31 Beaches will handle the security deposit disposition with residents that we screened and moved into a property. We utilize a thorough report that is completed upon moving in, which includes photographic evidence to reference the properties former condition. In addition, we are experts in resident-landlord laws which determine what can legally be deducted. Within our Property Management Agreement, you are granting us the authority to do this on your behalf. 31 Beaches reserves the right and authority to, at any point in time and at our discretion, turn over the security deposit to the owner who will then be personally responsible for the security deposit disposition. This may happen in rare cases in which:

1. The owner disputes what 31 Beaches states are illegal deductions as it pertains to California landlord-resident law and demands additional funds to be deducted from the security deposit.

2. Our management agreement is being terminated on the same day that the lease agreement with the residents is also being terminated.

31 Beaches Property Management provides service to the greater San Diego County areas. We have multiple Portfolio Managers that are responsible for property portfolios that are geographically focused to provide fast and efficient service. We have a centrally located San Diego office to support our team:

San Diego Office 3825 32nd Street San Diego, CA 92104

We deliver high-end San Diego property management based on 20+ years of experience, having designed our program to exceed your expectations, build trust and confidence, and maximize the value of your real estate assets. We prioritize transparency, communication, and a high level of ethical integrity. Our objective is to be the trusted advisor to protect your rental property investment, achieve your real estate financial goals, and free you of the time involved in being a landlord. If these values are important to you, then 31 Beaches will be a good fit for your San Diego property management services!

Yes, CA law requires property owners to disclose any of the following if they apply to their property:

• Lead-based paint

• Mold

• Asbestos

• Bed Bugs

• Water sub meters

• Carbon monoxide detector not installed

• Smoke alarms not installed

• Water heater not braced

• Prop. 65 Warning notice not posted

• Unsafe pool/spa drain cover or lack of other pool safety measures

• Death on the property in the past 3 years

Yes, the sale of your property is legal while your property is being rented by a resident, however, you must do so in a way that does not unlawfully affect your residents’ rights. 31 Beaches is an expert in real estate sales with resident in possession. We partner with PorchLight Realty and can list your property, and facilitate the sale from beginning to end, while simultaneously keeping positive relationships with your current residents. Because our property management agreement provides for an exclusive agency relationship, you may not hire another Agent to facilitate the sale of your property until your agreement with 31 Beaches is concluded or terminated with proper 30-day notice.

Yes, if a property owner resides outside of the State of California, 31 Beaches is required to withhold 7% of the rent collected and submit it to the state tax authorities on a quarterly basis. Withholdings are submitted quarterly by 31 Beaches on the property owner’s behalf to the California Franchise Tax Board with a FTB Form 592, Quarterly Nonresident Withholding Statement. Before January 31st of the following calendar year, we provide the property owner with a statement showing the total amount of income subject to withholding and the total amount withheld, using a FTB Form 592-B, Nonresident Withholding Tax Statement.

We advise our property owners to consult with their tax accountant regarding the reporting and handling of rent income on their annual tax return. 31 Beaches is legally obligated to report the gross rental income distributed to you on a 1099 form to the IRS and as such will need your social security number for reporting purposes.

We advise all our property owners to consult with their insurance agent to be certain they are carrying an adequate landlord/rental dwelling insurance policy. We require proof of proper insurance and that 31 Beaches Property Management be named as additionally insured (this is standard procedure with insurance companies and not at additional cost to the property owner).

This is an amount (typically $500) of the property owner’s funds that 31 Beaches holds in our broker trust account as contingency funds for any repairs, daily obligations, maintenance issues, and emergencies that may occur at the property over the course of the given month. The reserve is funded upon receipt of the first month’s rent and is replenished each month when rent is received to offset expense items during the previous month. If expenses should exceed the $500 reserve, or if 31 Beaches needs funds for repairs which are to be completed before the resident move-in date, an owner deposit will be required to pay for such expenses.

31 Beaches shall obtain prior approval for any expenditure over the maintenance limit (typically set at $500). Any minor items below the maintenance limit will be resolved using our own best judgement. The only exceptions would be when emergency action is needed to protect the property or the well-being of the resident.

