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
A property's effective gross income (EGI) is calculated as:
Answer: Potential gross income minus vacancy and credit losses plus other income
EGI = Potential Gross Income − Vacancy & Credit Losses + Other Income (like laundry, parking fees), representing actual expected collections.
Which maintenance approach focuses on fixing equipment or systems only after they break down?
Answer: Reactive maintenance
Reactive maintenance addresses issues only after failure occurs, which can lead to higher repair costs and tenant dissatisfaction compared to proactive approaches.
A residential landlord wants to raise rent for a tenant on a fixed-term lease. When can this legally happen?
Answer: Only at lease renewal when the current lease term ends
A fixed-term lease locks in rent for the duration; increases can only be imposed at renewal unless the lease contains a specific escalation clause.
What does 'tenant mix' refer to in the context of commercial real estate management?
Answer: The strategic combination of retail or commercial tenants to maximize foot traffic and synergy
Tenant mix in commercial properties is the deliberate selection of complementary businesses (e.g., anchor store plus specialty retailers) to drive traffic and revenue.
An investor uses a 1031 exchange after selling a rental property. What is the primary benefit?
Answer: Defers capital gains taxes by reinvesting proceeds into a like-kind property
A 1031 exchange allows investors to defer federal capital gains taxes when they sell a property and reinvest the proceeds into a qualifying like-kind replacement property.
Which of the following is a landlord's legal obligation under the implied warranty of habitability?
Answer: Maintaining safe, sanitary conditions including working plumbing and heat
The implied warranty of habitability requires landlords to maintain rental units in a livable condition with functioning essential systems like heat, plumbing, and structural safety.
A property manager is evaluating two vendors for landscaping. Vendor A costs $500/month with a one-year contract; Vendor B costs $600/month with no contract. What is the primary risk of choosing Vendor B?
Answer: Higher monthly cost and pricing unpredictability without a locked contract
Without a contract, Vendor B can raise prices at any time, making budgeting harder even though the flexibility to switch vendors is a benefit.