Real Estate Investing Asset and Property Management 3

Question 1

Under a triple net (NNN) lease, which expenses does the tenant typically pay?

Accepted Answer

Base rent plus property taxes, insurance, and maintenance

Answer

In a NNN lease, the tenant pays base rent plus the three 'nets': property taxes, building insurance, and maintenance costs.

Question 2

A property manager discovers that a unit's HVAC system needs $8,000 in repairs. The correct funding source is:

Accepted Answer

Capital expenditure reserve

Answer

Major system repairs like HVAC are capital expenditures that should be funded from the CapEx reserve, not monthly operating cash flow.

Question 3

Which of the following is considered a Fair Housing Act protected class under federal law?

Accepted Answer

National origin

Answer

The federal Fair Housing Act protects seven classes: race, color, national origin, religion, sex, familial status, and disability.

Question 4

What does the term 'vacancy rate' represent in property management?

Accepted Answer

The percentage of units not currently rented

Answer

Vacancy rate is calculated as vacant units divided by total units, expressed as a percentage, and directly impacts gross rental income.

Question 5

A property manager collects a $2,000 security deposit. Where must this typically be held?

Accepted Answer

In a separate trust or escrow account

Answer

Most states require security deposits to be held in a separate trust or escrow account to protect tenant funds from being used for operations.

Real Estate Investing Practice Test