a measure of _____________.

A. a building's sustainability practices in its design and operation.

Artificial harmony, not wanting to upset someone or draw attention to oneself over a thought or idea, is best described as which dysfunction?

Fear of Conflict

At the end of the story, which team member voluntarily decides to report to Nick instead of Kathryn, because it would be best for the company?

Jeff

The book begins with the Board of Directors unanimously asking which executive to step down from the position of CEO?

Jeff

All of the following are considered additional revenue EXCEPT

pet deposits.

When Carlos did not have his portion of work completed for the off-site meeting, it would have been easy for the group to go easy on him because he is always the first person willing to help others; however doing this would be an example of which dysfunction?

Avoidance of Accountability

A tenant leases space with a usable area of 25,000 sf, but pays rent based on 30,500 sf to cover their share of common areas of the building. What is this unit's "R/U ratio?"

B. 1.22

Which governing document instructs condominium owners about which maintenance items are covered collectively and which are the responsibility of the individual owners?

Bylaws

When a new commercial lease is signed, the tenant is responsible for operating expense increases over the base year. The base year was $350,000 of operating expenses for the building. The tenant is leasing 12,000 ft of a 48,000 sf building. At the end of the year, the operating expenses totaled $380,000. How much would the tenant be responsible for?

C. $7,500

Which law protects employees and applicants from discrimination in the hiring and employment process?

Civil Rights Act

A manager decides to forego some preventive maintenance procedures, deferring $35,000 of expenses over the course of a year. At a cap rate of 7%, this manager increased the building's value by

D. $0

Which of the following is least likely to be "Other Income" for a residential property?

D. Operating Expense Chargebacks

If the monthly collection from condominium owners is not enough to pay for a repair or improvement, a/an __________________ may be levied to cover the expense.

D. special assessment

The Landlord Tenant Act establishes criteria like _______________.

D. the limits, use, and distribution requirements for a residential security deposit.

A building with a lower "R/U ratio" will likely cost the tenant more per square foot of usable area.

False

Although the team often questioned Kathryn's methods early on, the Board of Directors never doubted her decisions or strategies.

False

At will employment protects employers' rights to terminate an employee for any reason without potential for recourse.

False

Internal promotion of an employee is not recommended because it creates a need to train two positions instead of one, increasing operating costs.

False

Like condominiums, cooperative owners hold an individual deed to their unit which grants them occupancy rights.

False

TRUE or FALSE: A commercial leasing agent should avoid discussing the current tenants of a building during the marketing process, to avoid claims of discrimination.

False

TRUE or FALSE: A property that strictly enforces a "no pet policy" may deny an applicant with an emotional support animal (assistance animal).

False

TRUE or FALSE: It is acceptable to charge a higher rent amount for a 2-bedroom unit occupied by a family of four vs. the same 2-bedroom unit occupied by a couple.

False

TRUE or FALSE: It is considered discrimination and federally illegal if private landlords reject an applicant with a Section 8 Housing Choice Voucher.

False

TRUE or FALSE: Residential leases are usually individually negotiated and unique. One property is likely to have several varying lease agreements, with unique terms, clauses, and tenant obligations for each of its tenants.

False

TRUE or FALSE: Section 8 vouchers allow low-income renters to receive subsidized housing at a tax credit property, but cannot be used in the private market.

False

TRUE or FALSE: The "building out" of a space to suit the needs of a tenant is a costly upfront expense that the owner must pay to secure a long-term tenant.

False

TRUE or FALSE: The smaller the community, the more likely it offers recreational facilities such as swimming pools, tennis courts, patios, exercise rooms, etc.

False

TRUE or FALSE: Unlike residential tenants, commercial tenants do not require applications or qualifying procedures.

False

The dysfunction of "Avoidance of Accountability" applies only to holding oneself accountable for the commitments they have made to the team.

False

The story ends when Green Banana makes an offer to buy DecisionTech, now that the executive team is functioning well and the company has inched up over its competitors. Each of the team members receives a large settlement payout and lives happily ever after.

False

True or False: The tenant is often referred to as the "lessor" in the lease agreement.

False

When working on the five dysfunctions, the order with which you tackle them does not matter because they are independent of one another.

False

true or False: When offering concessions, the textbook recommends reducing the base rent each month instead of offering one-time free rent.

False

T or F: Because commercial properties involve more expensive rental space, they often require more elaborate model units and finishes to attract potential tenants.

False (Chapter 8 Start)

TRUE or FALSE: The property owner's insurance against physical damage protects the building structures, interiors, and resident's items.

False (End Chp. 11 pt.2)

True or False: Residential leases will often contain escalation clauses due to their term length and the unpredictable nature of inflation and expenses.

