Accredited Residential Manager (ARM) Certification Practice Exam

The term that describes spending on capital assets that add to a property's value is known as Capital Expenditure. This type of expenditure refers specifically to funds used by a property manager or owner to acquire, upgrade, or maintain physical assets such as buildings, machinery, or the property itself, which will enhance its overall value or extend its useful life. Capital expenditures are considered long-term investments in the property, often leading to increased efficiency, improved aesthetics, or enhanced functionality, making them essential for strategic property management.

In contrast, other terms such as Capital Revenue refer to income generated from investments or asset sales, and Operational Expenditure pertains to the day-to-day costs of running the property, like utilities and maintenance, which do not typically add long-term value. Maintenance Cost is more focused on repairs and upkeep to maintain current asset conditions rather than improve property value. Understanding these distinctions is crucial for effective financial planning and property management.