IREM Certified Property Manager (CPM) Practice Test 2025 – All-in-One Guide to Exam Success!

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What is the primary purpose of an operating budget?

To forecast property appreciation

To plan for emergencies

To forecast annual Net Operating Income (NOI)

The primary purpose of an operating budget is to forecast the annual Net Operating Income (NOI). This financial tool provides a comprehensive overview of all anticipated revenues and expenses associated with the management and operation of a property for a specific period, typically one year. By calculating NOI, property managers can determine the property's overall profitability, assess financial health, and make informed decisions regarding operations and investment strategies.

Forecasting NOI helps in setting realistic financial expectations, managing cash flow effectively, and ensuring that the property remains sustainably profitable throughout the year. This level of financial planning is crucial for maximizing the property's value and guiding future financial planning and decision-making processes.

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To allocate funds for future developments

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