False (chp 9 start)

Hiring in-house employees will always result in cost savings compared to contracted labor or outsourcing.

False (chp7) Start

Under HUD Section 8 housing,

rent is subsidized based on the resident's income.

Match each team member with their position

Kathryn Chief Executive Officer (CEO) Nick Chief Operating Officer (COO) Martin Chief Technologist Mikey VP of Marketing Jan Chief Financial Officer (CFO) Carlos VP of Customer Service Jeff VP of Business Development JR VP of Sales

Which team member was technically competent but had a condescending tone in their delivery frequently rolling their eyes, and ultimately leading to their no longer being part of the team?

Mikey

A real estate manager spends $750 on a marketing project to lease a vacant apartment. The marketing effort led to the apartment being leased at $975, and is suspected to have saved 15 days of vacancy. Was this marketing effort an effective decision?

No, the net benefit does not outweigh the costs

True or False: Because commercial properties involve more expensive rental space, they often require more elaborate model units and finishes to attract potential tenants. Selected Answer: False

Selected Answer: False

What is the best term to describe unoccupied office space that does not have partition walls, ceiling tiles, electrical, or wall coverings?

Shell space

Which residential property type would you expect to be most "liquid?"

Single-family houses

During negotiations for a commercial lease, the tenant expresses concerns about the construction costs needed to transform the space to fit their business. If the owner is willing, what would be the most appropriate concession to offer for this scenario?

Tenant improvement allowance

Which of the following factors is LEAST LIKELY to influence the number of staff and their level of specialization regarding real estate management?

The neighborhood in which the properties are located

A triplex is listed at $425,000 and generates $4,500/mo in rent. A fourplex is listed at $515,000 and generates $4,900/mo in rent. Which property has a more favorable gross rent multiplier (GRM)?

The triplex has a more favorable GRM because it would take fewer months of rent to equal the sale price. (end chp 11 pt.1)

An investor owns a vacant lot next to their apartment building. The manager proposes doing some site work and gravel, installing a fence, and adding some security cameras of the area at a cost of $68,000. The lot could then be marketed as overflow parking or vehicle storage for campers, boats, and RVs at a cost of $75/mo/space. The finished lot would have 30 spaces, and the manager expects 70% occupancy. The market cap rate for this property is 7.5%. What is the best analysis of this project?

This was a good investment because it increased value by $252,000.

A worker that is eligible to receive overtime pay for hours worked in excess of daily or weekly maximums best defines a non-exempt employee.

True

TRUE OR FALSE: Commercial real estate is often valued using the Income Capitalization Approach. In this approach, when a higher cap rate is applied, it will result in a lower value

True

TRUE or FALSE: Condominium revenue comes almost entirely from assessments to members (owners of units) and is budgeted to meet expenses and reserves.

True

TRUE or FALSE: Condominium units are individually assessed and taxed for property taxes, not the building as a whole.

True

TRUE or FALSE: It is acceptable to charge a different security deposit amount for an applicant that has a poor credit history.

True

TRUE or FALSE: It is acceptable to charge a higher rent amount for a third floor unit than a first floor unit.

True

TRUE or FALSE: More so than with commercial properties, residential tenants have an emotional as well as a monetary value attached to their rented space.

True

TRUE or FALSE: When a resident's lease comes up for renewal, concessions to upgrade or improve the space is a preferred strategy for the owner versus giving an equal monetary concession.

True

The Dysfunction "Lack of Commitment" addresses that commitment does not require consensus or compromise, but rather a platform to debate and hear all arguments before arriving at a decision that must then be committed to fully regardless of personal opinion.

True

The dysfunction of "Inattention to Results" addresses the need to place the team's goals above your own personal ego and success

True

True or False: When negotiating a lease, base rent for a triple-net lease would likely be lower than base rent for a single-net lease.

True

When identifying your target market, which of the following is not one of the four determining factors identified by the textbook?

Zoning

The document containing the company's policies and procedures and employee benefits best defines the _______________.

a. employee manual.

An employer's failure to act in a reasonably prudent manner, such as performing background checks on all new employees, may lead to accusations of ______________ regarding the employer's behavior.

a. negligence (chapter 7 End)

After hours of meaningful debate, the team decided that their overarching goal should be ______________.

acquiring 18 new customers

The calculation of a repayment of a loan, including both principal and interest payments, is better termed _________________.

amortization

The regular monthly assessments for HOA dues should include funding for the reserve account to fund long-range planning of __________________.

capital expenditures

Condominium managers are primarily concerned with

maintaining or improving the value of the property.

Unlike condominium managers, apartment managers are responsible for maintaining

occupancy levels.

Residential properties include spaces where ___________.

people live (start chp 11 pt.1)