Wear and tear on a rental property is normal and should be expected over the course of a resident’s lease agreement. To keep your rental home properly maintained, 31 Beaches will facilitate regular maintenance of the property, as needed and necessary, on appliances and other home aspects such as HVAC, plumbing, electrical, windows/screens and doors, garden and landscaping. Maintenance items spotted by 31 Beaches or reported by the resident are entered in our system as “work orders”, then forwarded to our maintenance team, for completion of the associated repairs. Invoices and charges related to such maintenance items will appear on your monthly owner statement, subtracted from your owner reserves or rent collected in the given month.

Maintenance is a necessary service that we must provide to deliver on the rest of our property management business services. It is a simple fact: if you want to own rental properties, you must have the understanding and financial resources to keep the rental home properly maintained. Just like maintaining your car, nobody likes to spend the money to do it, but it is a necessity to keeping a car running and performing safely. With our Preferred Vendor Program, 31 Beaches provides a maintenance solution with a maintenance program that is hard to find from any one company. The objective is to provide value and a fair price, with a top level of service, but may not necessarily be the cheapest or absolute lowest cost.

• 31 Beaches is available 24/7/365 for resident emergencies.

• They are always staffed to take on any maintenance/repair task.

• Software systems and processes are in place to handle requests quickly and efficiently.

• 31 Beaches has the breadth of expertise, capacity, and vendor relationships to act quickly with minimal disruption for the property owner and resident.

• Each tradesman is vetted professionally to confirm their level of experience, active license, and proper level of liability insurance.

• Allows owners to be “hands-off” and leave the heavy lifting to 31 Beaches.

Broker advises Owner to set aside his/her own maintenance reserves between 10-15% of owner distributions received for ongoing and unexpected maintenance purposes. Another good rule of thumb, according to the “one-percent rule”, is to set aside at least one-percent of your home’s value every year for home maintenance. Using this logic, if your home is worth $450,000, you should set $375 a month for expected home maintenance and anticipate about $4,500 in repair costs during the year.

NO CASH OUT OF POCKET is required to start the process with any of our programs if you are starting with us with a vacant property… we get our fees only when we find acceptable renters, we have moved them into the property, and the rent is collected. There are NO upfront fees or start-up costs to you. The only exceptions to this are if we are asked by an owner to manage home improvement projects to make their home “rent ready”, when taking on a rental property with a resident in possession, or if the property is being transferred from another property manager.

The method of calculating a security deposit deduction for repair or replacement of an item in a rental home pro-rates the total cost of the repair or replacement such that the resident pays only an amount relative to the remaining useful life of the item that the resident has damaged. For example, suppose a resident has damaged an eight-year-old carpet that had a life expectancy of ten years, and that a replacement carpet of similar quality would cost $1,000. We could properly charge only $200 for the two years’ worth of life (use) that would have remained if the resident had not damaged the carpet. All fixtures, appliances, furnishings, etc. in a home have a defined useful life.

California law specifically allows us to use a security deposit for four purposes:

• For unpaid rent;

• For cleaning the rental unit when the resident moves out, but only to make the unit as clean as it was when the resident first moved in;

• For repair of damages, other than normal wear and tear, caused by the resident or the resident’s guests; and

• If the lease or rental agreement allows it, for the cost of restoring or replacing furniture, furnishings, or other items of personal property (including keys), other than because of normal wear and tear.

We can withhold from the security deposit only those amounts that are reasonably necessary for these purposes. The security deposit cannot be used for repairing defects that existed at the property before a resident moved in, for conditions caused by normal wear and tear during the tenancy or previous tenancies, or for cleaning a rental unit that is as clean as it was when a resident moved in.

31 Beaches holds all deposits provided by residents and owners in our Broker Trust Account for safe keeping as regulated by California law. By holding security and rent deposits ourselves, it makes the move-out process with the resident easier when it comes time to reconcile any necessary cleaning fees, repair, and the subsequent security deposit disposition. We offer two options to our residents for Security Deposits. The traditional security deposit is calculated at 1x the rent and can increase based on credit. We hold onto the full amount in an escrow account until the resident moves out. Any damages found at the time of move out will be taken out of this deposit. The second option is our security deposit replacement program. This option allows them to pay a monthly fee in lieu of the traditional deposit. They are still responsible for any damages at move out.

