CRECI Asset and Property Management 2

Question 1

Which metric best measures a commercial property's operating efficiency by comparing operating expenses to gross income?

Accepted Answer

Operating Expense Ratio (OER)

Answer

The Operating Expense Ratio (OER) divides total operating expenses by gross income to measure how efficiently a property is managed.

Question 2

A property manager discovers that a long-term commercial tenant is consistently paying rent 10 days late. What is the most appropriate first step?

Accepted Answer

Issue a formal notice and review the lease cure period provisions

Answer

The manager should issue a formal late notice and reference the lease's cure period before escalating to legal action.

Question 3

In commercial real estate asset management, what does 'disposition strategy' refer to?

Accepted Answer

A plan for selling or exiting an asset at the optimal time

Answer

Disposition strategy outlines when and how an asset will be sold or otherwise exited to maximize investor returns.

Question 4

Which lease structure requires the tenant to pay base rent plus all operating expenses, including taxes, insurance, and maintenance?

Accepted Answer

Triple net (NNN) lease

Answer

A triple net lease passes taxes, insurance, and maintenance costs directly to the tenant in addition to base rent.

Question 5

A commercial property's NOI is $500,000 and the market cap rate is 6.25%. What is the estimated property value?

Accepted Answer

$8,000,000

Answer

$500,000 ÷ 0.0625 = $8,000,000 is the estimated value using direct capitalization.

(CRECI) Commercial Real Estate Certification Institute Practice Test