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Answers Regarding Trust FundsWhen you enter into a management agreement,Progressive established an account for you and yourproperty. We recognize the importance of accurately collecting and disbursing funds. The bookkeepingprogram used by Progressive is specialized software(Appfolio) designed to handle the many facets ofproperty management and accurate record keeping,and complies with the requirements of your state’sDepartment of Real Estate.BankingProgressive maintains one trust account withEnterprise Bank & Trust. All rents and security deposits reside in this account. Each owner is insured by theFederal Deposit Insurance Corporation (FDIC) up to 250,000. After rents are received, we immediatelyforward the owner proceeds after our fee and anymonthly expenses have been deducted. All securitydeposits remain inthis trust account,but do not earn anyinterest. Once thetenant vacates your property, we disburse the balanceof this security deposit back to the tenant within 21days after any deductions for damage beyond normalwear and tear and other tenant caused expenses.Monthly StatementsThe management software we use is provided by Appfolio. You will have access through your Owner Portal to view real-time and monthly reports. For thoseowners who request their monthly disbursements bycheck, we will include a printed monthly statementwith their proceeds.Disbursement of Monthly FundsProgressive disburses available funds to ownerswithin 3 days of receipt of “good” funds, this meansif a tenant pays by the fifth of the month, our owners should receive their funds from 8th to the 15thof the month depending on holidays and weekends,when banks do not operate. Progressive does notdisburse funds on the weekend or holidays, and wedo not issue owners checks or ACH payments unlessthere are sufficient funds in the owner’s account. It isrecommended that you maintain a contingency fundin your rent account to cover any unexpected repairsor maintenance.Progressive distributes owner funds in two ways:1. Company check disbursed directly to the owneraccompanied by their monthly statement.2. Most commonly, when an owner uses ACH directdeposit – proceeds directly disbursed into an owner’sbank account; Progressive then mails the monthlystatement by month end to the owner.End of Year ProceduresAt the end of the year, Progressive is required to file1099’s for income received over 600 and we chargeall owners a 35 tax preparation fee. Please note thatthis amount is for “total income received”, and notthe yearly total of owner disbursements. The InternalRevenue Service dictates the “total income received”requirement, not Progressive. Please note that thesecurity deposits are not included in this amount.It is required that you supply Progressive with a W9with the necessary Social Security/Tax ID informationso the 1099 is accurate. We will send the 1099 for therent by January 31 for the previous tax year. If there isa change in your tax information such as a new trustor address, please notify us with the Owner Changeof Information form. If you need another W9 changeform, please contact us.Progressive also issues 1099s for disbursements tovendors for work over 600. Therefore, owners donot have to issue 1099s for work completed and paidthrough our trust account. Owners are responsible forissuing 1099s to any vendor paid through the owner’spersonal account.The last statement of the year will reflect “totalamounts” for income and expenses that have transpired throughout the year, such as management fees,leasing fees, landscape, utilities, repairs and maintenance, etc. The amounts will not reflect any fundsissued through the owners personal account. Ownerscan submit their last statement to their tax professional along with other information for income taxreporting. Progressive does not issue statements tothe owner’s tax preparers.Progressive Property Management, Inc. www.progressive-pm.comOwner’s Manual 6

RENTING YOUR PROPERTYshow you property and introduce their clients to yourrental. W e will screen all applicants and vet themthoroughly to determine if they meet our leasingcriteria. P rogressive will execute a lease agreement on yourbehalf with your consultation and approval. W e will conduct the move-in and transfer of keys.Showing and ApplicationsPreparing to Rent the PropertyWhen you have a vacancy, our goal is to attract thebest possible tenant for your property. To do that: We conduct a move-out evaluation of your property and determine if repairs or maintenance arerequired to make it “rent ready” We run a competitive market analysis report tomake sure your rents are priced right for the market. We subject your property to our extensive