Real Estate Investing Property Management Operations 3 — Questions and Answers
Question 1: Which type of lease structure passes most operating cost increases directly to the tenant?
- Gross lease
- Modified gross lease
- Triple net (NNN) lease (Correct answer)
- Percentage lease
Correct answer: Triple net (NNN) lease
In a triple net lease, the tenant pays base rent plus property taxes, insurance, and maintenance, shielding the landlord from expense escalations.
Question 2: A tenant vacates without notice and leaves personal belongings behind. What should the property manager do?
- Immediately dispose of all belongings
- Follow state-specific abandoned property laws, which usually require notice and a waiting period (Correct answer)
- Store items indefinitely at no charge
- Auction items immediately to cover unpaid rent
Correct answer: Follow state-specific abandoned property laws, which usually require notice and a waiting period
Most states require landlords to provide written notice and a waiting period before disposing of or selling abandoned property to protect tenant rights.
Question 3: What does a property management agreement typically specify?
- The tenant's credit score requirements only
- The scope of services, fee structure, authority limits, and termination terms (Correct answer)
- Only the monthly management fee percentage
- Building code compliance standards
Correct answer: The scope of services, fee structure, authority limits, and termination terms
A comprehensive management agreement outlines services provided, fees charged, spending authority, reporting requirements, and how either party can exit the contract.
Question 4: An investor owns a 20-unit apartment complex. Which professional license is typically required to manage it for a fee in most US states?
- Certified Public Accountant (CPA)
- Real estate broker or property manager license (Correct answer)
- General contractor license
- No license is required for residential property
Correct answer: Real estate broker or property manager license
Most US states require a real estate broker or property management license to manage rental properties for compensation on behalf of others.
Question 5: What is the typical consequence of co-mingling tenant security deposits with operating funds?
- Higher interest earnings on deposits
- Violation of state law with potential fines and loss of license (Correct answer)
- Reduced administrative burden for the manager
- No consequence if deposits are returned on time
Correct answer: Violation of state law with potential fines and loss of license
Most states require security deposits to be held in separate trust accounts, and co-mingling is illegal and can result in significant penalties.
Question 6: Which document formally terminates a month-to-month tenancy in the US?
- A lease renewal offer
- A proper written notice to vacate, typically 30 days (Correct answer)
- A rent increase notice
- A property inspection report
Correct answer: A proper written notice to vacate, typically 30 days
Month-to-month tenancies require a written notice—usually 30 days—from either the landlord or tenant to legally terminate the rental agreement.
Question 7: A property manager receives a repair request for a broken heater in winter. How should this be prioritized?
- Schedule it within 30 days as a routine repair
- Treat it as an emergency and address within 24 hours (Correct answer)
- Ask the tenant to hire their own contractor
- Wait until the monthly inspection to assess the issue
Correct answer: Treat it as an emergency and address within 24 hours
A broken heater in winter is a habitability issue and most states legally require landlords to restore heat within 24 hours to maintain a habitable living environment.
Real Estate Investing Property Management Operations 3
Which type of lease structure passes most operating cost increases directly to the tenant?