chapter 11 property management short … 11 – property management math question answers . 1)...

CHAPTER 11 – PROPERTY MANAGEMENT SHORT-ANSWER QUESTION ANSWERS

1) Is not, timeshare, E

2) 30, cash, records, accounts, commissions

3) third party, affiliated business entity

4) security, normal, intended

5) month, sixty

6) treble

7) Boulder

8) Escrow, rental

9) Lender, default, lease, prevents, commercial

10) Objectives, Management

11) Market, Competitive

12) Competitive, rank, weaknesses, strengths, Cost, Market

13) Budget, performance, expenses

14) Capital, improvements, useful, replaced

a) Appearance

b) Equipment

c) Component

d) Renovating

e) Appliances

15) Pass-Through, expenses, taxes, Expense, Recoveries

16) Leases, rent, Escalator

17) a) Physical Inspections

b) Service Contract Negotiations

c) Utility Management

d) Preventive Maintenance

e) Risk Management

f) Capital Repairs

g) Marketing

MacIntosh Real Estate School Uniform Course - Chapter 11

Copyright 2018 - All Rights Reserved 1 Real Estate Law & Practice (48 credit hrs)

CHAPTER 11 – PROPERTY MANAGEMENT MATH QUESTION ANSWERS

1) $3,000,000 x 0.03 = $90,000 per year of Depreciated Value

$90,000 x 10 years = $900,000 accumulated Depreciation

$3,000,000 - $900,000 = $2,100,000 Depreciated Value after 10 years

2) Gross Potential Rental Income per month calculation

($1100 x 50) + ($1800 x 40) = ($55,000 + $72,000) $127,000 per month

Gross Potential Rental Income per year calculation

$127,000 x 12 = $1,524,000 per year

3) Gross Potential Rental Income calculation

120,000sf x $22/sf = $2,640,000.

Vacancy Loss Calculation

$2,640,000 x 8% = $211,200.

Effective Gross Income Calculation

$2,640,000 - $211,200= $2,428,800.

4) Gross Potential Rental Income $ 2,640,000

+ Expense Reimbursements + $ 300,000

- Vacancy and Credit Loss - 211,200 ($2,640,000 x 0.08)

+ Miscellaneous Income + $ 37,000

= Effective Gross Income = $ 2,765,800

5) $22,000 x 12 = $264,000

$264,000/120,000 = $2.20/sf

6) $60,000 + $30,000 + $11,000 + (120,000 x $0.10) $12,000 + $550,000 + ($2,640,000 x .035)

$92,400 = $755,400 Total Annual Operating Fee

$755,400 / 120,000 = (6.295) $6.30 cost per square foot

7)

Gross Potential Rental Income per year:

$900 x 3 units x 12 months = $32,400

$1200 x 6 units x 12 months = $86,400

$1800 x 3 units x 12 months = $64,800

Gross Potential Rental Income =

$32,400 + $86,400 + $64,800 = $183,600 per year

Vacancy Loss = $900 x 6 months = $5,400

Net Effective Rent and Net Oper Income:

Gross Potential Rent $183,600

-Vacancy Loss $ 5,400

= Net Effective Rent $178,200

-Operating Expenses $100,000

= Net Operating Inc $ 78,200



8) Gross Potential Rental Income $5,000,000

-Vacancy Rate (5% x $5,000,000) - $ 250,000

= Effective Gross Income = $4,750,000

-Operating Expenses ($6/sf x 250,000) - $1.500,000

= Net Operating Income = $3,250,000

-Debt Service ($55,000/mo x 12 months) - $ 660,000

= Cash Flow = $ 2,590.000

9) Restaurant Annual Cash Flow/Initial Cash Investment = Return on Investment

$70,000 / $700,000 = (0.10) 10%

10) Shopping Center Annual Cash Flow/Initial Cash Investment = Return on Investment

Initial cash investment = $4,000,000 x 0.20 = $800,000

$150,000 / $800,000 = 18.75%

The shopping center is a better investment

11) Gross Potential Rental Income $ 2,640,000

-Vacancy Rate (10% x $2,640,000) - $ 264,000

= Effective Gross Income = $ 2,376,000

-Operating Expenses - $ 250,000

= Net Operating Income = $ 2,126,000

/ Capitalization Rate of 7.5% / .075

= Value $28,346,667

12) Net Operating Income / Value (Sales Price) = Capitalization Rate

$2,126,000/$28,346,667 = 7.5%

13) Net Operating Income / Capitalization Rate = Value

$2,126,000 / 0.075 = $28,346,667

14) Cost to implement energy saving method/money saved = Payback Period

$45,000/$2,500/yr = 18 years



chapter 11 property management short … 11 – property management math question answers . 1)...

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