Certified Property Manager Practice Exam

The Certified Property Manger Certification Exam is the final step to becoming a CPM. It is generally taken after completing your property management courses, and meeting all additional requirements. Below are 15 free practice questions to help you determine if you are ready to take your Certified Property Manager test. Good luck!

Certified Property Manager Exam

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Question 1

Which of the following is a good reason for deferring maintenance on a commercial property?

A	Negative effect on resale value.
B	Higher tenant turnover.
C	Property is being sold "as-is".
D	More difficult to secure financing.

Question 1 Explanation:

Good reasons to defer maintenance are: 1) Not enough time or money. 2) Seasonal or weather conditions. 3) Parts or labor unavailable. 4) Property is being sold "as-is".

Question 2

The net change in the amount of occupied space from one period to the next is called:

A	Occupancy Rate.
B	Demand.
C	Vacancy Rate.
D	Absorption.

Question 2 Explanation:

Absorption is the space "absorbed" by tenants during the period (normally a year). It includes construction of new space and demolition of existing space.

Question 3

The Kirkpatrick Model of training evaluation recommends assessing the program on which four levels?

A	Reaction, Learning, Behavior, Results.
B	Norming, Storming, Forming, Performing.
C	Behaviors, Actions, Benefits, Shortcomings.
D	Assessment, Development, Implementation, Evaluation.

Question 3 Explanation:

The Kirkpatrick Model recommends assessing on the following levels: 1. Reaction: What the participants thought and felt about the training. 2. Learning: The resulting increase in knowledge, skills, or capability. 3. Behavior: How did the program influence their behavior on the job? 4. Results: What were the effects on the business or environment resulting from the participants performance?

Question 4

If ABC Insurance Company pays a loss that it believes is rightfully the responsibility of XYZ Insurance Company, this is called:

A	Indemnity.
B	Subrogation.
C	Co-insurance.
D	Layered insurance.

Question 4 Explanation:

After paying your insurance claim, your insurer is then subrogated to the rights of your policy and can sue the negligent party on your behalf.

Question 5

An office property's acquisition cost is $5,400,000. It is financed with a loan of $4,100,000. What is the Loan to Value (LTV%)?

A	24%
B	1.3%
C	81%
D	76%

Question 5 Explanation:

Loan Amount / Loan Value = LTV %. $4,100,000 / $5,400,000 = .76 = 76%

Question 6

Which of the following is a variable cost?

A	Insurance.
B	Real estate taxes.
C	Electricity.
D	None of the above.

Question 6 Explanation:

Variable costs are costs that change with usage, such as water and electric. Fixed costs don't change with occupancy rates, and are fairly stable during the budget period.

Question 7

Main Street Apartments spends $4,500 on a marketing campaign. They generate 18 prospects and have a conversion rate of 39%. What is the cost per prospect?

A	$250
B	$643
C	$7
D	$4,500

Question 7 Explanation:

Cost of Marketing / Number of Prospects = Cost per Prospect. $4,500 / 18 = $250

Question 8

The mall that you are managing will need new cooling towers, so you have created a reserve account. If you deposit $50,000 per year in an account that pays 3% interest, how much will you accumulate in 4 years?

A	$213,224
B	$212,000
C	$209,181
D	$221,098

Question 8 Explanation:

Calculate as follows with hp10BII calculator: 1 [SHIFT] [P/YR] [SHIFT] [C ALL] 4 [N] 3 [I/YR] 50000 [+/-] [PMT] [FV]

Question 9

Which of the following is not needed in order to calculate Effective Gross Income (EGI)?

A	Net Rent Revenue.
B	Operating Expenses.
C	Expense Reimbursements.
D	Miscellaneous Income.

Question 9 Explanation:

Net Rent Revenue + Miscellaneous Income + Expense Reimbursements = Effective Gross Income

Question 10

The section of a contract that provides a detailed description on how the work should be done is the:

A	Scope of Work.
B	Punch List.
C	Span of Work.
D	Specifications.

Question 10 Explanation:

The Scope of Work is the general summary of the work to be done. The Specifications are the detailed description of how the work should be done. The Punch List is a checklist developed jointly by the property manager and the contractor.

Question 11

Your office building has a $468,000 loan at 7% interest, amortized for 20 years. There is a balloon payment due at the end of the 10th year. What is the amount of the balloon payment?

A	$312,501
B	$468,000
C	$155,499
D	$362,800

Question 11 Explanation:

Calculate as follows with hp10BII calculator: 12 [SHIFT] [P/YR] [SHIFT] [C ALL] 20 [SHIFT] [x P/YR] 7 [I/YR] 468000 [PV] [PMT] 10 [SHIFT] [x P/YR] [FV]

Question 12

What are the two most common reasons that apartment leasing agents fail to close?

A	Size of fitness facility. Leasing agent asks questions that presuppose the signing of the lease.
B	Condition of apartment shown. No swimming pool.
C	Leasing agent is rude. Inability of prospect to afford the apartment.
D	Inability of leasing agent to ask for the order. Condition of apartment shown.

Question 12 Explanation:

The closing is the leasing agent's explicit invitation to a prospect to sign the application and the lease. Leasing agents always need to ask for the order using the appropriate closing techniques.

Question 13

This type of discipline encourages employees to monitor their own behavior and assume responsibility for their actions.

A	Phase 3 discipline.
B	Progressive discipline.
C	Positive discipline.
D	Procedural discipline.

Question 13 Explanation:

Positive discipline encourages employees to monitor their own behavior and take responsibility for their actions. Progressive discipline involves a series of interventions which give employees an opportunity to correct their behavior before being dismissed.

Question 14

When conducting a midstream analysis, you must subtract which two items from the Current Market Value in order to determine the Cash-Out Potential?

A	Cost of Sale and Current Loan Balance.
B	Current Equity and Current Loan Balance.
C	New Loans and Cost of Sale.
D	Cost of Sale and Capital Improvements.

Question 14 Explanation:

Current Market Value - Cost of Sale - Current Loan Balance = Cash-Out Potential

Question 15

Total current assets minus total current liabilities equals:

A	Net Worth.
B	Current Ratio.
C	Owner's Equity.
D	Working Capital.

Question 15 Explanation:

Working Capital focuses on the short-term turnover of money, so long-term assets and liabilities are not included. Net Worth/Owner's Equity is the difference between total assets and total liabilities.

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Related Exams and Resources:
Certified Property Manager Certification
Property Management Schools

About the Certified Property Manager Exam:
The CPM exam is designed for residential and commercial real estate professionals, and is administered by the Institute of Real Estate Management (IREM). It is four hours long and consists of 150 multiple choice questions. The questions are divided among five areas: Maintenance & Operations, Human Resources, Marketing & Leasing, Financial Operations & Asset Management, and Legal & Risk Management. A 70% is required to pass the exam.