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

Fixed expenses are costs that remain constant regardless of the level of business activities or occupancy rates. Property taxes fall into this category because they are assessed based on property value and must be paid regardless of whether the property is fully occupied or has lower occupancy levels. These taxes do not fluctuate from month to month, thus providing a clear example of a fixed expense. In contrast, marketing costs can vary depending on the campaigns being run, promotion expenses may change based on activities planned, and utility bills fluctuate based on usage, all of which are variable in nature and can change over time. Understanding which expenses are fixed and which are variable is crucial for effective budgeting and financial planning in property management.