Special Reports

SPECIAL
REPORTS
Whitney Education Group, Inc.®
1612 Cape Coral Parkway, Suite A
Cape Coral, FL 33904
© 2003 Whitney Education Group, Inc.®

All Rights Reserved
Digital Format © 2003
Notice
This publication and the accompanying materials are designed to provide accurate and authorita-
tive information in regard to the subject matter covered in it. It is sold with the understanding that
the publisher is not engaged in rendering legal, accounting or other professional opinions. If legal
advice or other expert assistance is required, the services of a competent professional should be
sought. (From a Declaration of Principles adopted jointly by a Committee of the Bar Association
and a Committee of Publishers and Associates.)
SPECIAL REPORTS
TABLE OF CONTENTS
ARE YOU AN ENTREPRENEUR?
CHOOSING YOUR BUSINESS
STARTING YOUR BUSINESS
BORROWING MONEY FOR YOUR BUSINESS
LOCATING YOUR BUSINESS
REAL ESTATE INVESTMENT STRATEGIES
REAL ESTATE FINANCING GUIDE
PROPERTY TAXES
FREQUENTLY ASKED QUESTIONS (FAQ)
TIME MANAGEMENT FORMS
ADDITIONAL RESOURCES
ARE YOU AN
ENTREPRENEUR?
SPECIAL REPORT ONE
©2003 Whitney Education Group, Inc.®

SPECIAL REPORT ONE
ARE YOU
AN ENTREPRENEUR?
(A PERSONALITY PROFILE)
Today’s successful entrepreneurs are a study in contradictions. They may hate details, but they tend
to be very organized. They love their independence and freedom, but they recognize that, to a large
extent, their success depends upon teamwork and the loyalty and efforts of others. They want to run
the show, but as they become successful, their businesses in turn become more and more controlled
by the managerial teams they have appointed. They love to roll up their sleeves, get involved, and do
everything themselves. However, eventually they must learn to delegate responsibilities in order to
get everything done.
The entrepreneurial personality is comprised of an intriguing blend of ingredients. Most successful

entrepreneurs have a touch of introspection, a dash of showmanship, and healthy doses of drive,
adaptability, and love of adventure. These ingredients exist either in combination within a person or
between individuals who team up as partners in a new enterprise.
ENTREPRENEURIAL PERSONALITY TEST

How many of the entrepreneurial personality characteristics do you have? Take the following test and
discover the traits within yourself that can work for or against you if you start your own business. For
each statement circle the number that best represents you, with the rating of “6” being most like you
and “0” being least like you.
INDEPENDENCE
1. I usually do things my own way. 6 5 4 3 2 1 0
2. I tend to rebel against authority. 6 5 4 3 2 1 0
3. I have a reputation for sometimes being stubborn. 6 5 4 3 2 1 0
4. I like to take the initiative. 6 5 4 3 2 1 0
5. I often enjoy being alone. 6 5 4 3 2 1 0
6. I gravitate toward positions of leadership. 6 5 4 3 2 1 0
7. I like responsibility. 6 5 4 3 2 1 0
8. I tend to stand on my own rather than ask for help. 6 5 4 3 2 1 0
Special Report One: Are You An Entrepreneur? 1—1

9. I like to be in control. 6 5 4 3 2 1 0
10. Personal freedom is very important to me. 6 5 4 3 2 1 0
Your score for Independence ___________
SELF-DISCIPLINE
11. I’m persistent. 6 5 4 3 2 1 0
12. I finish projects even if they involve a lot of work. 6 5 4 3 2 1 0
13. I’ll work as long as it takes to finish a project. 6 5 4 3 2 1 0
14. When I’m interested in a project, I need less sleep. 6 5 4 3 2 1 0
15. If something needs doing, I’ll do it even if unpleasant. 6 5 4 3 2 1 0
16. I have good concentration. 6 5 4 3 2 1 0
17. When I want something, I clearly see the end results. 6 5 4 3 2 1 0
18. I keep New Year’s or other resolutions I make. 6 5 4 3 2 1 0
19. I analyze my mistakes to learn from them. 6 5 4 3 2 1 0
20. I have a strong personal drive and need to achieve. 6 5 4 3 2 1 0
Your score for Self-Discipline __________
CREATIVITY
21. It’s easy for me to find solutions to problems. 6 5 4 3 2 1 0
22. I see problems as challenges. 6 5 4 3 2 1 0
23. I have innovative ideas. 6 5 4 3 2 1 0
24. I am adaptable. 6 5 4 3 2 1 0
25. I am curious. 6 5 4 3 2 1 0
26. I tend to be very intuitive. 6 5 4 3 2 1 0
27. I can think of original ideas for common objects. 6 5 4 3 2 1 0
28. I’m receptive to new ideas. 6 5 4 3 2 1 0
29. I have a good imagination. 6 5 4 3 2 1 0
30. I experiment with new ways to do things. 6 5 4 3 2 1 0
Your score for Creativity __________
DRIVE AND DESIRE

31. Once I make up my mind, nothing stops me. 6 5 4 3 2 1 0
32. If something “can’t be done”, I find a way to do it 6 5 4 3 2 1 0
33. I’m willing to sacrifice to attain long-term gain. 6 5 4 3 2 1 0
34. I would describe myself as gutsy. 6 5 4 3 2 1 0
35. I would describe myself as determined. 6 5 4 3 2 1 0

36. I would describe myself as motivated. 6 5 4 3 2 1 0
37. I would describe myself as persistent. 6 5 4 3 2 1 0
38. I would describe myself as positive. 6 5 4 3 2 1 0
39. I would describe myself as committed. 6 5 4 3 2 1 0
40. I would describe myself as ambitious. 6 5 4 3 2 1 0
Your score for Drive and Desire __________
RISK-TAKING
41. I feel if I don’t take risks, I’ll get stuck in a rut. 6 5 4 3 2 1 0
42. I enjoy discovering new and unusual things to do. 6 5 4 3 2 1 0
43. I have a high need for adventure. 6 5 4 3 2 1 0
44. I live life to the fullest. 6 5 4 3 2 1 0
45. I take chances. 6 5 4 3 2 1 0
46. I think people who take chances are more successful. 6 5 4 3 2 1 0
47. I’ll stick out my neck even I don’t believe in it. 6 5 4 3 2 1 0
48. I’ll gamble on a good idea. 6 5 4 3 2 1 0
49. I’ll face failure in order to expand my horizons. 6 5 4 3 2 1 0
50. I’ll delve into unknown subjects to learn them. 6 5 4 3 2 1 0
Your score for Risk-Taking __________
CONFIDENCE
51. I have a healthy self-esteem. 6 5 4 3 2 1 0
52. I am emotionally resilient. 6 5 4 3 2 1 0
53. I am a self-assured person. 6 5 4 3 2 1 0
54. I can handle any situation. 6 5 4 3 2 1 0
55. I feel like a winner. 6 5 4 3 2 1 0
56. I believe in myself. 6 5 4 3 2 1 0
57. I’m “on top” of things, no matter what happens. 6 5 4 3 2 1 0
58. I can accept a compliment. 6 5 4 3 2 1 0
59. I accept challenges. 6 5 4 3 2 1 0
60. I have unlimited potential. 6 5 4 3 2 1 0
Your score for Confidence __________
Your total Entrepreneurial Personality Test score __________

