Real Estate Investing Asset and Property Management 2

Question 1

A landlord wants to minimize vacancy between tenants. Which strategy is most effective?

Accepted Answer

Begin marketing 60 days before lease expiration

Answer

Starting marketing 60 days before a lease ends reduces vacancy gaps by attracting new tenants before the current one leaves.

Question 2

What does a gross lease mean for a commercial tenant?

Accepted Answer

The landlord covers all operating expenses within the rent

Answer

In a gross lease, the landlord collects a flat rent and pays all operating expenses such as taxes, insurance, and maintenance.

Question 3

Which metric best measures a property manager's effectiveness at controlling expenses?

Accepted Answer

Expense ratio

Answer

The expense ratio (operating expenses divided by gross income) directly shows how efficiently a manager controls costs relative to revenue.

Question 4

A tenant refuses to vacate after their lease expires. This situation is called a:

Accepted Answer

Holdover tenancy

Answer

A holdover tenancy occurs when a tenant remains in possession of a property after the lease term ends without the landlord's formal renewal consent.

Question 5

Which reserve account is used specifically to fund major capital improvements on a property?

Accepted Answer

Capital expenditure reserve

Answer

A capital expenditure (CapEx) reserve is set aside to pay for large, infrequent improvements like roof replacements or HVAC systems.

Real Estate Investing Practice Test