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

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Prepare for the CAPS Exam with a comprehensive study of Module 2. Utilize our practice resources filled with flashcards, multiple choice questions, and thorough explanations to ensure your success!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

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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.