ENTREPRENEURIAL PERSONALITY TEST SCORING
320-360
You’re an independent, high-energy person with the drive and discipline that it takes to be an
entrepreneur. When you make up your mind to do something, you get the job done. If you decide to
be self-employed, you’ve got the personality traits to be successful.
280-319
You show good promise to succeed in your own business, but not if you immediately quit your job
because of a high-test score. Those destined to succeed will use this test to gain greater insight as
they venture forth into their new entrepreneurial endeavors.
210-279
You have some potential. Take time to develop yourself. Read extensively, take classes, and talk to
successful entrepreneurs to discover what they’re doing right.
120-209
Proceed with caution. You’ll need a lot more drive, self-discipline, and confidence to make it in your
own business at this stage. Think of your low-test score as a challenge to strengthen important
personality traits that you’ll need to be successfully self-employed.
10-119
Until you develop your creativity, risk-taking ability, and confidence, and get your drive and self-
discipline into high gear, you’ll probably be better off working for someone else at this time.
0-10
Chances are you lead a dull but manageable life and probably prefer it that way.

CHOOSING YOUR
BUSINESS
SPECIAL REPORT TWO

SPECIAL REPORT TWO
CHOOSING YOUR
BUSINESS
CHOOSING YOUR BUSINESS
The first step to starting your own business is choosing the type of business you’d like to be in.
There are a host of possibilities that you may consider:

• Start a part time business
• Start a full time business
• Buy an existing business
· Service
· Retail
· Wholesale
· Manufacture
· Invent/manufacture
• Buy a Franchise
There are benefits and deficits for all of the above so let’s take a moment to examine the alternatives.
First, there is really no best choice that would be good for everybody. Since we are all individuals
coming from different walks of life, the first thing to do is to examine your own strengths and weak-
nesses.
Ask yourself questions such as:

• Do I have business experience?
• Do I have capital to finance my project?
• Am I aggressive?
• Do I have good communication skills?
• What is my educational background?
• Am I creative?
• What are the strengths and weaknesses of my personality?
• Is my family supportive?
• Am I persistent?
Continue with this exercise by listing all the strengths and weaknesses you can think of that would
help or hinder your efforts in starting your own business.
Special Report Two: Choosing Your Business 2-1

BUSINESS EVALUATION WORKSHEET
STRENGTHS WEAKNESSES

It has been written that the exercise you just went through is derived from one of the most famous
Americans in history: Ben Franklin. It has been said that when Ben had a tough decision to make or
was entering into a new endeavor he would take a notebook and draw a line down the middle. Then
he would list not only his strengths and weaknesses but he would list all of the reasons why he should
make a positive (YES) decision on one side. On the other side he would list all the reasons why he
should not move forward (NO).
SHOULD I BE IN MY OWN BUSINESS? IF SO, WHY?

REASONS WHY I SHOULD REASONS WHY I SHOULDN’T
1. I want financial independence 1. Lack of self confidence

2. I want more control of my own time 2. Undercapitalized
3. More freedom 3. Not sure what type of business to start
4. 4.
5. 5.
6. 6.
7. 7.
8. 8.
9. 9.
10. 10.
11. 11.
12. 12.
13. 13.
14. 14.
15. 15.
These two exercises should at least start your mind working in a positive direction. You should start
to get in touch with yourself to begin choosing alternatives and to examine your motivations for
getting into business.
Once you understand your strengths and weaknesses you can start to evaluate the benefits and
deficits of the varieties of business available to you. Keep in mind, of course, that if your resources
are limited, so then will be your choices.
FRANCHISES
The franchise industry has caused a major boom in new business start-ups in recent years. Why have
franchises aided in allowing an entire new realm of people to enter into their own businesses?
Benefits
1. Most franchises have a tested, proven product. Therefore, you don’t have to pioneer the
business. Someone has already gone through the trial-and-error process for you.

2. Most franchises have a tested, proven marketing plan. Generally the franchiser will have
statistics on location, quality, traffic counts and growth potential. With a good franchiser you
can project, to a certain degree, the gross dollars that can be earned based on past research
and franchise history.
3. Most good franchisers give help, support and consultation to new franchises. This could be a
big help for someone who has never been in business before. Just be sure that it is a reputable
franchise with solid financial banking and a verifiable track record of performance that has
franchise support.
Disadvantages
1. Usually there is a pretty big up-front investment required. You can spend anywhere from
$25,000 up to hundreds of thousands of dollars just in front money. This means you are
paying just for the name because many of these franchises don’t include the cost of the
location or the equipment in that up-front charge. They generally must disclose to you exactly
what is and isn’t included in the up-front dollars, but you should be very careful.
2. There are many stories of conflict resulting in greater regulation in the franchise industry, but
still, when making a big dollar investment, you should do it with scrutiny. Make sure you
read all of the fine print and know exactly what you are signing. Also, since these are big
dollar commitments, you should have an accountant and an attorney review the
documentation. That doesn’t mean you let them decide whether it’s good for you or not. Just
have them point out the positives and negatives so that you can make an evaluation based on
the facts presented.
3. It may be important for you to note that although there is some history to a good franchise
and in many cases some very convincing statistics, there are NO GUARANTEES of success.
It many cases it is not necessarily the franchiser’s fault. That’s right. The franchised business
may work fine, but it was the person who bought the franchise that either didn’t work out or
didn’t work.
4. A franchise can also be very limiting for you if you are the creative type. If they already have
prescribed methods of operation, you may have to adhere to those policies. Even if you have
what you may think is a great new advertising idea, that doesn’t mean the franchise will use
it. Furthermore you may be in violation of your agreement if you do not clear your idea with
the franchiser. Again, review your agreements in advance to be sure you understand your
limitations and also your freedoms.
5. The main concern with a franchise is the limitation on the dollar earning potential. You have
to weigh the amount of hours you put into the business against the amount of personal dollars
you can put out each year. When you own a franchise you are obviously limited as far as
expansion. The only way you can build to bigger dollars is if you can add multiple franchises
or use the money you earn from the business to open other businesses. The other alternative
is to invest your monies wisely and get them compounding for you, but that would take a
good deal of cash flow to grow to that level of ROI (return on investment).

