DC Pr oper ty Managem ent
License (168 QUESTIONS W ITH
VERIFIED SOLUTIONS)
The primary responsibility of a real estate property manager is to
understand and implement the owner's goals and objectives
If an apartment building has 20 one bedroom units which rent for
$800 per month and 30 two bedroom apartments which rent for
$1500 per month, what is the Gr oss Potential Rental
Incom e per month?
Gr oss Potential Rental Incom e per month calculation ($800
x 20) + ($1500 x 30) =$61,000 per month
Man agem ent Plan
The plan describes in detail the subject property's intended use
along with its physical condition, fiscal projections, and any
operational issues. It also includes an analysis of the market (both
regional and neighborhood), the competing properties, as well as
potential improvements or alternative uses for the subject
property.
Mar k et Analysis
focuses on both a regional and neighborhood evaluation, which
includes the demographic conditions, geographic features,
,governmental prospective, existing real estate supply, potential
future developments, and tenant/ resident demand
Com petitive Pr oper ty An alysis
identifes the subject property's strengths and weaknesses
Analysis of Alter natives
theoretical costs and coresponding increase in rents by making
different improvements, even the subject property's
redevelopment.
Type of building alternatives
• Rehabilitate the property without altering its existing use
• Modernize the property by updating finishes, purchasing new or
more efficient equipment or enhancing existing features or
amenities.
• Change the use of the building, including the conversion from
one property type to another (i.e. from industrial to single story
office), or by demolishing it for a completely new development.
• Conversion to a condominium ownership structure
Three types of obsolescence
Physical Obsolescence, Fu nctional Obsolescence, and
Econom ic Obsolescence
Physical Obsolescence
is characterized as a condition of aging (i.e. wear and tear) or
deferred maintenance. Examples are worn carpets, peeling paint,
a leaking roof, or dead landscaping.
,Fu nction al Obsolescence
is characterized by old or outdated designs or building systems.
Examples include equipment that is not repairable because parts
or no longer manufactured;
single pane window systems because they waste a large amount of
energy; outdated bathroom fixtures because of changing designs
and tastes.
Econom ic Obsolescence
represents a loss in value due to outside forces (i.e. location,
market conditions). An example would be an office building,
located in a small town, where the major employer closes. This
may result in both lower demand and rental rates.
Depr eciation
loss in value from the various forms of
obsolescence. Depr eciation can be economically estimated on a
broad level.
If a new 400 unit apa1tment building is worth $12,000,000 and
depreciates in value at 2.5% per year, what is its
Depr eciated Value after five years?
$12,000,000 - $1,500,000 = $10,500,000 Depr eciated
Valu e after 5 years
If a new 400 unit apa1tment building is worth $12,000,000 and
depreciates in value at 2.5% per year, what is its
Depr eciated Value after 1 year?
, $12,000,000 x 0.025 = $300,000 per year of Depr eciated
Valu e
If a new 400 unit apartment building is worth $12,000,000 and
depreciates in value at 2.5% per year, what is its
Accum ulated Depr eciated Value after 1 year?
$300,000 x 5 years= $1,500,000 accumulated Depr eciation
What are the different types of property values?
Investm ent Value, Assessed Value, Mar ket Valu e,
Depr eciated Value
Investm ent Value
This is the value that is generally used by investors. It is
frequently determined either by calculating the Net Oper atin g
Incom e and applying a Capitalization Rate to it or from Cash
Flow by determining the Retur n on Investm ent.
Assessed Valu e
This is the value used by government tax assessment offices. Since
it is frequently determined using sophisticated mathematical
models that are applied to many similar types of properties over a
geographic area, it can be less accurate and produce results that
are higher or lower than other types of "values".
Mar k et Valu e
This is the value that is agreed to between a buyer and seller. It
represents the "meeting of the minds".
License (168 QUESTIONS W ITH
VERIFIED SOLUTIONS)
The primary responsibility of a real estate property manager is to
understand and implement the owner's goals and objectives
If an apartment building has 20 one bedroom units which rent for
$800 per month and 30 two bedroom apartments which rent for
$1500 per month, what is the Gr oss Potential Rental
Incom e per month?
Gr oss Potential Rental Incom e per month calculation ($800
x 20) + ($1500 x 30) =$61,000 per month
Man agem ent Plan
The plan describes in detail the subject property's intended use
along with its physical condition, fiscal projections, and any
operational issues. It also includes an analysis of the market (both
regional and neighborhood), the competing properties, as well as
potential improvements or alternative uses for the subject
property.
Mar k et Analysis
focuses on both a regional and neighborhood evaluation, which
includes the demographic conditions, geographic features,
,governmental prospective, existing real estate supply, potential
future developments, and tenant/ resident demand
Com petitive Pr oper ty An alysis
identifes the subject property's strengths and weaknesses
Analysis of Alter natives
theoretical costs and coresponding increase in rents by making
different improvements, even the subject property's
redevelopment.
Type of building alternatives
• Rehabilitate the property without altering its existing use
• Modernize the property by updating finishes, purchasing new or
more efficient equipment or enhancing existing features or
amenities.
• Change the use of the building, including the conversion from
one property type to another (i.e. from industrial to single story
office), or by demolishing it for a completely new development.
• Conversion to a condominium ownership structure
Three types of obsolescence
Physical Obsolescence, Fu nctional Obsolescence, and
Econom ic Obsolescence
Physical Obsolescence
is characterized as a condition of aging (i.e. wear and tear) or
deferred maintenance. Examples are worn carpets, peeling paint,
a leaking roof, or dead landscaping.
,Fu nction al Obsolescence
is characterized by old or outdated designs or building systems.
Examples include equipment that is not repairable because parts
or no longer manufactured;
single pane window systems because they waste a large amount of
energy; outdated bathroom fixtures because of changing designs
and tastes.
Econom ic Obsolescence
represents a loss in value due to outside forces (i.e. location,
market conditions). An example would be an office building,
located in a small town, where the major employer closes. This
may result in both lower demand and rental rates.
Depr eciation
loss in value from the various forms of
obsolescence. Depr eciation can be economically estimated on a
broad level.
If a new 400 unit apa1tment building is worth $12,000,000 and
depreciates in value at 2.5% per year, what is its
Depr eciated Value after five years?
$12,000,000 - $1,500,000 = $10,500,000 Depr eciated
Valu e after 5 years
If a new 400 unit apa1tment building is worth $12,000,000 and
depreciates in value at 2.5% per year, what is its
Depr eciated Value after 1 year?
, $12,000,000 x 0.025 = $300,000 per year of Depr eciated
Valu e
If a new 400 unit apartment building is worth $12,000,000 and
depreciates in value at 2.5% per year, what is its
Accum ulated Depr eciated Value after 1 year?
$300,000 x 5 years= $1,500,000 accumulated Depr eciation
What are the different types of property values?
Investm ent Value, Assessed Value, Mar ket Valu e,
Depr eciated Value
Investm ent Value
This is the value that is generally used by investors. It is
frequently determined either by calculating the Net Oper atin g
Incom e and applying a Capitalization Rate to it or from Cash
Flow by determining the Retur n on Investm ent.
Assessed Valu e
This is the value used by government tax assessment offices. Since
it is frequently determined using sophisticated mathematical
models that are applied to many similar types of properties over a
geographic area, it can be less accurate and produce results that
are higher or lower than other types of "values".
Mar k et Valu e
This is the value that is agreed to between a buyer and seller. It
represents the "meeting of the minds".
