AIC CAC cheat sheet

Management agreement defines scope, fee basis, owner authority limits, and reporting frequency; the manager acts as the owner's agent, not as principal.

Management fee is typically a percentage of collected income, so the fee falls when collections fall - a structural incentive for diligent rent collection.

Net Operating Income (NOI) = Effective Gross Income − Operating Expenses; it excludes debt service, income taxes, and capital expenditures.

Effective Gross Income = Gross Potential Rent − Vacancy and Credit Loss + Other Income.

Operating Expense Ratio = Operating Expenses ÷ Effective Gross Income; compare against the property's own historical trend and its competitive set.

Capital expenditures (roof replacement, HVAC changeout) are excluded from NOI and funded from reserves or capital budgets.

Reserve for replacement is commonly funded per unit per year and sized to a component schedule (roof, paving, appliances, HVAC).

A property's operating budget is built bottom-up by line item using prior-year actuals, current contracts, and known changes in occupancy or rent.

Property condition and occupancy drive staffing ratios; payroll and benefits are usually the largest controllable operating expense line.

Economic occupancy measures rent actually collected against gross potential rent; physical occupancy counts occupied units against total units.

Vacancy loss = lost rent from empty units; credit loss (bad debt) = billed rent not collected - track them separately.

Average daily occupancy = total occupied unit-days ÷ total available unit-days for the period.

Turnover rate = move-outs during period ÷ average number of units; annualized by dividing by average units and multiplying by 12 ÷ months in period.

Rent-ready days and make-ready cost per turn are the two core metrics linking leasing to maintenance performance.

A lease is a binding contract; renewal offers should be issued early enough to preserve the owner's ability to re-lease if declined.

Concession costs (free rent, waived fees) should be amortized over the lease term so the effective rent reflects true revenue.

Traffic-to-lease ratio = leases signed ÷ qualified prospects; a rising ratio signals pricing or closing problems, not traffic problems.

Occupancy thresholds in loan covenants and management agreements can trigger reporting or performance obligations.

Federal Fair Housing Act prohibits discrimination based on race, color, religion, sex, national origin, familial status, and disability.

Many state and local laws add protected classes such as source of income, age, marital status, sexual orientation, and gender identity - the stricter standard controls.

Reasonable accommodation = a change in rules, policies, or services for a person with a disability; reasonable modification = a physical change to the unit or common area.

Disability discrimination includes failing to allow assistance animals, refusing to permit unit modifications at the tenant's expense, and failing to design/construct accessible units.

Familial status protection covers households with children under 18, pregnant persons, and persons securing legal custody.

Occupancy standards must be based on objective factors (unit size, configuration) and applied uniformly; they cannot be used to exclude families with children.

Consistent written screening criteria (income ratios, credit, rental history, criminal history with individualized assessment) reduce disparate-treatment and disparate-impact risk.

Advertisements must avoid discriminatory wording; use equal housing opportunity language and describe the property, not the preferred resident.

Fair housing complaints are typically filed with HUD or a state/local agency within one year of the discriminatory act; keep records supporting every adverse decision.

Service request response times should be defined in writing and tiered by urgency: emergency (immediate), urgent (24 hours), routine (3–5 business days).

Complaint resolution follows a documented loop: acknowledge, investigate, act, confirm with the resident, and log the outcome.

Resident satisfaction survey scores correlate with renewal intent; measure at move-in, mid-lease, and pre-renewal.

Renewal rate = renewals ÷ leases expiring in the period; it is the cheapest source of occupancy because turnover costs exceed retention costs.

Move-in inspection documentation protects both parties and establishes the baseline for deposit deductions at move-out.

Deposit accounting must follow state law on holding period, interest, itemization, and timing of the refund statement.

Clear written communication about rent due dates, late fees, and payment methods reduces delinquency and disputes.

Retention outreach should begin 90–120 days before lease expiration, before the resident starts shopping the market.

Gross Potential Rent = total units × market rent × 12, adjusted for actual rent roll and scheduled increases.

Vacancy and credit loss is budgeted as a percentage of gross potential rent, informed by trailing 12-month actuals.

NOI = EGI − operating expenses; debt service is a below-the-line item and does not reduce NOI.

Cash flow before debt service = NOI − capital expenditures − debt service − reserves.

Operating expense benchmarking is expressed per unit or per square foot, not as a raw dollar total.

Variance analysis compares actual to budget and to prior year; label each variance as timing, volume, rate, or one-time.

A budget is a management tool: line items should be controllable by the on-site team and reviewed monthly with a written variance explanation.

Reserve funding is a real expense of ownership; underfunding reserves shifts cost to future periods and distorts current NOI.

Delinquency ratio = past-due balances ÷ total billed rent; track aging buckets (0–30, 31–60, 61–90, 90+).

Preventive maintenance schedules extend equipment life and reduce emergency repairs; work orders should be tracked by category and completion time.

Deferred maintenance raises future capital needs and can create habitability and liability exposure.

Habitability obligations (implied warranty of habitability, state statutes) require functioning heat, water, plumbing, and safe common areas.

Emergency maintenance includes no heat, no water, sewage backup, gas leaks, fire damage, and lockouts - respond immediately and document.

Risk transfer tools: insurance (property, liability, umbrella), hold-harmless clauses, vendor certificates of insurance, and waivers where lawful.

Slip-and-fall claims are reduced by documented inspection logs, snow/ice removal contracts, lighting checks, and prompt repair records.

Vendor management requires W-9/1099 handling, COI verification, scope-of-work documentation, and completion sign-off.

Unit entry requires notice per state law except in genuine emergencies; log every entry with date, time, and reason.

Loss prevention includes key control, background screening per applicable law, and incident reporting for every injury or property damage event.

A manager owes fiduciary duties to the owner: loyalty, obedience within lawful authority, disclosure, confidentiality, and accounting for funds.

Trust funds (security deposits, rents held for owners) must be held in a designated account and never commingled with operating funds.

Confidentiality covers owner financials and resident personal information; disclose only as required by law or contract.

Disclose conflicts of interest (vendor relationships, referral fees, side businesses) in writing before acting.

Representations to residents and owners must be accurate; do not promise outcomes (approval, repair timing) outside documented policy.

Documentation standards: date, time, parties, facts, and actions taken - opinions and speculation should be excluded.

Fair dealing means applying written criteria consistently; exceptions create liability and undermine defensibility.

When an owner directs an unlawful act (e.g., discriminatory screening), the manager must refuse and document the refusal.