CAS Knowledge Check: Part 1
Explore Part 2 of this CAS Knowledge Check.
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1. What information do you need in order to complete a financial analysis on a property?
2. When doing an financial analysis, why do you need to identify the GPR first?
All other income & expenses are measured and evaluated as a percentage of GPR
3. What are the three primary types of income you will look for/calculate?
- Effective Gross Income (EGI)
- Net Operating Income (NOI)
- Cash Flow (CF)
4. What is a Chart of Accounts?
A list of accounts to which revenue and expenses are posted and show up on the General Ledger
5. What is used to generate an Income Statement?
Entries in the General Ledger
6. List some benefits of minimizing financial loss.
- Increases the financial success of a property
- Improves property performance
- Makes your job easier
7. What are the main types of financial loss you should work to prevent?
- Vacancy loss
- Offline and nonrevenue units
- Bad debt
- Concessions and discounts
8. During the rent collection process, what things should you consider before occupancy?
- The screening process
- Rent collection policy
- Inclusion of the policy in the lease, orientation materials, etc.
9. During the rent collection process, what is the purpose of resident communication efforts?
To facilitate the rent collection process
10. Why would you want to create a buffer for rent collection?
- To help you remain on good terms with residents
- To ensure timely and complete payments
11. What are some characteristics of Variable Expenses?
- Vary as conditions change
- Many are associated with occupancy
12. What are Capital Expenses?
Costs for large improvements that have an economic useful life beyond one year
13. Describe a Cost Benefit Analysis.
Process of weighing a potential expense against a potential benefit
14. What is the most important thing to keep in mind when developing a budget?
The owner’s property objectives and investment goals
15. What are the steps to the budget development process?
- Identify goals
- Gather Information
- Assign numerical values
16. When would you develop Rehab or Renovation budget?
When a property is being rehabbed or undergoing retrofitting/modernization
17. What are the three tips to developing budgets covered today?
- Be prepared
- Use historical numbers
- Seek input
18. What is Extrapolation/Annualization?
Estimating future information by extending known information
19. How do you analyze variances?
- Compare budget to actual numbers
- Look at events on the property or in your submarket or region
20. Are increased expenses favorable or unfavorable variances?
21. Once you’ve analyzed and can explain variances, what should you do next?
Determine what, if any, action to take.
22. What is the benefit to the investor resulting from an investment?
Return; the financial benefit
23. What is the purpose of measuring performance?
Shows if goals are met and drives investment decisions
24. If a down payment is $200,000 and the cash flow generated is $20,000, what is the Cash-on-Cash Return?
25. Does a lower cap rate indicate lower or higher value?
26. What type of property valuation approach would you use if there are several similar properties in the area that have recently sold?
Sales Comparison Approach
27. If you increase the NOI by $24,000 and the cap rate is 6%, how much value are you adding to the property?
Perform a Property Evaluation
28. What attributes affect the value of a property?
- Supply and Demand
- Highest and Best Use
- External Influences
29. What determines Cap Rates?
The market and quality of the property; can be as low as 5% and as high as 12%.
30. When entering an apartment unit, how can you limit liability?
Strictly follow your right of entry policies
31. You may enter an apartment unit without notice in case of emergency. List some emergency examples.
- Smoke pouring out of windows
- Water leaking out of unit
- Smell of gas
32. What are some reasons law enforcement or government officials may want entry to an apartment unit?
- Random building inspection
- Suspected safety or health violation
- Serving an arrest warrant
- The pursuit of fleeing criminals
33. Regarding satellite dishes and TV antennas, what has the Federal Communications Commission (FCC) ruled?
Apartment residents may not be unreasonably restricted from installing an individual satellite dish or antenna
34. What is negligence?
An unreasonable response to a foreseeable risk
35. When preventing danger, what should you encourage residents to do?
- Understand personal responsibility for safety
- Inform management of dangerous situations
36. What are your disclosure responsibilities regarding a tenant who has a sex offense conviction?
It depends on the specific state regulations; seek legal counsel
37. If a resident is injured through criminal activity, can they sue the apartment manager? Why or why not?
Yes; you can be liable if you acted unreasonably in the face of foreseeable risk
38. What is Megan’s Law?
A law requiring authorities to notify communities of the whereabouts of convicted sex offenders
39. What does that Virginia Graeme Baker Pool & Spa Safety Act require?
All public pools and spas MUST use anti-entrapment devices
40. When should you hire a contractor?
- Your normal staff cannot do the task
- It is more cost effective
- You need required documentation
41. Can your property be held liable for the actions of a contractor?
Yes; legally, contractors may be viewed as extensions of the property management team
42. What are the four Bid Process Elements?
- Performance Security
- Insurance Certificates
- Awarding a Bid
- Bidder Disqualification
43. In which section of a contract is the type of work that will be performed and the time frame for the work?
Scope of Work
44. What is performance security?
A form of security deposit that ensures the successful bidder will perform according to all contract requirements
45. What should be included in a bid invitation?
- The specifications for the procurement
- Terms and conditions
- Specifications defining goods or services
- Formally numbered specifications
46. What is a lien waiver?
A signed and notarized document that waives all claims against the property or the management company
47. What releases one party from liability for claims asserted by another party?
General Waiver of Release
Explore Part 2 of this CAS Knowledge Check.