CLP Property Evaluation & Analysis 2 — Questions and Answers
Question 1: A leasing professional is calculating the economic occupancy rate for an apartment community. The property has 200 units at a market rent of $1,200/month, but concessions total $15,000/month. What is the economic occupancy rate if gross potential rent is $240,000?
- 93.75% (Correct answer)
- 87.5%
- 91.25%
- 95.0%
Correct answer: 93.75%
Economic occupancy = (Gross Potential Rent - Concessions) / Gross Potential Rent = ($240,000 - $15,000) / $240,000 = 93.75%.
Question 2: When evaluating a competing property, which metric best indicates how quickly units are absorbed by the market?
- Physical vacancy rate
- Absorption rate (Correct answer)
- Turnover rate
- Concession value
Correct answer: Absorption rate
Absorption rate measures how quickly available units are leased over a given time period, indicating market demand strength.
Question 3: A property's net operating income (NOI) is $180,000 and the cap rate in the local market is 6%. What is the estimated market value of the property?
- $2,700,000
- $3,000,000 (Correct answer)
- $1,800,000
- $2,400,000
Correct answer: $3,000,000
Market Value = NOI / Cap Rate = $180,000 / 0.06 = $3,000,000.
Question 4: Which of the following best describes a Class B apartment community?
- Newly constructed with luxury amenities and highest rents
- Older property with average amenities targeting middle-income renters (Correct answer)
- Workforce housing with minimal amenities below market rate
- Historic property requiring significant renovation capital
Correct answer: Older property with average amenities targeting middle-income renters
Class B properties are typically older, well-maintained communities with average amenities serving the middle-income renter segment.
Question 5: A leasing professional is conducting a competitive market analysis (CMA). Which factor would be LEAST relevant when selecting comparable properties?
- Unit size and bedroom count
- Property age and condition
- Owner's personal investment strategy (Correct answer)
- Location and submarket proximity
Correct answer: Owner's personal investment strategy
A CMA focuses on physical and market characteristics of properties, not the owner's personal financial goals.
Question 6: What does the term 'submarket' refer to in multifamily property analysis?
- A below-market rent program for income-qualified residents
- A defined geographic area within a broader market with similar supply/demand dynamics (Correct answer)
- Properties that rank below Class A in quality classification
- Apartment units priced below the metropolitan average
Correct answer: A defined geographic area within a broader market with similar supply/demand dynamics
A submarket is a geographically defined area within a larger market that shares similar economic and demographic characteristics affecting supply and demand.
Question 7: When reviewing a rent roll, a leasing manager notices that 15 of 100 units are month-to-month leases. What is the primary risk this presents?
- Higher maintenance costs per unit
- Increased vacancy exposure due to short notice move-outs (Correct answer)
- Lower gross potential rent calculations
- Reduced ability to charge pet fees
Correct answer: Increased vacancy exposure due to short notice move-outs
Month-to-month leases can terminate with short notice (often 30 days), creating unpredictable vacancy spikes and revenue instability.
CLP Property Evaluation & Analysis 2
A leasing professional is calculating the economic occupancy rate for an apartment community.
The property has 200 units at a market rent of $1,200/month, but concessions total $15,000/month.
What is the economic occupancy rate if gross potential rent is $240,000?