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EXAM REVIEW DC PROPERTY MANAGER EXAM
– QUESTIONS AND ACCURATE ANSWERS
GRADE A+
"The Lease Administration Process - CORRECT ANSWER=> involves thoroughly reading and then
documenting all of the rights, terms and obligations that both the owner and resident/tenant have agreed to in the lease."
"Gross Lease - CORRECT ANSWER=> The property owner pays for all Operating Expenses. A derivative
of this format is a ___________ with a base amount (or base year). The property owner pays all Operating Expenses up to the specified amount (the base) and the tenant pays for all Operating Expenses above that base amount. This is commonly found in office building leases."
"What does the term "Net Lease" mean when referring to commercial leases? - CORRECT ANSWER=>
The tenant pays for some or all operating expenses in addition to base rent. Derivatives of this structure are Net-Net & Triple Net Leases"
"What does the term "Triple Net Lease" mean when referring to commercial leases? - CORRECT
ANSWER=> The tenant pays for all Operating Expenses in addition to base rent. For example in a
____________, a tenant would pay for all Operating Expenses including real estate taxes, insurance, roof maintenance, landscaping, etc. This is commonly found in industrial leases."
"Percentage Rent - CORRECT ANSWER=> The tenant pays rent based on a calculation that relates
directly to the tenant's gross sales. This is often in addition to base rent and it is commonly used in shopping center leases."
"The rights of a property owner include... - CORRECT ANSWER=> The right of possession, the right of
control, the right of exclusion, the right of enjoyment, the right to sell."
"What is a leasehold interest? - CORRECT ANSWER=> When the owner leases a property, it
temporarily transfers to the tenant a portion of the right of possession."
"Tenancy at Will - CORRECT ANSWER=> a leasehold possession such that either the landlord or tenant
may terminate the leasehold interest at any time by giving reasonable notice, which is typically 30 days or it may be stated in the lease. It usually occurs in the absence of a written lease and can occur after a lease expires, but the resident/tenant continues to occupy the space and the landlord continues to accept the rental payment"
"Tenancy at Sufferance - CORRECT ANSWER=> (or holdover tenant) occurs after the lease has expired
and resident/tenant continues to occupancy the apartment or space without the landlord's consent."
"Escalator Clause - CORRECT ANSWER=> Typically, multi-year leases contain a provision for the owner
to increase the rent on the lease's anniversary date. This concept is referred to as an"
"Separation of Funds - CORRECT ANSWER=> It is critical that the owner's funds be kept separate from
the property manager's accounts. This is called"
"Asset management focuses on... - CORRECT ANSWER=> the property's long term planning, leasing
and asking rates, negotiates commercial leases, evaluates mortgages & opportunities to refinance the loan, considers strategies to maximize value and when to market the property for sale."
"Capitalization rate - CORRECT ANSWER=> is determined by the market and depends on various
factors, including the property type, economic conditions, interest rates, location, and the property's condition."
"What common method is used to determine a property's investment value? - CORRECT ANSWER=>
Net operating income is divided by the capitalization rate (NOI/Cap Rate = Value)"
"Payback period - CORRECT ANSWER=> the cost to implement the energy saving method divided by
the money saved"
"What are the four categories related to Maintenance? - CORRECT ANSWER=> Curative, deferred,
routine & preventative"
"Curative maintenance - CORRECT ANSWER=> involves fixing or repairing something after it has
already broken ex. fixing a broken sink faucet"
"Deferred maintenance - CORRECT ANSWER=> an ordinary maintenance item that is not performed at
the time when a problem is discovered ex. when manager notices some minor paint peeling in a stairwell, but delays hiring a painter until more painting work is needed"
"Routine maintenance - CORRECT ANSWER=> relates to the cleaning and upkeep that is needed every
day ex. vacuuming the carpet in the building hallways"
"Preventative maintenance - CORRECT ANSWER=> a planned activity that is routinely performed with
the intention of extending the useful life of the building and its equipment; helps to protect the property from unforeseen risks or potential equipment failures, can reduce the likelihood of term-53costly emergency services and may increase tenant satisfaction"
staffing levels, marketing plans, and capital expenditures, but it is the owner who accepts or modifies the budget. The manager can make recommendations to renovate a building or to change common area finishes, but the owner makes the final decision. Similarly, when it becomes time to sell a property, the manager can make suggestions to enhance its appeal, but the owner decides which, if any, improvements will be made prior to sale."
