1
DC PROPERTY MANAGEMENT LICENSE
REAL Exam Questions and Verified Answers
Top Rated A+
"What is the purpose of a Budget? correct answer>> The purpose of
the Budget is to develop a means to both track the prope1ty's
perfonnance and to organize the various types of income (such as
rent, miscellaneous income, etc.) and expenses (such as utilities,
insurance, payroll, etc.) in a meaningful way."
"Gross Potential Rental Income correct answer>> is the maximum
amount of income that a property can generate from all sources."
"Pass-Through Income, Expense Reimbursements or Recoveries.
correct answer>> In certain types of leases, paiticularly commercial
leases, tenants can also be billed for some or all of the property's
operating expenses, real estate taxes and insurance."
"Vacancy and Credit Loss correct answer>> vacant spaces do not
produce any income and sometimes residents/tenants do not pay for
all of their lease obligations, actual income can be less than the Gross
Potential Rental Income. This difference is refen-ed to as Vacancy and
Credit Loss and it is subtracted from Gross Potential Rental Income."
"Cost per square foot ($/SF) basis correct answer>> commercial
properties operating expense are calculated on Cost per square foot
($/SF) basis. By using a "unit cost" basis, it is easier to compare the
expenses of one property to other similar prope1ties even though the
total areas may vary."
1
,2
"If a commercial prope11y 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"
"Building A is 75,000 sf. Its Operating Expenses are $180,000 for
electricity, $30,000 for repairs & maintenance and $150,000 for real
estate taxes.
Building B is 200,000 sf. Its Operating Expenses are $400,000 for
electricity, $55,000 for repairs & maintenance and $400,000 for real
estate taxes.
Which building has lower Operating Expenses per square foot?
correct answer>> Building B"
"Net Operating Income (NOI) correct answer>> It represents the
money that remains after Operating Expenses are subtracted from
Effective Gross Income. A property that produces a positive Net
Operating Income indicates that Effective Gross Income exceeds its
Operating Expenses"
"Debt Service correct answer>> includes both the interest and
principal reduction and is subtracted from Net Operating Income. An
owner will want to know if the property is producing sufficient NOi
to pay the Debt Service."
"Cash Flow correct answer>> is the amount of money that remains
after Debt Service is subtracted from Net Operating Income."
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,3
"Return on Investment correct answer>> Annual Cash Flow/Initial
Cash Investment= Return on Investment"
"An investor is considering the purchase of a hotel prope1ty for
$5,000,000 that will be paid with a $1,000,000 down payment and a
$4,000,000 11101tgage. The annual Cash Flow is projected to be
$90,000. What is the investor projected Return on Investment?
correct answer>> Annual Cash Flow/Initial Cash Investment =
Retum on Investment
$90,000 I $1,000,000 = 9%"
"Lease correct answer>> a written contract between
owner/landlord (Lessor) and tenant/resident (Lessee) for the use of
real property and outlines each paity'slights and responsibilities"
"A lease's fundamental components include: correct answer>> •
Parties to the lease
• Description of the prope1ty and the premises being rented
• Term of the lease
• Secmity deposit amount
• Rental amount and late fee
• When rent is due
• What the premises will be used for (Use Provision)
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, 4
• Who insures the prope1ty
• Who maintains the prope1ty
• What happens if the property is damaged or destroyed during the
lease term (Casualty Provision)
• What happens if the tenant doesn't pay its rent (Default Provision)
• What happens if the tenant doesn't vacate when the lease expires
• If the tenant can sublease the premises or assign the lease (Sublease
ancl Assignment Conditions)"
"Tenancy at Will correct answer>> is a leasehold possession such
that either the landlord or tenant may te1minate the leasehold
interest at any time by giving reasonable notice, which is typically 30
days or it may be stated in the lease."
"Tenancy at Sufferance (or holdover tenant) correct answer>>
occurs after the lease has expired and resident/tenai1t continues to
occupancy the apaitment or space without the landlord's consent."
