Certified Apartment Portfolio Supervisor (CAPS) Practice Exam - Module 2

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Prepare for the Certified Apartment Portfolio Supervisor exam with our comprehensive quiz based on Module 2. Engage with multiple-choice questions and detailed explanations to help you enhance your knowledge and excel in your examination.

Practice this question and more.

What might indicate a strong financial health of an apartment portfolio?

Constant increase in maintenance needs
Low occupancy and high turnover rates
High net operating income and low vacancy rates
High levels of liabilities compared to assets

The correct answer is: High net operating income and low vacancy rates

A strong financial health of an apartment portfolio is indicated by high net operating income (NOI) and low vacancy rates. High net operating income reflects the income generated from the property after all operating expenses have been deducted, which is crucial for assessing the profitability of a portfolio. When NOI is high, it typically means that the property is performing well financially, generating sufficient revenue to cover costs and potentially provide returns to investors. Low vacancy rates are essential because they signify a steady demand for the apartments, leading to consistent rental income. If a property has low vacancy rates, it suggests that units are being leased quickly and that the management is effectively marketing and maintaining the property. Together, high NOI and low vacancy rates create a favorable financial situation, indicating that the apartment portfolio is in strong financial health.