"Analysis of Competitive Properties - CORRECT ANSWER=> Understanding the subject property's
strengths and weaknesses compared to its competition are important factors to know and to be able to explain to the owner. Since most prospective tenants or residents will visit a number of properties before making a decision, it is important to understand how the subject property may rank in relation to its competitors. By understanding this information, the manager can develop a strategy to improve the weaknesses and enhance the strengths through the management plan and budget. For example, if most competitive properties offer concierge services or a health club, then the manager should investigate the cost to implement these amenities and present the findings to the owner. Often the only way to discover some of this information is to tour each of the competing properties."
"Comparison Analysis - CORRECT ANSWER=> A way of gathering information about competitive
properties, including:
- Age of the properties
- Location advantages/Accessibility
- Curb Appeal
- Interior conditions, quality of finishes
- Amenities
- Rents per square foot (commercial) or Rents per unit (apartments)
- Operating expenses per square foot"
"Budget Process - CORRECT ANSWER=> The annual process of preparing a detailed list of all
anticipated income and expenses (both operating and capital)."
"Gross Potential Rental Income - CORRECT ANSWER=> The maximum amount of income that a
property can generate from all sources. It represents the total potential income from all units or spaces being fully occupied and all amounts owed by the residents/tenants being collected in full."
Management Plan - CORRECT ANSWER=> The plan describes in detail the subject property's current
use along with its physical condition, fiscal projections, and any operational issues. It also includes an analysis of the market (both regional and neighborhood), the competing properties, as well as potential improvements or alternative uses for the subject property. These items will be discussed further in this section."
"Market Analysis - CORRECT ANSWER=> A ______ focuses on both a regional and neighborhood
evaluation, which includes the demographic conditions, geographic features, governmental prospective, existing real estate supply, potential future developments, and tenant/ resident demand"
"By performing the ____________ and a ______________, it is easier to identify the subject property's
strengths and weaknesses. - CORRECT ANSWER=> Market Analysis, Competitive Property Analysis"
"Analysis of Alternatives - CORRECT ANSWER=> Looks at the theoretical costs and corresponding
increase in rents by making different improvements, even the subject property's redevelopment."
"Physical Obsolescence - CORRECT ANSWER=> is characterized as a condition of aging (i.e. wear and
tear) or deferred maintenance. Examples are worn carpets, peeling paint, a leaking roof, or dead landscaping."
"Functional Obsolescence - CORRECT ANSWER=> is characterized by old or outdated designs or
building systems. Examples include equipment that is not repairable because parts or no longer manufactured; DC Property Management Study Guide - 3 single pane window systems because they waste a large amount of energy; outdated bathroom fixtures because of changing designs and tastes."
"Economic Obsolescence - CORRECT ANSWER=> represents a loss in value due to outside forces (i.e.
location, market conditions). An example would be an office building, located in a small town, where the major employer closes. This may result in both lower demand and rental rates."
"Depreciation - CORRECT ANSWER=> Properties begin to deteriorate as soon as they are completed.
This process is called ____________. and it represents the loss in value from the various forms of obsolescence. __________ can be economically estimated on a broad level." "If a new 400 unit apartment building is worth $12,000,000 and depreciates in value at 2.5% per year,
what is its Depreciated Value after five years? - CORRECT ANSWER=> $12,000,000 x 0.025 = $300,
per year of Depreciated Value $300,000 x 5 years = $1,500,000 accumulated Depreciation $12,000,000 - $1,500,000 = $10,500,000 Depreciated Value after 5 years"
"Investment Value - CORRECT ANSWER=> This is the value that is generally used by investors. It is
frequently determined either by calculating the Net Operating Income and applying a Capitalization Rate to it or from Cash Flow by determining the Return on Investment"
"Assessed Value - CORRECT ANSWER=> This is the value used by government tax assessment offices.
Since it is frequently determined using sophisticated mathematical models that are applied to many similar types of properties over a geographic area, it can be less accurate and produce results that are higher or lower than other types of "values"."
"Market Value - CORRECT ANSWER=> This is the value that is agreed to between a buyer and seller. It
represents the "meeting of the minds"."
