Unit 19: Property Management

The property manager's chief concern should be that the property

A)
generates commission for the property manager.
B)
is managed to achieve the highest overall rate of return possible on the owner's investment.
C)
is never vacant, no matter how unreliable the tenants.
D)
doesn't require too much of the property manager's time.
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The property manager's chief concern should be that the property

A)
generates commission for the property manager.
B)
is managed to achieve the highest overall rate of return possible on the owner's investment.
C)
is never vacant, no matter how unreliable the tenants.
D)
doesn't require too much of the property manager's time.
B) is managed to achieve the highest overall rate of return possible on the owner's investment.

The three principal responsibilities of the property manager are to achieve the objectives of the property owner, to generate income for the owner, and to preserve and/or increase the value of the investment property. In the process of meeting the goals of the property owner, the property manager is responsible for maintaining the owner's investment and ensuring that the property earns income.
A rental rate for residential space is usually states as the monthly rate

A)
per floor.
B)
per number of bedrooms.
C)
per unit.
D)
per square foot.
C) per unit.

A rental rate for residential space is usually stated as the monthly rate per unit. Commercial leases—including office, retail, and industrial space rentals—are usually stated according to either annual or monthly rates per square foot.
The three principal responsibilities of the property manager do NOT include

A)
generating maximum income for the property manager.
B)
preserving and/or increasing the value of the investment property.
C)
generating income for the owner.
D)
achieving the objectives of the property owner.
A) generating maximum income for the property manager.

The three principal responsibilities of the property manager focus on the investment objectives of the property owner, including preserving or increasing the value of the property, and do not include generating maximum income for the property manager.
A management agreement is to a property manager as

A)
a deed is to a buyer.
B)
a lease is to a tenant.
C)
a client representation agreement is to a broker.
D)
an assignment is to an assignee.
C) a client representation agreement is to a broker.

The management contract defines the relationship between the parties. This agreement creates an agency relationship between the owner and the property manager just as a client representation agreement may between the seller and the broker.
All of the following should be included in a management agreement EXCEPT

A)
restrictions regarding ages of children.
B)
compensation.
C)
a description of the property.
D)
the extent of the manager's authority.
A) restrictions regarding ages of children.

A management agreement should include an adequate description of the property, compensation arrangements, and what the manager's authority is to be. Restricting occupancy based on ages of children violates the federal Fair Housing Act and may also violate state and local laws.
Avoid, control, transfer, or retain are the four alternative techniques of

A)
risk management.
B)
acquiring insurance.
C)
tenant relations.
D)
property management.
A) risk management.

Ways to manage risk are to avoid it (removing source of risk), to control it (take safety measures), to shift or transfer it (insure), or to retain it (increase deductible).
An apartment complex is severely damaged by a tornado, making it uninhabitable. What type of insurance covers the landlord against the resulting loss of rent?

A)
Liability
B)
Consequential loss, use, and occupancy
C)
Fire and hazard
D)
Casualty
B) Consequential loss, use, and occupancy

Consequential loss policies—also called business interruption insurance—offset loss of rental income due to disasters that keep a property from being used.
A property manager is offered a choice of three insurance policies with different deductibles. If the property manager selects the policy with the highest deductible, which risk management technique is being used?


A)
Transferring risk
B)
Retaining risk
C)
Avoiding risk
D)
Controlling risk
B) Retaining risk

The deductible is the part of risk that the insured retains.
Removing existing barriers when readily achievable in public buildings, such as adding Braille markings to elevator buttons, is a requirement of which law?

A)
Regulation Z
B)
Fair Housing Act
C)
Equal Credit Opportunity Act
D)
Americans with Disabilities Act
D) Americans with Disabilities Act

The Americans with Disabilities Act (ADA) requires that places of public accommodation remove existing barriers when readily achievable to provide access to facilities and services.
An example of complying with the Americans with Disabilities Act (ADA) could be


A)
making exceptions regarding prohibited activities such as smoking in restricted areas.
B)
offering relaxed credit standards for appropriate prospective tenants.
C)
allowing qualified prospective tenants to be considered before any others.
D)
installing auditory signals in elevators.
D) installing auditory signals in elevators.

