chapter 11 property management short … 11 – property management math question answers . 1)...
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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
MacIntosh Real Estate School Uniform Course - Chapter 11
Copyright 2018 - All Rights Reserved 2 Real Estate Law & Practice (48 credit hrs)
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
MacIntosh Real Estate School Uniform Course - Chapter 11
Copyright 2018 - All Rights Reserved 3 Real Estate Law & Practice (48 credit hrs)
MacIntosh Real Estate School Uniform Course - Chapter 11
Copyright 2018 - All Rights Reserved 4 Real Estate Law & Practice (48 credit hrs)