marketing program including submitting it to our localMultiple Listing Service (MLS), syndicating it to toprental websites in your market, as well as promoting it on our website.Internet/WebsiteProgressive has found that the most pervasivemarketing tool to promote your property is the MLS,it sends your property out to thousands of websitesnationwide. We will also use Craig’s List, Rent.comand other sites as necessary, but not being on theMLS limits your exposure greatly.Tenant Acquisition (Leasing) FeeThis fee will be 40% of the first month’s rent andconsists of our 30% fee to secure the tenant, and weoffer 10% to the agent who represents the tenant.Here is what we do for that one-time fee: Prepare your property for the market. Place your property in the local MLS and otherwebsites with photos. Offer a 10% commission to a cooperatingbrokerage. Real estate agents will be compensated toProgressive Property Management, Inc. (714) 528-3100The Progressive Property and Branch Managers conduct showings for each vacant unit via appointments,open houses and in some cases, secured self-showings. When prospective tenants see the property, themanagement team answers questions and prequalified potential candidates. Online applications areavailable on the Progressive website.Processing Tenant ApplicationsTenant ScreeningThorough screening is crucial to successful propertymanagement. Progressive requires all applicants to fillout a detailed application online from our website andsubmit it for processing and approval. A simple creditcheck in not enough. We conduct a careful reviewof their credit, verify income, conduct a backgroundcheck and seek previous landlord references. We alsodocument the number of occupants, earliest move-indate, pets and their motivation. Here is our minimumcriteria: 3 times the rent in verified income for allapplicants. A minimum credit score of 600 for the lowestapplicant. No evictions in the past 5 years. No lates with the previous landlord for theprevious 12 months.Cross-referencing all three areas – credit, tenanthistory and income provides the answers to qualify ordisqualify prospective applicants. If a pet is allowedon the property, the screening includes the pet byrequiring the applicant to register their pet with Petscreening.com.Co-signersProgressive normally does not accept guarantors.Our policy is that the applicants should have theability to rent on their own merits. However, there areoccasions, e.g., college age tenants, that may warrantOwner’s Manual 7

taking a co-signer or guarantor on a property. If thisis the case, Progressive will notify the owner, discussthe reasons, and obtain owner authorization. We disclose to the guarantor that they are equally responsible for the terms of the lease.PetsIf an owner authorizes a pet on the premises,Progressive requires the following: T he applicant must submit their pet informationto Petscreening.com. There is a small fee per pet( 20 for the first pet, 15 for each additional petand 0 for service/comfort animals), and the siterequests the following information: Type of Breed Weight Vaccination History License Information (If Applicable) Certification of Service/Comfort Animal from a Legitimate Source Based on this data, the site generates a “paw”score from 1 (worst) to 5 (best). W e then charge the tenant a monthly feeas follows: If the tenant would like to avoid the complexityand cost of submitting their information forPetscreening.com, we will charge the tenant 25 per pet as an application fee and 30 perpet monthly to participate in our Pet Protection Program. If the tenant would like to avoid the cost andcomplexity of using Petscreening.com, theycan pay a flat fee of 30 per pet. For that fee, we guarantee to the owner up to 1,000 per pet in pet damage over and abovethe security deposit. We will also perform an annual pet inspectionof the premises to make sure the pet is notcausing additional damage to the propertyand the tenant will be charged 95 for thisinspection.Many tenants have or want pets and it is estimatedthat 70% of all households have a pet. It is perfectlylegal for property owners to discriminate againstpets and not allow them in their rental. You may wishto allow pets though, to make your property moreattractive to prospective tenants. Even if a tenantwants a pet and you allow it, there are certain breedsthat may be restricted by your insurance an unwise toallow on your premises.Progressive recommends to owners that when aproperty is vacant is on the market, that pets are“negotiable”. This solves a couple problems:1. This encourages prospective applicants to behonest and disclose any pet. Once disclosed,based on the “paw” score, and the owner/managerpreference, Progressive