Property Management
The 'capital expenditures' budget in property management covers costs for:
AA. Monthly operating expenses like utilities and janitorial services
BB. Major improvements and replacements with a useful life of more than one year✓ Correct
CC. Tenant move-in and move-out procedures
DD. Property management fees and commissions
Explanation
Capital expenditures (CapEx) are major investments in property improvements or replacements (roof, HVAC, parking lot) with useful lives beyond one year. They are distinguished from operating expenses (OpEx) on financial statements.
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Key Terms to Know
Earnest Money
A deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
Purchase AgreementA legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
Option ContractA contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.
Math Concepts
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