31 Beaches utilizes the “2nd month proration” method of accounting in regard to the rent due in the first month. This method requires payment of a full month’s rent at the beginning of the tenancy. This provides extra security for our property owners and allows us to pay all relevant leasing fees and maintenance at resident move-in. 31 Beaches then prorates rent for the 2nd month based on their actual move in date based on a 30-day month. For example, if a resident moves in on the 10th of the month, their first month rent due will be a full one month’s rent. The second month will then be prorated for the 20 days of rent. Each month thereafter, the rent is due on the first.

No. 31 Beaches requires that all property owners provide assurance that mortgages, taxes, insurance and any HOA dues are current and are not in default. Also, we require the assurance that the property is not in foreclosure or pending foreclosure action.

Businesses of all types in California must occasionally adjust to ever changing state compliance and regulatory requirements, tax/labor laws, and market fluctuations. While we do our best to absorb costs and avoid program/price changes, adjustments may occasionally be necessary to provide our clients with the best level of service they have come to expect. If the need should arise to make such a change in our program, policies, or pricing, we will be transparent about the adjustment by providing you with 30-day written notice with a full explanation of the changes.

Over two-thirds of all rental applicants will have a pet(s). When allowed in a rental home, we want our property owners to feel comfortable that the pet(s) has been screened, vetted, and approved by our property management team. All pet/animals will be subject to a separate pet screening which requires the prospective resident to provide a photo of the pet/animal, name of breed, weight, veterinarian and vaccine information, age of pet, as well as other information requested by our partnership with PetScreening.com. Various dog breeds such as Pit Bull Terrier may be cause for immediate rejection. No aquariums larger than 10 gallons will be allowed. No wild cats (non-domestic breeds), ferrets, reptiles or rodents of any kind are permitted. We do not charge a separate pet deposit. We do, however, charge monthly pet rent of $50 ($75 if there are two pets) which is retained by 31 Beaches as part of our Pet Guarantee. We are required to give special consideration to Service Animals that are registered and certified to assist a resident with special medical or emotional needs (proper and current documentation will be required for verification as part of the pet screening process). As a standard policy, 31 Beaches provides reasonable accommodations and follows HUD guidelines regarding assistance animals (FHEO-2013-01, Issued: April 25, 2013).

Our resident screening process is quite thorough and diligent. Each interested renter is required to complete a rental application, agree to a background and credit check, and meet the minimum qualification criteria to be considered as a resident. We obtain a credit, criminal, and eviction history background report on each applicant. We also contact previous landlords for rental references and verify current employment as well as bank statements. We work with our owners directly to review the prospective applicants and make the best choice to fit your needs and the amenities of the property.

Yes, but only in cases when a property is vacant. If the owner or resident is still residing at the property, lockboxes will not be used. Under certain conditions and when a property meets specific criteria, we have “self-access lockboxes” which allow Realtors and prescreened/prequalified prospective residents who have provided valid identification to have access to a property for viewing by themselves. Self-access lockboxes are only used when a property is unfurnished and vacant (no resident or persons currently occupying the unit). Self-access showings are within a very limited time window through unique access code to an electronic lockbox. The unique code captures exactly which prospective residents have accessed and departed the property and at what time. This is very effective in helping us get your property rented quickly. During periods of self-show activity, 31 Beaches makes regular visits to the property to make sure it is locked, safe, and secure.

31 Beaches handles the collection of rent monthly from the resident by check, online bank payment through our resident portal, or credit card. The rent is deposited into the 31 Beaches Broker Trust Account, then dispersed to you after we take our fees and expenses. You’ll get a monthly statement on all financial activity related to your property and your owner disbursement by the 10th day of each month after the closing of our monthly accounting cycle. These reports are available to you online at any time through the Owners Portal on the 31 Beaches website, so you can keep up on what’s going on at any time.

Yes, we are happy to step in as your property manager with a resident in possession and/or another property manager involved, provided the resident is in good standing with rent collection, you have informed the other property manager of your decision to change, and there are no resident/landlord legal matters pending.