can notify the applicant thatthe owner does not allow that pet. If the listing says“no pets allowed” and the applicant has a pet butalso a great desire to rent your property, they maybe inclined to lie (they are not going to give awaytheir pet or worse to occupy your rental) and createan issue after they move in with their pet.2. By listing the possession of a pet as negotiable,it avoids eliminating automatically an excellentapplicant that does care for their pet, has an excellenttenant history, owns a pet suitable for your propertyand is willing to pay a monthly fee to guarantee thatpet.Service, Comfort and Emotional Support AnimalsIMPORTANT: The above animals are not pets byFederal law, and owners cannot discriminate againsthandicapped/disabled persons with a service,comfort or emotional support animals. Fair HousingProgressive Property Management, Inc. www.progressive-pm.comOwner’s Manual 8

legislation does not allow owners or propertymanagers to collect additional deposits of anykind for these animals.However, landlords can still process applicants whoare on the same criteria as other applicants: income,credit and tenant history. If they fail to qualify inthese well documented areas, the landlord can stilldeny the application, disabled or not.The Tenant Move-inRent and Security DepositsProgressive does not accept personal checks prior torenting the property and does not allow “payments”on security deposits: we require all funds paid infull prior to taking possession of the property. It iscompany policy to collect two month’s rent as thesecurity deposit for an unfurnished unit, and we havea program that allows the tenant to pay one month’srent as the security deposit, and we guarantee thesecond month to the owner. Participation in thisprogram is optional to the owner.Rent/Lease AgreementsAt the execution of the lease, Progressive will collectall required funds. All persons 18 and over, includingadult children, are required to read and sign all leaseagreements, addendum and disclosures and completean application. If the accepted applicants are a foreignnationality and cannot read and understand thedocumentation, they must supply an interpreter oflegal age for signing the lease agreements.Walk-ThroughA vital part of the rental agreement is a detailed walkthrough documenting the condition of the propertywhen they move-in. Unless extenuating circumstances prevail, your Property or Branch Manager (or theirassigned) completes the walk-through before thetenant takes possession of the property. Photos aretaken to document the condition of the rental andany damage to the property.Working with Your TenantsCollecting RentRents are due on the 1st of themonth and late if not receivedin the Progressive office by the5th of the month.Progressive recognizes thatmany things can happen whereit concerns rent: rent can reallybe lost in the mail; employers can delay the tenant’spaycheck; there are real tenant emergencies, andmore. Therefore, we do make a serious concertedeffort to determine the reason the tenant is havinga problem. If Progressive receives rent prior to the“3-Day Notice to Quit or Pay” has expired, we do notcontact the owner. Once the 3-Day has expired, wewill contact the owner and determine the next steps.Notice to Quit or Pay RentIf Progressive does not receive rent by the due date(typically the 5th of the month), we prepare anddeliver a timely 3-Day Notice to Quit or Pay, as thelaw allows. Progressive makes every effort to mailand post notices properly should legal action berequired. If Progressive determines the tenant isnot going to pay rent during the notice to pay or quitperiod, or shortly thereafter, we will contact theproperty owner and work out a plan of action leadingto possible eviction.Other NoticesThere are other notices that may be involved withthe tenants. Progressive serves notices as situationswarrant, such as a notice to comply with the rules andregulations of a homeowner’s association, a noticeto enter the property, a notice to perform inspectionor a notice to allow vendors access for necessaryrepairs. These tenant violations may be in the formof a certified letter or a legal notice “form”. Oftenthese notices are simply to correct minor tenantProgressive Property Management, Inc. (714) 528-3100Owner’s Manual 9

