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

Which of the following would likely be considered a fixed expense?

1. Repair costs

2. Utilities

3. Insurance payments

4. Salaries for maintenance staff

The correct answer is: Insurance payments

Insurance payments are considered a fixed expense because they generally remain constant over a set period, typically paid on an annual basis. This means that regardless of the level of activity within the apartment portfolio, the expense does not fluctuate month-to-month; it is a predictable and regular cost that the property owner needs to budget for. Fixed expenses are those that do not vary with the occupancy or usage levels of the property, making them easier to plan for in the operating budget. Other types of expenses, such as repair costs and utilities, can change significantly based on usage, demand, or unforeseen repair needs, while salaries for maintenance staff may vary based on hours worked or contractual agreements but are usually fixed on a monthly or annual basis.