"Depreciated Value - CORRECT ANSWER=> This is used for income tax purposes and affects a
property's tax basis. In the past, the Federal Government has implemented accelerated depreciation programs to help promote economic growth"
"If the Gross Potential Rental Income is $800,000, the Expense Reimbursements are $100,000, the Vacancy and Credit Loss is 10% of the Gross Potential Rental Income and Miscellaneous Income is
$25,000, what is the property's Effective Gross Income? - CORRECT ANSWER=> Gross Potential Rental
Income $800,000 + Expense Reimbursements + $100,000 - Vacancy and Credit Loss - ($800,000 x 0.1) + Miscellaneous Income + $ 25,000 = Effective Gross Income = $845,000" "In a 150,000 SF commercial building, the rental rates are $20/SF and it is 5% vacant. What is the
property's Effective Gross Income? - CORRECT ANSWER=> Gross Potential Rental Income calculation
150,000SF x $20/SF = $3,000,000. Vacancy Loss Calculation $3,000,000 x 5% = $150,000. Effective Gross Income Calculation $3,000,000 - $150,000 = $2,850,000."
"Operating Expenses.. - CORRECT ANSWER=> include all of the costs associated with running and
maintaining a property" "If a commercial property is 100,000 SF and its annual electricity costs are $225,000, what is the
electricity cost per square foot? - CORRECT ANSWER=> $225,000/100,000 = $2.25/SF"
"Net Operating Income (NOI) - CORRECT ANSWER=> represents the money that remains after
Operating Expenses are subtracted from Effective Gross Income; is not only a critical measure of the property's ability to pay its bills but is one of the components often used in calculating a property's investment value."
"Debt Service - CORRECT ANSWER=> includes both the interest and principal reduction and is
subtracted from net operating income"
"Cash Flow - CORRECT ANSWER=> the amount of money that remains after debt service is subtracted
from net operating income"
"Return on Investment - CORRECT ANSWER=> one measure used by investors to determine if potential
investment is worth purchasing, annual cash flow/initial cash investment = _________"
"Capital Expenditures - CORRECT ANSWER=> are defined as an improvement or betterment to a
property that extends its useful life."
"Vacancy & credit loss - CORRECT ANSWER=> when actual income collected is less than gross potential
income (typically a commercial lease)"
"Cash flow - CORRECT ANSWER=> is the amount of money that remains after debt service is
subtracted from Net operating income;"
"Chart of accounts - CORRECT ANSWER=> is utilized to classify each of the different types of income
and expenses"
"What are the objectives of a Maintenance Plan? - CORRECT ANSWER=> Implement & accomplish the
owner's objectives, increase resident/tenant satisfaction rates, reduce operating costs, optimize the property's physical capabilities, increase the property's value, providing safety of tenants, residents, visitors, and employees."
"General liability - CORRECT ANSWER=> Insurance coverage that can protect the property owner from
a variety of claims including bodily injury, property dmage and personal injury."
"Excess liability - CORRECT ANSWER=> An umbrella policy is issued to provide coverage limits in excess
of an underliying general liability policy"
"A management plan is made up of what components? - CORRECT ANSWER=> Regional analysis,
neighborhood analysis, property analysis, market analysis, analysis of alternatives, proposed property analysis, investment analysis"
"Functional obsolescence can directly impact ... - CORRECT ANSWER=> attainable rents at a building"
"Deferred maintenance - CORRECT ANSWER=> involves delaying needed repairs and maintenance to
save money"
"Examples of deferred maintenance - CORRECT ANSWER=> painting a corridor, sealing leaky roof or
repairing cracks"
"Preventative maintenance - CORRECT ANSWER=> preplanned, routine and systematic schedule of
inspecting, maintaining and repairing a facility and its equipment"
"Examples of preventative maintenance - CORRECT ANSWER=> inspecting a roof every six months for
damage"
"Types of property insurance include - CORRECT ANSWER=> Fire & extended coverage, Theft/Crime,
Boiler & Machinery, Rent Loss, & Catastrophe, Earthquake, Plate Glass, Liability, Excess Liability."
"Components of valid lease - CORRECT ANSWER=> names of lessee, name of owner property or agent
with authority to lease, legal address of property, statement of rental amount etc."
"What is the designation of the national association of real estate brokers inc? - CORRECT ANSWER=>
Realtist"
"What is included in an RPF? - CORRECT ANSWER=> Scope of work, how is to be performed, frequency,
special requirements, work hours, timetable to complete, insurance requirements, deadline for submission, number of personnel to be provided, warranty, & references."
