CPM Property Management Fundamentals 2 — Questions and Answers
Question 1: A management plan typically includes all of the following EXCEPT:
- Regional and neighborhood analysis
- Property analysis
- Owner's tax return preparation (Correct answer)
- Statement of objectives and strategies
Correct answer: Owner's tax return preparation
A management plan covers market analysis, property analysis, and strategies but does not include preparation of the owner's personal tax returns.
Question 2: What is 'vacancy rate' as used in property management?
- Percentage of units currently under renovation
- Percentage of rentable space not occupied or generating income (Correct answer)
- Number of evictions per year
- Ratio of gross income to net income
Correct answer: Percentage of rentable space not occupied or generating income
Vacancy rate is the percentage of all available rental units or space that is unoccupied and therefore not generating rental income.
Question 3: Which document transfers possessory rights of a property to a tenant for a specified period in exchange for rent?
- Deed
- Lease (Correct answer)
- Title insurance policy
- Mortgage note
Correct answer: Lease
A lease is the legal contract that grants a tenant the right to occupy and use property in exchange for rent payments over a defined term.
Question 4: In property management, what does 'turnover' refer to?
- Annual revenue generated by the property
- The process of a unit becoming vacant and being re-leased to a new tenant (Correct answer)
- The sale of the managed property
- Monthly financial reporting
Correct answer: The process of a unit becoming vacant and being re-leased to a new tenant
Turnover refers to the cycle of a tenant vacating, the unit being prepared, and a new tenant moving in.
Question 5: Which of the following is a gross lease?
- Tenant pays base rent plus all operating expenses
- Tenant pays a fixed rent and landlord covers most or all operating expenses (Correct answer)
- Tenant pays rent based on a percentage of sales
- Tenant pays rent that escalates monthly
Correct answer: Tenant pays a fixed rent and landlord covers most or all operating expenses
In a gross lease, the tenant pays a single fixed rent and the landlord is responsible for paying most or all operating expenses.
Question 6: What is the purpose of a property inspection during a tenant move-out?
- To set the new market rent
- To document the property's condition and determine security deposit deductions (Correct answer)
- To evaluate the property for sale
- To conduct an environmental assessment
Correct answer: To document the property's condition and determine security deposit deductions
A move-out inspection documents the property's condition compared to move-in, forming the basis for any legitimate security deposit deductions.
CPM Property Management Fundamentals 2
A management plan typically includes all of the following EXCEPT: