Asset and Property Management Flashcards
7 cards from real Real Estate Investing practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Asset and Property Management flashcards as text
Under a triple net (NNN) lease, which expenses does the tenant typically pay?
Answer: Base rent plus property taxes, insurance, and maintenance
In a NNN lease, the tenant pays base rent plus the three 'nets': property taxes, building insurance, and maintenance costs.
A property manager discovers that a unit's HVAC system needs $8,000 in repairs. The correct funding source is:
Answer: Capital expenditure reserve
Major system repairs like HVAC are capital expenditures that should be funded from the CapEx reserve, not monthly operating cash flow.
Which of the following is considered a Fair Housing Act protected class under federal law?
Answer: National origin
The federal Fair Housing Act protects seven classes: race, color, national origin, religion, sex, familial status, and disability.
What does the term 'vacancy rate' represent in property management?
Answer: The percentage of units not currently rented
Vacancy rate is calculated as vacant units divided by total units, expressed as a percentage, and directly impacts gross rental income.
A property manager collects a $2,000 security deposit. Where must this typically be held?
Answer: In a separate trust or escrow account
Most states require security deposits to be held in a separate trust or escrow account to protect tenant funds from being used for operations.
Which lease clause allows a landlord to raise rent during a lease term if property taxes increase?
Answer: Escalation clause
An escalation clause allows rent adjustments during the lease term based on increases in specified costs such as taxes, insurance, or a price index.
What is the most common reason investors hire professional property managers despite the added cost?
Answer: To leverage expertise and time savings on multi-unit portfolios
Professional managers bring systems, legal knowledge, and vendor networks that save time and reduce costly mistakes, especially valuable as a portfolio scales.