$1,340,000 I 0.075 = $17,866,667"
"The overall objectives of a maintenance program include: correct
answer>> • Implementing and accomplishing the owner's objectives
• Increasing resident/tenant satisfaction and retention rates
• Reducing operating costs
4
DC PROPERTY MANAGEMENT LICENSE
REAL Exam Questions and Verified Answers
Top Rated A+
"What is the purpose of a Budget? correct answer>> The purpose of
the Budget is to develop a means to both track the prope1ty's
perfonnance and to organize the various types of income (such as
rent, miscellaneous income, etc.) and expenses (such as utilities,
insurance, payroll, etc.) in a meaningful way."
"Gross Potential Rental Income correct answer>> is the maximum
amount of income that a property can generate from all sources."
"Pass-Through Income, Expense Reimbursements or Recoveries.
correct answer>> In certain types of leases, paiticularly commercial
leases, tenants can also be billed for some or all of the property's
operating expenses, real estate taxes and insurance."
"Vacancy and Credit Loss correct answer>> vacant spaces do not
produce any income and sometimes residents/tenants do not pay for
all of their lease obligations, actual income can be less than the Gross
Potential Rental Income. This difference is refen-ed to as Vacancy and
Credit Loss and it is subtracted from Gross Potential Rental Income."
"Cost per square foot ($/SF) basis correct answer>> commercial
properties operating expense are calculated on Cost per square foot
($/SF) basis. By using a "unit cost" basis, it is easier to compare the
expenses of one property to other similar prope1ties even though the
total areas may vary."
1
,2
"If a commercial prope11y 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"
"Building A is 75,000 sf. Its Operating Expenses are $180,000 for
electricity, $30,000 for repairs & maintenance and $150,000 for real
estate taxes.
Building B is 200,000 sf. Its Operating Expenses are $400,000 for
electricity, $55,000 for repairs & maintenance and $400,000 for real
estate taxes.
Which building has lower Operating Expenses per square foot?
correct answer>> Building B"
"Net Operating Income (NOI) correct answer>> It represents the
money that remains after Operating Expenses are subtracted from
Effective Gross Income. A property that produces a positive Net
Operating Income indicates that Effective Gross Income exceeds its
Operating Expenses"
"Debt Service correct answer>> includes both the interest and
principal reduction and is subtracted from Net Operating Income. An
owner will want to know if the property is producing sufficient NOi
to pay the Debt Service."
"Cash Flow correct answer>> is the amount of money that remains
after Debt Service is subtracted from Net Operating Income."
2
,3
"Return on Investment correct answer>> Annual Cash Flow/Initial
Cash Investment= Return on Investment"
"An investor is considering the purchase of a hotel prope1ty for
$5,000,000 that will be paid with a $1,000,000 down payment and a
$4,000,000 11101tgage. The annual Cash Flow is projected to be
$90,000. What is the investor projected Return on Investment?
correct answer>> Annual Cash Flow/Initial Cash Investment =
Retum on Investment
$90,000 I $1,000,000 = 9%"
"Lease correct answer>> a written contract between
owner/landlord (Lessor) and tenant/resident (Lessee) for the use of
real property and outlines each paity'slights and responsibilities"
"A lease's fundamental components include: correct answer>> •
Parties to the lease
• Description of the prope1ty and the premises being rented
• Term of the lease
• Secmity deposit amount
• Rental amount and late fee
• When rent is due
• What the premises will be used for (Use Provision)
3
, 4
• Who insures the prope1ty
• Who maintains the prope1ty
• What happens if the property is damaged or destroyed during the
lease term (Casualty Provision)
• What happens if the tenant doesn't pay its rent (Default Provision)
• What happens if the tenant doesn't vacate when the lease expires
• If the tenant can sublease the premises or assign the lease (Sublease
ancl Assignment Conditions)"
"Tenancy at Will correct answer>> is a leasehold possession such
that either the landlord or tenant may te1minate the leasehold
interest at any time by giving reasonable notice, which is typically 30
days or it may be stated in the lease."
"Tenancy at Sufferance (or holdover tenant) correct answer>>
occurs after the lease has expired and resident/tenai1t continues to
occupancy the apaitment or space without the landlord's consent."
$1,340,000 I 0.075 = $17,866,667"
"The overall objectives of a maintenance program include: correct
answer>> • Implementing and accomplishing the owner's objectives
• Increasing resident/tenant satisfaction and retention rates
• Reducing operating costs
4