An example of compliance with the ADA could be installing auditory signals in elevators and placing braille information on elevator control panels.
The Equal Credit Opportunity Act prohibits A) setting maximum debt-to-income limitations. B) discrimination based on the sexual orientation of the prospective tenant. C) discrimination in applying credit-qualifying standards. D) requiring a credit report from prospective renters.C) discrimination in applying credit-qualifying standards. The Equal Credit Opportunity Act permits ordinary tests for credit-worthiness, applied equally, but prohibits discrimination in applying such standards.The manager's primary goal is to operate and maintain the physical property in such a way as to A) preserve and enhance the owner's capital investment. B) facilitate optimum time management. C) earn the greatest commission from management activities. D) attract only higher-income tenants.A) preserve and enhance the owner's capital investment. The manager's primary goal is to operate and maintain the physical property in such a way as to preserve and enhance the owner's capital investment.Homes built in factories meeting Department of Housing and Urban Development (HUD) specifications are called A) manufactured homes. B) trailers. C) mobile homes. D) prefab housing.A) manufactured homes. These homes meet certain HUD guidelines and are built in factories.In determining rental amounts, a property manager considers the economic principle of A) supply and demand. B) conformity. C) balance. D) marginal contribution.A) supply and demand. Supply and demand in the real estate marketplace can influence occupancy and vacancy rates, which in turn affect rental rates.Adaptations of property specifications to suit tenant requirements are A) tenant improvements. B) generally not a good idea. C) prohibited by most nonresidential leases. D) tax-exempt improvements.A) tenant improvements. Tenant improvements are alterations to the interior of the building to meet a tenant's particular space needs.The three principal responsibilities of the property manager are to achieve the objectives of the property owner, generate income for the owner, and A) keep maintenance and other expenses to a minimum. B) make sure that rents are steadily increased. C) preserve and/or increase the value of the investment property. D) keep the tenants happy.C) preserve and/or increase the value of the investment property The property manager works for the property owner, and while avoiding a high tenant turnover is desirable, that goal serves the objective of generating income for the property owner.The channeling of protected class members to certain buildings or neighborhoods is called A) blockbusting. B) redlining. C) steering. D) boycotting.C) steering. Steering is prohibited by fair housing laws, even if the action is requested by a client or customer.Which type of insurance coverage insures an employer against MOST claims for job-related injuries? A) Surety bond B) Consequential loss C) Workers' compensation D) CasualtyC) Workers' compensation Workers' compensation insurance protects employers against claims for on-the-job injuries to their employees.Asbestos, sick building syndrome (SBS), and lead-based paint are all examples of A) problems found only in newly constructed properties. B) issues that arise under the Americans with Disabilities Act (ADA). C) issues beyond the scope of a property manager's job description. D) environmental concerns that a property manager may have to address.D) environmental concerns that a property manager may have to address. These are all environmental issues that might impact any managed property.In evaluating rental applications, it is important for the property manager to establish consistent criteria for acceptable debt and income ratios in order to be in compliance with A) Regulation Z. B) federal antitrust laws. C) the Americans with Disabilities Act. D) the Equal Credit Opportunity Act.D) the Equal Credit Opportunity Act. A lease is an extension of credit, so the property manager must comply with the provisions of the Equal Credit Opportunity Act (ECOA) and be consistent when evaluating the financial information provided on rental applications.Managers who monitor a portfolio of properties similar to a securities portfolio by analyzing the performance of the properties and making recommendations to the owners of the properties are called A) property analysts. B) asset specialists. C) asset managers. D) portfolio specialists.C) asset managers. Managers who monitor a portfolio of properties similar to a securities portfolio by analyzing the performance of the properties and making recommendations to the owners of the properties are called asset managers.Leasing agents are usually A) independent contractors working on a salary basis. B) employees of the broker. C) independent contractors working on a commission basis. D) employees of the property owner.C) independent contractors working on a commission basis. Leasing agents are usually independent contractors working on a commission basis.