Financial Management Flashcards
6 cards from real CPM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Financial Management flashcards as text
Which of the following is a common method to estimate property value using income?
Answer: Income capitalization approach
The income capitalization approach estimates value by dividing NOI by the market cap rate, reflecting a property's income-generating capacity.
What is 'loss to lease' in apartment management?
Answer: The difference between market rent and actual contracted rent on existing leases
Loss to lease represents the gap when in-place lease rents are below current market rents, reducing potential gross income.
Which financial report shows a snapshot of assets, liabilities, and equity at a specific point in time?
Answer: Balance sheet
A balance sheet (statement of financial position) captures assets, liabilities, and owner's equity at a single point in time.
What is 'straight-line depreciation' used for in property management accounting?
Answer: Allocating the cost of a capital asset evenly over its useful life
Straight-line depreciation spreads an asset's cost equally across its IRS-defined useful life (e.g., 27.5 years for residential property).
A property has a GPI of $500,000, vacancy loss of $25,000, and other income of $10,000. What is the EGI?
Answer: $485,000
EGI = $500,000 − $25,000 + $10,000 = $485,000.
Which lease structure requires the tenant to pay base rent plus their proportionate share of property taxes, insurance, and maintenance?
Answer: Triple net (NNN) lease
A triple net (NNN) lease passes taxes, insurance, and common area maintenance costs directly to the tenant beyond base rent.