6. The lesson here is this: Suppose you are creative? Suppose you are ambitious? Maybe you’re
the one who should start a franchise and get all the franchisees paying you royalties. Now, are
you seeing the limitations or the possibilities? No one ever said a franchise (or any small
business for that matter) couldn’t be used as just a stepping stone. There is nothing written
that says you can’t learn and then move on to bigger and better things.
YOUR OWN SMALL INDEPENDENT BUSINESS

One difference and potential benefit to starting your own independent business is you have no
royalties to pay. Who says you don’t have a better idea than Subway or Pizza Hut? If you have the
idea and create revenue from it, maybe you should consider starting your own from scratch.
One way to ease into this type of business is to watch someone else who is doing what you want to
do and copy their strategies. Watch their advertising, watch their business hours, their effective
employee count, etc. You might even take a job at such a business to get as much information and
experience as possible. Learn all of the ins and outs and use this information to your benefit. Last but
certainly not least is the consideration of royalties. With your own business you don’t have to pay a
royalty to anyone. In a franchise you pay a royalty (usually a percentage of your profits) that is
generally calculated on your gross profits.
The key word here is gross profits. This means the franchise gets its money regardless of whether
you make any money at all. Even if you lose money you will still have paid a royalty in almost every
case. These could have been very valuable dollars that you now could use if it was your own busi-
ness. Actually those dollars could mean the difference between failure and success. Go back and
evaluate your strengths and weaknesses. Then start your information-gathering and decision-making
process going. Continue to take notes and highlight as you review these reports.
BUY AN EXISTING BUSINESS

Several benefits of buying an existing business are obvious. The immediate benefit of owning an
existing business is its track record. If the business is producing revenue, customers, goodwill, etc.,
you have some of the tested, proven benefits of a franchise but without the ongoing royalties.
Therefore, you are basically buying cash flow. A smart idea would be to look for a business that is
being mismanaged or one that is run down. If there is room for improvement, you can benefit by
applying good management skills to increase the cash flow even further. Next you might scrutinize
the business thoroughly to see where you could reduce expenses and thus maximize cash flow even
further.
If you really are interested in this business of business, then consider the following as food for
thought. Why not make a business of seeking out and finding mismanaged, undervalued small
businesses? Buy them, turn them around and sell at a profit. You could also be enjoying the cash
flow they generate right up to the point of sale. The possibilities are limitless once you really start
digging, looking and listening.

The next step is to start watching things with interest. Start gathering some more informational
books and CDs on the subject of business. Then go to work and try one. Start with the most minimal
outlay of cash. Just get some experience and then increase the dollar amount to something bigger.
Over time you’ll be surprised at how much fear will be alleviated by the experience you gain.
MORE BUSINESS IDEAS

If you are still unsure of what type of business you want to start, the following list should help you
narrow your focus to a few businesses you may be interested in. This list is certainly not all-inclusive
and should give you an idea of the unlimited possibilities that are out there waiting for you!
Possible Businesses
A
Accounting Services
Advertising
Air Conditioning (Heating) Installation, Repair, Service
Animal Boarding, Care, Grooming, Sitting, Training
Answering Service
Antique Dealer
Appliance Sales and Service
Art Gallery or Teacher
Athletic Trainer
Automobile Detailing, Paint & Body, Rentals, Repairs, Sales, Upholstering
B
Baby-Sitting Services
Bakery, Cake Decorator
Barber or Beautician
Bed and Breakfast
Beverage Sales
Bicycle Sales and Repair
Boat Charter, Excursions, Rentals, Sales, Storage
Bookkeeping Services
Builder, Improvements, Inspection, Repair
Business Broker, Coach
Business Machine Sales and Service
C
Cabinet Maker
Camera and Radio Repair
Candle Sales
Candy Store
Canoe Charter, Excursions, Rental

Car Wash
Carpenter
Carpet Installer, Cleaner
Catering Services
Ceramic Sales, Supplies, Instructor
Chauffeur Service
Child Care Service (Day Care Center)
Cleaning (Dry Cleaner)
Cleaning (house, office, etc.) Services
Clothing Sales (new or used)
Computer Consultant, Maintenance, Repair, Sales, Training
Contractor
Copying Services
Cosmetics Sales
Counselor
Courier Service
Craft Instruction, Sales and Supplies
D
Dance Instructor
Delivery Service
Desktop Publishing Services
Detective Agency
Diaper Service
Discount Notes and Mortgages
Drafting Services
Dressmaker
E
Editor
Educational Products and Services
Electronic Repair Services
Employment Services
Equipment Rental, Sales, Maintenance, or Repairs
F
Fence Sales and Installation
Financial Planning, Services
Fitness Services
Florist
Food Cart (hot dog), Market, Specialty
Furniture Sales, Refinishing Services

G
Gift Shop
Golf Instructor, Equipment, Sales, Services
Graphic Designer
H
Handyman Services
Hardware Store, Repair, Sales
Health Club
Hobby Shop
Home Health Care Services
Horse Boarding, Breeder, Trainer
I
Ice Cream Parlor
Inspector
Insurance Agent
Interior Designer, Decorator
Internet Developer, Services
J
Janitorial Services
Jewelry Store
Journalist
K
Karate Instructor
Kennel Services
L
Land Clearing Services
Landscaping Services (Maintenance, Mowing, Spraying, Equipment Repair)
Laundry Services, Laundromat
Limousine Service
Locksmiths
M
Maid and Personal Services
Mail Box Services
Mailing List Services
Manicurist
Marketing Research Services
Martial Arts Instructor
Massage Therapist

