Which of the following can be a management problem when investing directly in real estate?

• A. Automatic diversification across multiple asset classes
• B. Lack of exposure to stock market volatility
• C. Dealing with tenant complaints and property maintenance
• D. Receiving fixed interest payments

Answer: (C)

Verified step by step guidance

1. Understand the context of the question: The problem is asking about potential management issues when investing directly in real estate. This requires identifying challenges specific to real estate management.
2. Analyze the options provided: Evaluate each option to determine if it represents a management problem related to real estate. For example, 'automatic diversification across multiple asset classes' and 'lack of exposure to stock market volatility' are not management problems but rather investment characteristics.
3. Focus on the nature of real estate investments: Direct real estate investment often involves active management, which includes responsibilities like tenant relations and property upkeep. These are potential management challenges.
4. Evaluate the correct answer: 'Dealing with tenant complaints and property maintenance' is a clear management problem because it involves ongoing operational responsibilities that require time, effort, and resources.
5. Conclude by eliminating irrelevant options: Options like 'receiving fixed interest payments' are not related to direct real estate management but rather to fixed-income investments, making them irrelevant to the question.