COS Financial Analysis for Properties 3

Question 1

Under HUD Section 8 regulations, what happens to a property's HAP contract if the owner fails to maintain the property in decent, safe, and sanitary condition?

Accepted Answer

HUD may abate or terminate HAP payments until conditions are corrected

Answer

HUD can abate Housing Assistance Payments when an owner fails to maintain required physical conditions under the HAP contract.

Question 2

Which of the following correctly defines 'Cash-on-Cash Return' for a rental property?

Accepted Answer

Annual pre-tax cash flow divided by total equity invested

Answer

Cash-on-Cash Return = Annual Pre-Tax Cash Flow ÷ Total Cash Invested, measuring the return on actual cash equity.

Question 3

A property manager reviews a rent roll showing 10 units at $800/month contract rent but only 8 occupied. What is the Economic Vacancy Loss?

Accepted Answer

$1,600

Answer

Economic Vacancy Loss = 2 vacant units × $800 = $1,600/month for the current period.

Question 4

In HUD-assisted housing, a 'surplus cash' calculation determines:

Accepted Answer

The distributable profit available to the owner after meeting all project obligations

Answer

Surplus cash is the net amount owners of HUD-insured projects may distribute after satisfying operating expenses, reserves, and debt service.

Question 5

Which document provides a forward-looking projection of a property's income and expenses and is commonly required by lenders during underwriting?

Accepted Answer

Pro Forma Income Statement

Answer

A Pro Forma projects future income and expenses, whereas a T-12 reports historical performance.

(COS) Certified Occupancy Specialist Practice Test

(COS) Certified Occupancy Specialist Practice Test

COS Financial Analysis for Properties 3