Medical Billing Services
Medical Supply Services
Merchandiser
Message Service
Mobile Home Repair, Washing
Mortgage Broker
Moving & Storage Services
Musical Instrument Instructor, Sales, Repair
N
Nanny
Natural (health) Foods Distributor, Sales
Newspaper Distributor
Nursing Home
O
Office Cleaning Services
Office Equipment, Furniture, and Supplies Sales, Maintenance, Repair
Online Auctions
Online Research
Optical Aids and Services
Outdoor Furniture Sales, Cleaning, Repair
P
Package Preparation, Supplies, Shipping
Painter
Paralegal Services
Party Planner
Pawnbroker
Payroll Services
Pest Control Services
Pet Sales and Supplies, Store
Photography
Physical Therapist
Picture Framing
Pizza Restaurant
Plant Nursery
Plumber
Printer
Proofreader
Property Management, Maintenance
Public Relations Services
Public Speaker

Q
Quality Control Consultant
Quilt Maker
R
Real Estate Broker, Investor, Salesperson
Recreational Services
Relocation Services
Rental Business
Restaurant
Resume Services
Retail Stores, Services
S
Sandwich Shop
Screen Printing
Secretarial Services
Security Sales, Services
Sign Maker, Sales
Software Developer
Sport Goods Sales, Maintenance, Repair
Sprinkler System Installer, Maintenance, Repair, Sales
Storage Services
Swimming Pool Installation, Maintenance, Repair, Sales
T
Tailor
Talent Agent
Tanning Salon
Tax Services
Taxidermist
Telecommunication Services
Telemarketing Sales
Tennis Instructor, Maintenance, Repair, Sales
Translation Service
Travel Agent
Tee Shirt Sales
Towing Services
Trucker
Tutoring Services
Tuxedo Services (rental, cleaning)
U
Upholsterer

V
Vending Machine Sales, Maintenance, Repair
Video & DVD Rentals and Sales
Voice Mail Services
W
Web Site Designer, Developer
Wedding Consultant, Planner
Window Coverings, Cleaning, Tinting
Word Processing Services
Writer
X
X-ray Services
Y
Yoga Instructor
Yogurt Shop

STARTING YOUR
BUSINESS
SPECIAL REPORT THREE

SPECIAL REPORT THREE
STARTING YOUR
BUSINESS
LEGAL CHECKLIST
There may be times when you will need the services of an attorney during your business start-up
process. Referral from another small business owner is the best method for finding an attorney to
suit your needs and the second best method is checking with your state’s Bar Association. You should
always hire an attorney who specializes in or at the very least is very knowledgeable in business
matters.
You can handle many legal issues such as completing simple forms, getting licenses, copyright and
trademarks without an attorney. However, you must determine your comfort level in completing such
forms before ruling out the use of an attorney.
The checklist below addresses local, state, and federal issues you or your attorney will need to
research for your business.
LOCAL
1. Zoning, Licenses, and Permits
Since new businesses will need a local business license in most communities, you should
check your community’s requirements. Also, if you plan to work from home, you should
check into local zoning requirements for any special permits or additional licenses.
Date Research Completed_____________________________________________
2. Registering A Business Name

If you operate a sole proprietorship, you will need to register your business name. In some
states you may file a “DBA” (doing business as) with your local county office. In other states
you may be required to file a Fictitious Name Affidavit with the Secretary of State. You may
also be required to file a notice in a local newspaper.
Special Report Three: Starting Your Business 3-1

3. Local Earnings Tax
If your community has a local earnings tax, you should check on the filing requirements with
the appropriate agency.
STATE
1. Registration
Partnerships, Limited Liability Companies, and Corporations are required to register at the
state level. Contact your Department of State for requirements.
2. State Taxes
State taxes may include sales and use, intangible and corporate income taxes. Check with
your state’s Department of Revenue.
FEDERAL
1. Federal Licenses
Your business will most likely not require a federal license. The federal government regulates
such businesses as investment counseling, interstate transportation, food, drug, tobacco, and
firearms. However, if you are in doubt about needing a federal license, call the Federal
information number in your area.
2. Federal Taxes
You will need an Employer’s Identification Number for your business. To obtain this number
you’ll be required to complete a Form SS-4. This form and instructions for completing it are
available from the Internal Revenue Service by phone at 800-TAX-FORM (800-829-3676) or
by computer at the IRS Web Site at www.irs.gov. You can also call 800-829-1040 for
information about IRS-sponsored small business workshops.

EXPENSE CHECKLIST
When starting a business, you should factor in the expenses you’ll incur to get the business up and
running. The following checklist gives you some basic expenses as well as space to add any expenses
unique to your particular business.
1. Stationery and Business Cards:

Envelopes _________________________
Letterhead _________________________
Second Sheets _________________________
Business Cards _________________________
Other ( ) _________________________
_________________________
2. Business Registration: _________________________

Sole Proprietorship; Partnership;
Limited Liability Company;
or Corporation _________________________
Other ( ) _________________________
3. Permits, Licenses: _________________________

Required Permits _________________________
Occupational License _________________________
Other ( ) _________________________
4. Equipment and Supplies: _________________________

Equipment _________________________
Office Furniture _________________________
Office Supplies _________________________
Remodeling Costs _________________________
Other ( ) _________________________
5. Other Expenses: _________________________

Insurance _________________________
Legal Fees _________________________
Telephone _________________________
Postage _________________________
Advertising _________________________
Printing _________________________
Shipping _________________________
Travel _________________________
Other ( ) _________________________
6. Total Expenses: _________________________

BOOKKEEPING BASICS
Bookkeeping involves collecting financial information needed to track profit and losses and prepare
appropriate tax returns. Basically, this process involves keeping invoices and receipts/records to
document income and expenses; and, creating financial reports to reflect the results of these records.
Accurate financial records are essential to the success of your business. They show you, the business
owner, if and where income and expenses are out of balance and where improvement is needed. They
also provide bankers and other sources of capital a financial snapshot of your business and help them
determine whether or not to lend money to or invest in your business. It also makes preparing your
tax return much easier as well as more accurate so that you avoid over- or under-paying taxes.
Cash Or Accrual Method
When setting up your financial records you will have to choose between the cash or the accrual
accounting method. The cash method simply records income and expenses as they come in and go
out of the business. The accrual method allows the business to deposit money in the same accounting
period that expenses will occur for a sale or service performed.
Chart Of Accounts
The next step is to set up a chart of accounts. Basically, all charts of accounts include a numbering
system to identify different categories of accounts: assets, liabilities, income, direct expenses, indi-
rect expenses, and non-operating accounts. Within each category of account are more specific types
of accounts.
Most software systems have a chart of accounts that you can customize for your business. Also, the
Small Business Administration website has a sample chart of accounts that you can download to your
computer to help you get started.
Financial Statements
Your financial statements will include your profit and loss statement, balance sheet, and cash flow projec-
tions. The profit and loss statement will show you how much money your business made or lost during a
designated period of time (month, quarter, year). Your assets, liabilities, and equity are listed on your
balance sheet for a specific date to show the financial health of the business as of a specific date. The cash
flow projections for many small businesses are completed on a monthly basis to show how the money is
coming in and going out of the business, based on the previous months history.