problems and most tenants quickly comply. However,if necessary, Progressive may contact the owner withthe information to discuss the situation.AB 1482 – Statewide Rent Control MeasuresCertain properties will be subject to Statewide RentControl and tenants are provided additional legalprotections on rent increases and our ability to havethem vacate the property. We will keep you abreastof the tenant’s legal protections and assist you inabiding by all city, county and state laws.Tenant ProblemsProgressive has years of experience handling themyriad of tenant difficulties that may occur. Ourpolicy is to obtain good tenants which eliminatesmany tenant problems. However, even good tenantshave problems. Progressive treats each problem witha common-sense approach, follows all landlord andtenant laws, and uses the appropriate documentation. If the situation turns serious, we will contactthe owner and work tofind a solution for theproblem.Legal ActionAlthough Progressiveworks diligently to avoidthe necessity to begina legal action, such asan unlawful detaineror eviction proceeding,it can happen. In theevent any legal actionis required, Progressivewill contact the owner prior to taking action, discussthe situation and obtain owner authorization.MaintenancePreventative MaintenanceThe best approach to maintenance is “preventativemaintenance”, and this is the Progressive policy.First, Progressive has already started educating thetenant by: Including a Lease Addendum outlining tenantresponsibilities regarding maintenance as well asowner obligations. Completing a walk-through documenting thecondition of the property before the tenant takespossession. G iving the tenant two weeks after move-in tobring up any issues with the property which can beimmediately addressed. If the tenant participates in one of our threeResident Benefit Packages, we supply a propersized air filter directly to the property twice a year.We want the tenant to know from the beginning oftheir tenancy that the Progressive landlord expectations are to “care for the property”. This approach canprevent costly maintenance.Next, we use “preventative maintenance” techniqueswhen work is required and utilize competent contractors. Often the minor expenditures save the mostmoney such as doorstops, new filters, checking appliances, testing smoke alarms, adjusting doors, windowlatches deadbolts and more. Many small repair itemscan prevent maintenance that is more expensive.Consider the cost of repairs like holes behind doorsclogged heaters and air conditioners, appliance problems, dry rot, safety issues and more. Then of course,there are the major issues in a home such as roof, theexterior condition of the building, carpeting, interiorand exterior paint, etc. When left to deteriorate, itusually means the owner will have to spend more inthe future.It is equally important to keep up with maintenancewhile the tenant occupies the property. Often people think no news is good news; this can be just theopposite. Instead, delayed news can become very badand expensive news.This is why, in our tenant instructions, we requirethem to report maintenance. For example, whatis worse than finding out dry rot could have beenProgressive Property Management, Inc. www.progressive-pm.comOwner’s Manual 10

prevented or because a tenant does not report a leakin the toilet, there is major damage to the flooring?Avoiding major maintenance costs are certainly morefavorable is such cases.The Progressive management team contacts ownersregarding maintenance above the minimum thatis listed in the management contract, unless thesituation is an emergency.Emergencies/DisasterWhen an emergency and/or disaster strikes,Progressive has policies in place for the propertyand tenants. We notify the property owner as soonas practical. The nature of the emergency and/ordisaster determines the action needed by Progressive.There are times when a property manager must “act”quickly in order to prevent great financial risk tothe owner. For example, when a property is flooding,action is necessary, particularly if the property owneris not immediately available.When the Tenant VacatesNotice to VacateWhen there is a notice to vacate, the move out procedures with tenants are as critical as when Progressive moves in a tenant. The preparation for this reallybegan when the tenant moved in with a detailed leaseagreement, Move-In Checklist and walk-through. Allof these documents gave instructions to the tenanton how to move out.Communication with Owners and TenantsIt is critical that Progressive follow a standardized renewal and/or notice to vacate, so here is the process: A pproximately 90 days prior to the leaseexpiration the owner is contacted and asked twoquestions: Does the owner want to keep this as a rental orsell? If the owner wants to sell, or move

Property Management as your property management company. We look forward to a long and successful business relationship. Central Office Information Mailing Address 1251 Yorba Linda Blvd. Placentia, CA 92870 Communication Office# (714) 528-3100 Scott's Extention (714) 528-3100 ext. 101 Fax# (714) 528-5522 General E-mail info@propropinc.com