Real Estate Investing Property Management Operations 2 β Questions and Answers
Question 1: A property manager discovers a tenant has sublet the unit without permission. What is the most appropriate first step?
- Immediately file for eviction
- Send a written lease violation notice with a cure period (Correct answer)
- Accept the unauthorized subtenant and charge higher rent
- Ignore the situation if rent is being paid on time
Correct answer: Send a written lease violation notice with a cure period
A written cure notice gives the tenant the opportunity to remedy the violation before escalating to eviction proceedings.
Question 2: Which metric best measures the financial efficiency of a rental property's operations?
- Gross rent multiplier
- Operating expense ratio (Correct answer)
- Loan-to-value ratio
- Price-to-earnings ratio
Correct answer: Operating expense ratio
The operating expense ratio (operating expenses Γ· gross income) directly measures how efficiently a property is being managed.
Question 3: A landlord in a rent-controlled jurisdiction wants to raise rents. What must they do first?
- Give 30 days notice regardless of local law
- Verify the allowable increase percentage set by the rent control board (Correct answer)
- Require all tenants to sign new leases
- Hire an attorney before any rent increase
Correct answer: Verify the allowable increase percentage set by the rent control board
Rent-controlled jurisdictions set maximum allowable increases, and landlords must comply with these limits or face penalties.
Question 4: What is a capital expenditure reserve fund used for in property management?
- Day-to-day maintenance and repairs
- Major improvements and replacements like roofs and HVAC systems (Correct answer)
- Marketing and leasing costs
- Property management fees
Correct answer: Major improvements and replacements like roofs and HVAC systems
Capital expenditure reserves are set aside specifically for large, infrequent costs such as roof replacement or major system overhauls.
Question 5: Under the Americans with Disabilities Act (ADA), which properties are most affected by accessibility requirements?
- Single-family homes
- Duplexes owner-occupied by the landlord
- Commercial properties and multifamily buildings with common areas (Correct answer)
- All residential properties regardless of size
Correct answer: Commercial properties and multifamily buildings with common areas
ADA primarily governs commercial properties and the common areas of multifamily housing, while private residences have different standards under the Fair Housing Act.
Question 6: A property manager wants to reduce vacancy. Which strategy typically has the greatest immediate impact?
- Repainting the exterior
- Offering competitive market rents and a referral program (Correct answer)
- Installing new appliances in vacant units
- Hiring additional maintenance staff
Correct answer: Offering competitive market rents and a referral program
Competitive pricing attracts more prospects quickly, while referral programs leverage existing satisfied tenants to find qualified new ones.
Question 7: What is the primary purpose of a move-in inspection checklist?
- To comply with mortgage lender requirements
- To document unit condition and protect both parties in security deposit disputes (Correct answer)
- To set rent for the upcoming lease term
- To identify deferred maintenance for the annual budget
Correct answer: To document unit condition and protect both parties in security deposit disputes
A detailed move-in checklist signed by both parties establishes baseline unit condition, making security deposit deductions easier to justify legally.
Real Estate Investing Property Management Operations 2
A property manager discovers a tenant has sublet the unit without permission.
What is the most appropriate first step?