FOCUSING ON GOALS AND A TIME LINE
The goals included in your business plan can now be broken down into specific steps and deadlines
for obtaining them. For example, you may have the following goals as part of your five-year plan.
Year #1
$100,000 Sales; $10,000 Net Profit
Year #2
Year #3
Year #4
Year #5
To obtain these goals you need to have your plan broken down into specific steps with deadlines for
completing them. The following example shows how you can organize these steps so that on a
weekly and monthly basis you continue to move forward toward the annual goal.
Month #1 – Set up the business
Week #1
Establish a Business Entity
Calculate Start-up Expenses
Address all legal issues including licensing
Week #2
Write a Business Plan
Week #3
Establish a Business Identity
Determine a Location
Week #4
Set up your Books
Meet with your accountant
Month #2 – Advertise the business and follow-up
Week #1
Attend industry related, chamber of commerce, etc. meetings to network.
Follow-up on all leads generated from networking.

Week #2
Start implementing your advertising methodology. Will you design print pieces or hire
someone? Will you focus on direct mail or newspaper?
Week #3
Test your distribution methods with sales obtained to date.
Week #4
Follow-up on any items not completed during month #1.

START-UP CHECKLIST
The following start-up checklist can be used to insure you have completed all the necessary steps
when starting your business.
1. Set aside space in your home for your business; or locate retail space, if needed for your type
of business.
Date Completed_____________________
2. Check zoning regulations in your community for any special permits or additional licenses.
Date Completed_____________________
3. Determine the entity of your business: sole proprietorship, partnership, limited liability
company, or corporation. Call our consultants at 800-741-7877 for assistance.
Date Completed_____________________
4. Select and register your business name as required by the business entity.
Date Completed_____________________
5. Obtain and file any needed licenses, permits, and registrations.

Date Completed_____________________
6. Design and print your logo, business cards, and stationery.

Date Completed_____________________
7. Develop your business plan.

Date Completed_____________________
8. Establish a bank account for your checking and credit needs.

Date Completed_____________________
9. Set up your bookkeeping and accounting system.

Date Completed_____________________
10. Purchase any needed equipment and supplies such as stationery, business cards, equipment,
and office supplies.
Date Completed_____________________
11. Set up your telephone and mail services.

Date Completed_____________________

12. Obtain the proper insurance.
Date Completed_____________________
13. Other _____________________________

Date Completed_____________________
14. Other _____________________________

Date Completed_____________________
15. Other _____________________________

Date Completed_____________________

KEEPING IN TOUCH
Customers
One of the most important areas that will determine your business success is customer satisfaction.
The reality is that if your customers are NOT satisfied, your business will cease to exist. Keep in
touch with them by sending out surveys, thank you cards, and periodic updates about any new
products and/or services.
Repeat business is certainly easier and less expensive to cultivate than new business and could
eventually make up to 80 percent of your business. Therefore, always keep customer service at the
forefront of your business. If you get negative feedback from surveys, analyze the situation and
adjust accordingly. On the other hand, if you receive positive feedback, don’t get complacent.
Employees
Employees often have incredible insight into the business so meet with them often to get their feed-
back about customer satisfaction as well as their own satisfaction with the business. The suggestion
box has been used for years at many businesses. When monetary reward, recognition, and/or time off
are part of the “suggestion box” procedure, it gives the employee an incentive to provide feedback to
the business.
GROWING YOUR BUSINESS

Since growth is essential to your business’ survival, revisit your business plan and look at your goals
and the strategies and timeframe to obtain them.
Specific Goals
Are your business goals specific and written down? It is a well-known fact that specific, written
goals are achieved most of the time and generalized unwritten goals are almost never attained.
Do the goals include deadlines for obtaining each one? If you do not set deadlines for the goals you
may not take the methodical steps necessary to obtain the goals.
Are you prepared to make changes to the goals as circumstances change? The goals for growing your
business can be set in stone or it will fail at the first roadblock or change. Your goals must be flexible
enough to adapt to changes in the market, in your customer base, in the economy, etc.
Marketing Plan
Does your marketing plan include growth strategies? These strategies should include the methodol-
ogy you plan to use such as product development, advertising campaigns, delivery methods, etc.

Will you expand the products and/or services you currently offer? You may decide to add similar or
complementary products and/or services to the ones you currently offer. Or, you may decide to add a
totally different line.
Do you plan to expand your customer base? Growth for your business may demand an expanded
customer base. Does your plan include methods for getting more customers?
Are you going to diversify your business? Perhaps your growth strategies include plans to enter into
a field outside your current business. Have you completed the research necessary to enter the new
field?
You may not know the answers to these questions in the beginning; however, as your business be-
comes successful these issues will need to be addressed.
Managing Your Business
Jack Welsh, former CEO of General Electric once told Business Week Magazine, “Most small com-
panies are simple, informal, and grow on good ideas. Think small.” We would have to agree that
when you are small, you could keep things simple and informal. It is also true that in that environ-
ment good ideas and creativity thrive.
However, as the business grows you need to be prepared to step out of the daily functions of operat-
ing the business and be prepared to take on the role of CEO and strategist.
Business Life Preservers
Most entrepreneurs would agree that sudden growth can be just as scary as starting the business. You
have to be able to adjust to change and adapt new strategies quickly. We offer three life preservers
when your business is growing rapidly.
1. Ask for help. Find a mentor, business associate, the Small Business Administration, SCORE,
etc. who will share their experience and insight with you. Call our consultants at 800-741-
7877.
2. Delegate. One of the hardest things that you’ll have to do is give up control of the business.
However, it is critical to your business’ success and to you individually. YOU CANNOT DO
IT ALL!
3. Don’t ever give up! It is a well-known fact that the majority of businesses fail. Did you know
that most entrepreneurs have failed at least once, usually several times, before success came?

