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

Which of the following is included in operating expenses for a property?

1. Total revenue from tenants

2. Property insurance premiums

3. Mortgage interest payments

4. Market value of the property

The correct answer is: Property insurance premiums

Operating expenses for a property refer to the costs necessary to maintain and operate the property on a day-to-day basis. These expenses are typically recurring and essential for the property's ongoing functionality and management. The inclusion of property insurance premiums in operating expenses is crucial because they are a necessary cost that protects both the property and the owner's financial investment against unforeseen events such as damage or liability claims. This is a critical expense that property owners must pay regularly to ensure coverage, and it directly relates to the operational aspect of managing real estate. Other choices, while related to financial aspects of property management, do not fall under the category of operating expenses. Total revenue from tenants reflects the income generated and does not represent an expense. Mortgage interest payments pertain to financing costs, which are usually categorized separately from operating expenses. The market value of the property is an assessment of worth, not an operational expense. Each of these choices addresses different facets of property management and financial considerations, underscoring the significance of correctly identifying which costs are operational.