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
Which document legally authorizes a property manager to act on behalf of the property owner?
Answer: Property management agreement
The property management agreement is a contract that grants the manager authority to collect rent, hire vendors, and make decisions within defined limits on the owner's behalf.
An investor calculates their property's NOI is $60,000 and the cap rate in the market is 6%. What is the estimated property value?
Answer: $1,000,000
Value = NOI ÷ Cap Rate = $60,000 ÷ 0.06 = $1,000,000.
What is 'deferred maintenance' and why is it a risk for real estate investors?
Answer: Repairs postponed that accumulate into larger, more expensive problems
Deferred maintenance refers to postponed repairs that worsen over time, eventually requiring much more costly fixes and reducing property value.
A tenant's lease includes a 'right of first refusal' clause. What does this mean?
Answer: The tenant must be offered the property for purchase before it is listed publicly
A right of first refusal gives the tenant the opportunity to match any purchase offer the landlord receives before selling to a third party.
Which of the following best describes an asset management role versus a property management role?
Answer: Asset managers oversee the investment's financial performance; property managers handle day-to-day operations
Asset management focuses on maximizing investment returns and long-term strategy, while property management handles leasing, maintenance, and tenant relations.
A landlord wants to convert a month-to-month tenancy to an annual lease. What is the proper first step?
Answer: Provide proper written notice as required by state law before changing terms
Changing lease terms for a month-to-month tenant requires advance written notice (typically 30 days) as dictated by state law before new terms take effect.
What is the purpose of an estoppel certificate in commercial real estate?
Answer: To certify the current lease terms and status, typically requested by a lender or buyer
An estoppel certificate is a signed tenant statement confirming current lease terms, rent amounts, and any defaults, used in due diligence by lenders and buyers.