BORROWING MONEY
FOR YOUR BUSINESS
SPECIAL REPORT FOUR

SPECIAL REPORT FOUR
BORROWING MONEY
FOR YOUR BUSINESS
LOAN TYPES FOR ENTREPRENEURS
Starting and growing a business involves financing. At some point in the life of your business, you
will have to arrange financing. Banks play by some pretty conservative rules because they have to
cope with both federal and state banking regulations as well as traditional lending standards. To
overcome these obstacles, you need to put together a proposal that fits into one of the conventional
categories the banking world uses to describe most loans.
Understanding the type of loan your business needs gives you the advantage when putting together
your business proposal for the bank. The following types represent some common business loans.
Accounts Receivable Loan

Small companies often turn to this type of financing to free up their working capital. Banks usually
require that a business has a good credit rating; and, they only loan a percentage of the amounts due
on accounts less than 60 days past due. The loan funds are then repayable as customer checks come
in to the business.
Asset-Based Loan
This is a loan where assets of a company, including receivables, raw materials, inventory, machinery,
and equipment, are used as collateral in exchange for funds to use as working capital. This type of
loan is also used when a targeted company is being acquired by a larger company and the buying
company uses the targeted company’s assets to finance the purchase.
Business Loan
A business loan requires equal monthly payments and principal and interest is calculated over the life
of the loan. This type of loan is often beneficial to small companies who cannot make large pay-
ments in the first year, as required by some term loans.
Commercial Loan
A commercial loan requires no installment payments and is repaid in a lump sum at the end of the
term. Commercial loans are most often used to finance inventory, but they may also be used for other
purposes approved by the bank.
Special Report Four: Borrowing Money for Your Business 4-1

Commercial Mortgage
A commercial mortgage is used to finance a business location. Generally the loan is a 5 to 10 year
loan, amortized over 15 to 20 years, with a balloon payment due at the end of the term of the loan.
Factoring
Factoring is a variation of an accounts receivable loan where the bank or factoring company buys a
company’s accounts receivables outright. Since the bank or factoring company takes on the credit
risk and collection responsibility, they usually require that the receivables meet strict criteria. The
discount or amount charged is often higher compared to other forms of financing.
Inventory Loan
This is a short-term loan where the bank takes an interest in the company’s inventory as collateral.
This type of loan is often referred to as “floor planning” for big-ticket retailers such as automobile
dealerships.
Line of Credit
A line of credit is a loan that allows a company to take funds either at specific intervals or as needed.
A line of credit can be established for a term of days, months, or years; and interest and fees vary
from bank to bank.
Personal Loan
The principal of a business can use his or her personal assets to secure a loan for his business. A
personal loan may be easier to negotiate than a business loan since personal property such as stocks,
bonds, savings accounts, certificates of deposit, etc. are used to secure the loan.
Small Business Loan

Under the Small Business Administration loan guaranty program, the SBA will guarantee up to 85%
of a small business loan. The lender forwards your loan application and a credit analysis to the
nearest SBA District Office who analyzes the entire application, then makes its decision. This pro-
cess may take up to 10 days to complete and upon SBA approval, the lending institution closes the
loan and disburses the funds.
PREPARING A LOAN PROPOSAL

You can use your business plan as a blueprint for preparing a loan proposal. The loan proposal can
even follow the same outline as the business plan by substituting the executive summary with a loan
request summary. Remember, however, that the loan proposal should be written from the perspective
that your loan request is low risk to the lender, and your proposal supports that fact.

I. Loan Request Summary
Loan Purpose: Indicate specifically how you will use the loan proceeds. For example, instead of
stating that you need the money for working capital, state that you will use the money to buy inven-
tory to increase sales, make improvements to production, etc.
Loan Amount Requested: State the specific amount of money needed. If the funds are needed for
more than one item, give a detailed listing of the individual expenditures and the total amount.
Repayment Plan Desired: Give two realistic repayment plans. For example, the loan will be repaid
from the sale of products/services at a projected amount (give an exact amount) on a monthly, quar-
terly, annual basis. If the sale of the products/services does not generate enough income to cover the
repayment plan, then the business will reduce operating costs (give an exact amount) and/or sell an
asset to make the payment (specify what asset and its market value).
Collateral (if any): Most loans to new businesses will require collateral as security for the loan.
Therefore, the asset used as collateral must have enough value to cover the percentage required by
the lender. For example, they may only lend up to 70% of the value of the asset.
II. Your Business

History of your business: State when your business started, who owns it, where it is located, and a
brief summary of what it has accomplished.
Ownership structure: Identify the type of business entity (sole proprietorship, partnership, limited
liability company, or corporation).
Products and services: List your products and/or services.
Accreditations and licenses: Include any accreditations and licenses your business has.
III. Market Analysis and Strategy

Overall market and direct competitors: List the national trends in your market along with your
direct competitors. Explain why your product and/or service is superior.
Product and/or service: List what you sell and how you distribute your product and/or services.
Selling strategy: Describe your distribution methods and how you will adapt to market changes.

IV. Management Team
Key individuals: Identify the management team of your business and include their background and
experience.
V. Financial Data
Pro-forma financial statement: List revenues, expenses, and net income or net loss for the previous
year and the current year. Project the anticipated revenues and expenses for three years into the
future.
Balance Sheet: List the business’ assets, liabilities, and owner’s equity as of a certain date.
Federal Tax Returns: Include copies of the last three years.
Personal Financial Statement: Include your personal financial statement.
VI. Appendix
Include any supporting documentation including but not limited to licenses, personal resumes of
your management team, credit reports, reference letters, contracts, legal documents, loan applica-
tions, advertising materials, and articles about your business.

LOCATING YOUR
BUSINESS
SPECIAL REPORT FIVE

SPECIAL REPORT FIVE
LOCATING YOUR
BUSINESS
DETERMINING YOUR BUSINESS LOCATION
For businesses that provide services at the customers’ location (lawn services, air conditioning
maintenance and repair, etc.), the main concerns about the physical location of the business will be
cost and zoning issues. Retail businesses, on the other hand, need to take into consideration the
location’s compatibility with the business, the location’s traffic patterns, and the location’s proximity
to competitors as well as cost and zoning issues.
Cost
Operating your business out of your home is the least expensive location choice since the expenses
generally fall under the categories of furniture, office equipment, and supplies. However, if your
business is not suitable for being based out of your home the next step will be to research location
costs in your area.
Will you rent or buy? Most business start-ups rent space in the beginning because they don’t have the
funds to start the business and buy real estate at the same time. Therefore, you need to know market
rent in your area. Once you have determined the average rent, the next step will be to determine what
the rent includes. For example, is the location only wired for standard phone usage or does it have
additional wiring for computers, fax machines, etc.? Is electricity included in the rent or will you be
responsible for a separate bill? What deposits are due and how much are they?
Once you have found the ideal location (home, office, or retail), don’t forgot to research zoning and
permitting requirements.
Zoning Issues
Regardless of your location you will have to consider zoning issues. Every city and/or county in the
country has a zoning and/or planning office so check out local regulations before committing to a
particular location.
Remember certain types of business may not be allowed in some areas. For example, a manufacturing or
industrial business may not be allowed in an area designed for offices or retail space.
Special Report Five: Locating Your Business 5 - 1