"A landlord may evict a tenant for ten statutory reasons including... - CORRECT ANSWER=> 1. non-
payment of rent
- violation of an obligation of tenancy of which the tenant failed to correct after notice
- tenant performed an illegal act within the rental unit
- landlord seeks in good faith to occupy the rental unit for personal use and occupancy
- landlord sells rental unit to a party who seeks in good faith to occupy the unit for personal use and occupancy
- landlord seeks to renovate rental unit in a mannaer in which tenant cannot safely occupy
- landlord seeks to demolish rental unit
- landlord seeks to substantially rehabilitate rental unit
- landlord seeks to discontinue rental unit for housing and occupancy
- landlord seeks to convert rental unit to a condo or cooperative after securing governmental approval" "In order to evict a tenant, the landlord must go through the judicial process. The tenant must be given...
- CORRECT ANSWER=> 1. a written notice to vacant (except for non-payment of rent, or if tenant waive right to notice in lease agreement)
- an opportunity to cure lease violation; if that is the basis for the action
- an opportunity to challenge the landlord's claims in court"
"_________________ is required for all evictions - CORRECT ANSWER=> Judicial process"
"For all cases of eviction other than non-payment of rent, a filing with _____________ is required -
CORRECT ANSWER=> Rental Accommodations Division (RAD)"
"Following a foreclosure - CORRECT ANSWER=> a tenant's lease terms remain the same, including
their rental payment amount & lease term, even if the tenant is month-to-month"
"Is a property's foreclosure a legal basis to evict a tenant? - CORRECT ANSWER=> No"
"The District of Columbia Human Rights Act - CORRECT ANSWER=> intended to end discrimination in
DC based on race, color, religion, national origin, sex, age, marital status, personal apperance, sexual orientation, familial status, family responsibilities, matriculation, political affiliation, disability, source of income and place of residence or business" "An owner asks the property manager to submit an Offer of Sale under DOPA. The property manager should submit the offer to: A. The District of Columbia Mayor's office B. The District of Columbia Department of Housing and Community Development C. The District of Columbia Real Estate Commission
D. The Department of Housing and Urban Development - CORRECT ANSWER=> B. The District of
Columbia Department of Housing and Community Development" "Which of the following is a legal reason for a landlord to evict a tenant? A. The property experiences a foreclosure B. The lease expires C. Landlord wants to occupy the rental unit
D. Landlord sells the building - CORRECT ANSWER=> C. Landlord wants to occupy the rental unit"
"Under the Rental Housing Act of 1985 any increase in rent must meet these conditions... - CORRECT
ANSWER=> 1. the new rent charged may not be more than the prior rent plus an allowable increase
- the last increase in rent must have been at least 12 months ago (unless the unit is vacant)
- the increase must not violate the terms of the lease
- the housing accommodation must be property registered with the RAD
- the rental unit and the housing accommodation's common elements must be in substantial compliance with housing regulations
- the housing provider must give a 30-day notice of any increase in rent *The most common allowable increase in rent is an annual adjustment, based on the increase in the Consumer Price Index."
“Management Plan - CORRECT ANSWER=> This describes in detail the subject property's current use
along with its physical condition, fiscal projections, and any operational issues. It also includes an analysis of the market (both regional and neighborhood), the competing properties, as well as potential improvements or alternative uses for the subject property."
"Market Analysis - CORRECT ANSWER=> This focuses on both a regional and neighborhood evaluation,
which includes the demographic conditions, geographic features, governmental prospective, existing real estate supply, potential future developments, and tenant/resident demand."
"Analysis of Alternatives - CORRECT ANSWER=> This looks at the theoretical costs and corresponding
increase in rents by making different improvements, even the subject property's redevelopment."
"Capital Expenditures - CORRECT ANSWER=> Work performed on properties that are occupied and
operational with the goal of trying to prevent the property from declining and becoming obsolete."
"Physical Obsolescence - CORRECT ANSWER=> A status characterized as a condition of aging (i.e. wear
and tear) or deferred maintenance. Examples are worn carpets, peeling paint, a leaking roof, or dead landscaping."
"Functional Obsolescence - CORRECT ANSWER=> A status characterized by old or outdated designs or
building systems. Examples include equipment that is not repairable because parts or no longer manufactured; single pane window systems because they waste a large amount of energy; outdated bathroom fixtures because of changing designs and tastes."
