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

What type of budget would be used for properties undergoing significant renovations?

1. Operating budget

2. Capital budget

3. Lease-up budget

4. Renovation budget

The correct answer is: Renovation budget

The selection of a renovation budget for properties undergoing significant renovations is suitable because this type of budget is specifically designed to address the costs associated with improving or upgrading a property. A renovation budget focuses on the anticipated expenses involved in the renovation process, including labor, materials, permits, and any other financial obligations that arise during the project. When a property is undergoing significant renovations, the financial planning will concentrate on the scope of the renovations, timelines, and expected returns on these investments. This budget helps ensure that resources are allocated efficiently and that the renovation project remains financially viable throughout its duration. While an operating budget deals with the day-to-day expenses of running a property, and a capital budget typically focuses on long-term investments and expenditures (which can include renovation if it's considered a long-lasting improvement), the specific nature and immediacy of the renovation costs and planning are best captured in a specialized renovation budget. This makes it the most appropriate choice for properties currently experiencing substantial changes.