Unique Issues to Your Business
Issues unique to your business should already be outlined in your marketing plan. As stated in that
section of this guide, your marketing plan has identified the product or service your business
offers, the benefits of your product or service, the price you will charge, how you will distribute it,
how you will promote your product or service, who your consumer is, what your cost of doing
business is, who your competition is, and the most efficient distribution channel.
This information should help narrow the choices of locations for your business, since it identifies
all the elements needed for determining how important the location of your business will be to your
business’ success.
REAL ESTATE CONTRACTS

If you are considering buying a location for your business or any real estate, you should call our
consultants at 800-741-7877 to find a real estate training academy near you. It is taught by our
national instructors and will enhance your communication and negotiation skills, and provide
training in how to work with bankers, brokers, and Realtors.
The training takes you step-by-step through the mechanics of a real estate transaction. It covers
everything from writing a contract that protects your interests and limits your liabilities to creative
financing strategies and much, much more.
At a minimum you should review any contract for sale and purchase in its entirety and make sure
that it includes all of the following information.
Property Description
The description of the property should include the legal description, street address, and any fixtures
and/or personal property that go with the property.
Purchase Price
The purchase price must be listed on the agreement. In addition, the deposit amount, any additional
deposits, mortgage money (if applicable), and the balance of funds to close is listed on the agree-
ment.
Date of Acceptance
The date of acceptance is the date given for all parties to accept, execute and deliver the agreement
in order for it to be a legal and binding agreement.
Financing Contingencies
For example, if you include a financing contingency, you can then withdraw from the offer if you
can’t obtain a loan to make the purchase.

Evidence of Title
Evidence of title is required to insure that the title is marketable title. Although the law may not
require it, title insurance protects the buyer from claims against the title.
Closing Date
The closing date is the date that the transaction is closed and documents are delivered.
Addendums and Contingency Clauses

Use addendums or add/delete text on the face of the contract to protect your position as a buyer. In
addition, using a contingency clause will allow you to cancel the contract if certain conditions are
not met.
Other Things To Consider

Both the buyer and the seller should sign the agreement.
Any statements from the seller about the condition of the property should be included in a contract
clause called “warranties and representations.”

REAL ESTATE
INVESTMENT STRATEGIES
SPECIAL REPORT SIX

SPECIAL REPORT SIX
REAL ESTATE
INVESTMENT
STRATEGIES
EVALUATING THE PROPERTY
Something that often scares newcomers to real estate investing is how to tell when a property needs
too much fixing up to make it a good investment. We have bought and sold hundreds of properties,
and we rarely come across any in such bad shape that they are beyond repair. The reason is simple: If
the property is in really bad shape, the owner may be motivated to sell way below the market value of
a similar property that is in good condition.
If you are dealing with an extremely low sale price because the property needs repairs, you have
more borrowing power for your repair or rehab loan. That means a greater opportunity for profits.
However, you have to train your eye to know the difference between cosmetic distress and serious
problems. A building might be so neglected that you’re afraid it’s going to fall down around you. But
in reality a few trips to the dump, a fresh coat of paint, and some cleaner and disinfectant may revive
the property to fair market value. Here are a few things to watch out for.
Structural Damage
Outside, look for a dramatic lean in any direction. Inside, look for floors slanted toward a corner of
the house. These are indications of a possible foundation problem. Before you reject the property,
call in several contractors and get free estimates on repairs, then use that information to negotiate a
better price.
Termite Damage
Termite damage usually scares off investors, but termites can take up to 10 or 15 years before they do
irreparable damage. Russ Whitney once bought a house that had severe termite damage in the sup-
porting beams in the basement. The property had been on the market a long time and was bargain
priced. Obviously the termite damage had scared off many other potential buyers. After he bought
the property, he had a contractor replace the beams, using mobile jacks as support; it wasn’t particu-
larly complicated or expensive. Russ pulled money out of the property up front with the rehab, and
then made $15,000 a few years later when he sold it. You can make good deals on termite-infested
Special Report Six: Real Estate Investment Strategies 6 - 1

properties. Just figure the cost of replacing the bad wood and exterminating the termites. If you can
do that and still make money, buy it.
Roof Damage
Always examine the roof. You might also ask several roofers to do it for you. Pick their brains until
you become proficient enough to do your own evaluations. Roofers make money by selling you a
roof, so keep that in mind as you consider their recommendations. If it looks as if the roof will need
replacing in the near future, calculate that into your offer. Set enough money aside from your home-
improvement loan and let it accumulate interest until the roof starts leaking; then replace it.
Major Plumbing
When you are evaluating a property, turn on all the faucets, flush all the toilets, and make sure all the
drains run freely. The most common way plumbing can become a problem is in older buildings with
galvanized and/or cast-iron plumbing. After years of use, this type of pipe collects sediment, which
builds up and causes a loss of water pressure and stopped-up drains. We have found a product called
Drain Snake, available in plumbing-supply stores, which seems to remedy the problem. (When using
this or any other chemical product, always use caution and follow the directions on the label to avoid
personal injury or property damage.)
Furnaces
In larger multi-unit buildings, you may have one furnace that heats the entire building. Be sure it
operates efficiently or that the cash flow will support the bill. Get a heating and air-conditioning
contractor you trust to do the evaluation for you.
These are the areas in which you could have a major expense if there is a problem. In most cases, roofs
and plumbing and heating units need major repairs or replacement only every 20 to 25 years, so problems
with them are the exception, not the rule, but it’s always good to check. When you do see a major problem,
don’t automatically rule out the property. If you can cover the repairs and still make money, the property is
a good investment. If you can’t, it isn’t. The whole process is just that simple.
You might want to hire a professional inspector in the beginning to confirm your opinion, but even-
tually you’ll get to the point where you can accurately evaluate a property on your own.
CALCULATING RETURNS
There is only one hard, fast rule about when to buy and when not to buy: If you will lose money,
don’t buy. And you can figure out just how profitable a property might be with basic, elementary
school arithmetic. To evaluate a property’s profitability, you need to look at four areas.

