Real Estate Investing Asset and Property Management 5

Question 1

A property's effective gross income (EGI) is calculated as:

Accepted Answer

Potential gross income minus vacancy and credit losses plus other income

Answer

EGI = Potential Gross Income − Vacancy & Credit Losses + Other Income (like laundry, parking fees), representing actual expected collections.

Question 2

Which maintenance approach focuses on fixing equipment or systems only after they break down?

Accepted Answer

Reactive maintenance

Answer

Reactive maintenance addresses issues only after failure occurs, which can lead to higher repair costs and tenant dissatisfaction compared to proactive approaches.

Question 3

A residential landlord wants to raise rent for a tenant on a fixed-term lease. When can this legally happen?

Accepted Answer

Only at lease renewal when the current lease term ends

Answer

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.

Question 4

What does 'tenant mix' refer to in the context of commercial real estate management?

Accepted Answer

The strategic combination of retail or commercial tenants to maximize foot traffic and synergy

Answer

Tenant mix in commercial properties is the deliberate selection of complementary businesses (e.g., anchor store plus specialty retailers) to drive traffic and revenue.

Question 5

An investor uses a 1031 exchange after selling a rental property. What is the primary benefit?

Accepted Answer

Defers capital gains taxes by reinvesting proceeds into a like-kind property

Answer

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.

Real Estate Investing Practice Test

Real Estate Investing Practice Test

Real Estate Investing Asset and Property Management 5