NAA CAPS cheat sheet

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

Effective Gross Income (EGI) = Potential Gross Income − Vacancy and Collection Loss + Other Income.

Operating Expense Ratio (OER) = Operating Expenses ÷ Effective Gross Income; lower ratio indicates greater efficiency but varies by property type.

Physical Occupancy = Occupied Units ÷ Total Units; Economic Occupancy = Collected Rent ÷ Potential Rent; economic occupancy reflects concessions and delinquency.

Maintenance work order priority: emergency (life-safety, habitability) → urgent (within 24–48 hours) → routine (3–7 days) → preventive (scheduled).

Preventive maintenance reduces emergency repairs and extends asset life; typical schedule: HVAC quarterly, roof semi-annually, fire systems annually.

Portfolio diversification reduces unsystematic risk; property type, geography, and tenant concentration are key dimensions.

Hold/sell analysis compares projected NOI growth, capital needs, and market cap rates against alternative reinvestment opportunities.

Lease administration tracks critical dates (expiration, renewal options, escalation, termination) to avoid missed deadlines and revenue loss.

Capitalization Rate = NOI ÷ Property Value; Value = NOI ÷ Cap Rate.

Gross Rent Multiplier (GRM) = Property Price ÷ Gross Annual Rent; used for quick comparison, ignores expenses.

Cash-on-Cash Return = Annual Pre-Tax Cash Flow ÷ Total Cash Invested.

Debt Service Coverage Ratio (DSCR) = NOI ÷ Annual Debt Service; lenders typically require 1.20–1.25x or higher.

Loan-to-Value (LTV) = Loan Amount ÷ Appraised Value; lower LTV reduces lender risk and may improve terms.

Internal Rate of Return (IRR) is the discount rate that makes NPV = 0; compares total return including sale proceeds.

Equity Dividend Rate = Annual Cash Distributions ÷ Equity Invested; measures current income return to equity.

Budget variance analysis: compare actual vs. budgeted line items; investigate variances exceeding a threshold (e.g., 5% or $5,000).

Break-even occupancy = (Operating Expenses + Debt Service) ÷ Potential Gross Income.

Situational leadership: adjust style (directing, coaching, supporting, delegating) based on follower competence and commitment.

SMART goals: Specific, Measurable, Achievable, Relevant, Time-bound; used for performance management.

Progressive discipline steps: verbal warning → written warning → suspension → termination; document each step.

Fair Housing Act prohibits discrimination in rental, sales, and advertising based on race, color, religion, sex, national origin, familial status, or disability.

Sexual harassment prevention: two types-quid pro quo and hostile work environment; employers must provide training and a complaint process.

Employee turnover cost includes recruitment, training, lost productivity; calculate as a percentage of annual salary.

Delegation requires clear authority, resources, and accountability; avoid reverse delegation.

Conflict resolution: separate people from problem, focus on interests not positions, generate options, use objective criteria.

Training needs analysis identifies gaps between current and required competencies; use for onboarding and skill development.

Property management agreement should specify scope of services, fees, authority, reporting, and termination provisions.

Fiduciary duties of an agent: loyalty, obedience, disclosure, confidentiality, accounting, reasonable care.

Ownership structures: sole proprietorship, general partnership, limited partnership, LLC, corporation, REIT, tenancy-in-common.

REITs must distribute at least 90% of taxable income to shareholders and derive 75% of income from real estate.

Asset management focuses on long-term value creation; property management focuses on day-to-day operations.

Capital expenditure planning: reserve study estimates replacement costs; fund reserves annually to avoid special assessments.

Property tax appeals require evidence of overvaluation; compare assessed value to market value and comparable sales.

Insurance coverage: property, liability, business interruption, umbrella; review limits and deductibles annually.

Owner reporting package typically includes income statement, rent roll, vacancy report, delinquency, and capital projects status.

Risk management process: identify, assess, control, monitor, and review risks.

Risk control techniques: avoidance, reduction, transfer (insurance), retention.

Fair housing: reasonable accommodation for disabilities; reasonable modification at tenant's expense (some exceptions).

Americans with Disabilities Act (ADA) applies to public accommodations; Fair Housing Act applies to residential.

Environmental hazards: asbestos, lead-based paint (pre-1978), mold, radon; disclosure and remediation requirements.

OSHA requires employers to provide a safe workplace; recordkeeping for injuries and illnesses.

Data privacy: protect tenant personal information; comply with applicable laws and breach notification.

Contractor risk: verify insurance, licenses, and use written contracts with indemnification clauses.

Emergency preparedness plan: evacuation routes, communication, drills, and business continuity.