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

When is a lease-up budget primarily used?

1. For properties with stable occupancy

2. For properties undergoing renovations

3. For new properties reaching stable occupancy

4. For fully leased properties operating normally

The correct answer is: For new properties reaching stable occupancy

A lease-up budget is primarily used when dealing with new properties that are in the process of reaching stable occupancy. This budget is specifically designed to address the financial aspects associated with filling vacant units in a newly constructed or acquired property. The key considerations in a lease-up budget include marketing expenses, leasing commissions, tenant improvements, and other costs that may arise during the initial phase of leasing. This approach helps property managers and owners anticipate the financial needs and challenges involved in achieving full occupancy. The focus is on ensuring that sufficient resources are allocated toward attracting tenants and meeting the specific needs of a property that has just entered the rental market. As the property moves through its lease-up phase and begins to stabilize with a consistent occupancy rate, the budget becomes less critical. In contrast, properties with stable occupancy, those undergoing renovations, or fully leased properties operating normally typically rely on different budgeting strategies that reflect their ongoing operational needs rather than the focused objectives of filling unoccupied units.