CCS Financial Analysis for Properties 3

Question 1

In a condominium pro forma analysis, effective gross income (EGI) is calculated by:

Accepted Answer

Subtracting vacancy and credit losses from potential gross income

Answer

EGI = Potential Gross Income − Vacancy Loss − Credit Loss, representing realistic collectible income.

Question 2

A fully funded reserve means the association has saved enough to:

Accepted Answer

Replace each component at the end of its useful life without a special assessment

Answer

A fully funded reserve (100%) means accumulated savings match the proportional deterioration of all reserve components, eliminating the need for special assessments.

Question 3

If a condominium unit's gross rent multiplier (GRM) is 12 and monthly rent is $2,000, what is the estimated value?

Accepted Answer

$288,000

Answer

GRM uses annual rent: $2,000 × 12 months = $24,000/year; Value = $24,000 × 12 = $288,000.

Question 4

Which document provides a forward-looking projection of association revenues, expenses, and reserve contributions for the coming fiscal year?

Accepted Answer

Annual operating budget

Answer

The annual operating budget projects expected income and expenditures, guiding the board in setting assessment levels for the upcoming year.

Question 5

A delinquency ratio of 15% in a condominium association most directly signals:

Accepted Answer

Risk that operating cash flow may be insufficient to cover expenses

Answer

A high delinquency rate reduces collectible assessments, potentially causing cash shortfalls for maintenance, insurance, and debt service.

(CCS) Certified Condominium Specialist Practice Test

(CCS) Certified Condominium Specialist Practice Test

CCS Financial Analysis for Properties 3