Unit 19 Property Management

Question 1

Define budget comparison statement

Answer 1

Compares actual results with the original budget, often giving either percentages or a numerical variance of actual versus projected income and expenses. 373

Question 2

Define cash flow report

Answer 2

A monthly statement that details the financial status of the property. 373

Question 3

Define corrective maintenance

Answer 3

Correction of problems after they have occurred. 377

Question 4

Define management agreement

Answer 4

A contract between the owner of income property and a management firm or individual property manager that outlines the scope of the manager’s authority. 370

Question 5

Define management plan

Answer 5

A highly detailed plan that lays out the owner’s objectives for a property, as well as what the property manager wants to accomplish and how, including all budgetary information. 372

Question 6

Define multiperil policies Insurance

Answer 6

Policies that offer protection from a range of potential perils, such as fire, hazard, public liability, and casualty. 383

Question 7

Define operating budget

Answer 7

A property’s anticipated financial performance in the present and future. It gives the owner a sense of expected profit. 372

Question 8

Define preventive maintenance

Answer 8

Small repairs that help prevent bigger problems and expenses. 377

Question 9

Define profit and loss statement

Answer 9

A general financial picture based on the monthly cash flow reports; does not include itemized information. 373

Question 10

Define property manager

Answer 10

Someone who manages real estate for another person for compensation. Duties include collecting rents, maintaining the property, and keeping up all accounting. 368 (Kyle 537)

Question 11

Define risk management

Answer 11

Evaluation and selection of appropriate property and other insurance. 381

Question 12

Define routine maintenance

Answer 12

Day-to-day duties such as cleaning common areas, performing minor carpentry and plumbing adjustments, and providing regularly scheduled upkeep of heating, air-conditioning, and landscaping. 377

Question 13

Define surety bonds

Answer 13

An agreement by an insurance or bonding company to be responsible for certain possible defaults, debts, or obligations incurred by an insured party; in essence, a policy insuring one’s personal and/or financial integrity. In the real estate business, a surety bond is generally used to ensure that a particular project will be completed at a certain date or that a contract will be performed as stated. 383

Question 14

Define tenant improvements

Answer 14

Alterations to the interior of a building to meet the functional demands of the tenant. Also known as build-outs. 378

Question 15

Define workers’ compensation acts

Answer 15

State laws that require an employer to obtain insurance coverage to protect employees who are injured in the course of their employment. 382