Net Profit
The easiest to see and most simple to calculate, net profit is the amount of money you have left over
after all your expenses are paid.
Appreciation
This is the amount your property increases in value. There are two types of appreciation: natural,
which is the amount the market goes up; and forced, which is adding value with improvements for a
higher and better use. During periods of moderate growth, natural appreciation usually ranges be-
tween 5 and 10 percent annually; in high-growth cycles, it could be well over 10 percent, and some-
times as much as 20 percent; in low- or no-growth cycles, the value may remain the same or increase
only by 1 or 2 percent.
To find out the current rate of natural market appreciation, call a couple of real estate agents. It’s
their job to know these things, but it’s also always wise to check with more than one to be sure you’re
getting an accurate picture. Forced appreciation is the area through which the bigger and more short-
term profits are usually made. Most real estate will appreciate naturally to a small degree if you do
absolutely nothing; if you put a little money and effort into the right property, you can make signifi-
cant gains.
Equity Buildup
A portion of each mortgage payment you make (which the tenants actually pay) is applied to reduc-
ing the principal balance of the mortgage. When rents are paying the mortgage, you can consider the
equity buildup as part of your overall profit.
Tax Shelter
Real estate investing is a business, and you are therefore entitled to take a variety of business-related
deductions on your income tax. Often these deductions will offset income earned from another
source and reduce your overall tax liability. The deductions you can take by owning investment
property include depreciation, interest (the interest portion of your mortgage payments), mainte-
nance, and any other expenses related to managing your property, such as gas or car expenses for
driving to and from the property, cleaning supplies, bookkeeping supplies, forms, and other adminis-
trative materials. Though we know that real estate typically goes up in value, the IRS will allow you
to take a tax deduction for depreciation based on wear and tear on the building (not the land). The
formula for calculating investment-property depreciation can change with changes in the tax laws, so
check with your accountant.
Return On Investment
Now, let’s look at how you use these areas of profitability to determine the return on your investment
(ROI). Calculate your ROI by dividing your profit by the amount of cash it took you to achieve that profit.

To illustrate ROI, we’ll use a four-unit building Russ bought for $75,000. The owner was willing to
hold the mortgage and take a 10 percent down payment, or $7,500. By arranging to close on the third
day of the month (after collection of that month’s rent, of which he would get a prorated share), he
was able to purchase the building for $3,700 cash out of pocket. The building was fully occupied,
and each unit rented for $500 a month. The following details show you how the numbers worked.
To Determine Net Profit

Add up the gross rents. Add up all the expenses (taxes, insurance, maintenance, utilities, vacancy
allowance, and so on) and debt service (mortgage). In our example, we’re using 5 percent for the
vacancy allowance, which is the amount of time each year we can expect the units not to have ten-
ants. To determine the vacancy rate for your area, contact a real estate agent or property management
company. You can ask the seller for documentation on the other expenses. Then subtract the expenses
from the rents. That will be the net profit (or loss) for the first year.
Calculating Net Profit

Monthly gross rents (4 units at $500 each) = $2,000
Annual gross rents (12 x $2,000) $24,000
Monthly expenses = $800
Annual expenses $ 9,600
Gross annual operating profits $14,400
Debt service (12 x $596.75, the monthly $ 7,161
Mortgage payment)
Net overall operating profit $ 7,239
Your first-year ROI is the net profit divided by the cash out of pocket it took for you to buy the
property, which is $7,239 divided by $3,700, or 196 percent return on investment.
Appreciation
If you know your market, you will be able to estimate how much specific improvements will increase
the value of your property. Appreciation turns into a cash profit when you sell or refinance.
Original purchase price of property $ 75,000

Cost of improvements $ 1,300
Revised appraised value of property $ 130,000
Forced appreciation $ 55,000
Appreciation ROI on this property was 1,486 percent (the amount of appreciation divided by the
investment, or $55,000 divided by $3,700). In this example, we used forced appreciation only that is;
we forced the value of the property up by improving it. When adding in natural market appreciation,
contact a real estate agent for the figure that applies in your area.

Equity Buildup
As rents pay down the mortgage balance, the equity increase is considered profit. It is a paper profit
until you sell or refinance, but it is there for you to use when you need it.
Initial loan amount $68,000

Amount applied to principal $ 500
New principal balance $67,500
Equity buildup $ 500
Equity buildup ROI is 14 percent (the amount of equity divided by the investment, or $500 divided
by $3,700).
Tax Shelter
With an investment in real estate, most of the time your expenses will offset most, if not all, of your
income for tax purposes. You will make additional income gains by deducting depreciation and
letting that offset the taxes on income from other sources. How much of a tax shelter you will receive
depends on your tax bracket and sources of income. Generally, you can count on a 5 to 15 percent
ROI from a tax shelter.
Now let’s go back and total up the first-year ROI from the $3,700 we used to buy this building:
Return on cash invested 196%

Appreciation 1,486%
Equity buildup 14%
Tax shelter *10%
_______________________________________________________________
Total ROI 1,706%
*Average estimate
And this doesn’t even consider the money Russ made later by refinancing the building on the in-
creased appraised value. Is it any wonder so many great fortunes have been built through real estate?
On any investment, we look at the first-year anticipated net profit, and if that doesn’t give us at least
a 20 to 30 percent return on our investment, we usually don’t go any further. The exception would be
if there were a tremendous upside to the building something we know would give us a greater return
in the future. It might be that the building has a lot of vacancies we know we can fill, or that nearby
property-use trends are changing and we can benefit from that. Don’t put anything in concrete; be
flexible and use logic and reason to make a good deal.

MORE STRATEGIES
For more investment strategies, call our consultants at 800-741-7877 to find a real estate training
academy near you. It is taught by our national instructors and will enhance your communication and
negotiation skills, and provide training in how to work with bankers, brokers, and Realtors.
Then, once you’ve mastered the basics, you can attend our advanced training specializing in such
topics as wholesale buying, foreclosures, purchase options and much more.

REAL ESTATE
FINANCING GUIDE
SPECIAL REPORT SEVEN

SPECIAL REPORT SEVEN
REAL ESTATE
FINANCING GUIDE
Financing is one of the most intricate and important parts of successful investing. It is both an ongo-
ing and ever changing facet of business. After a while, it becomes routine and somewhat trying.
Most of the real estate deals that we make today are prospected, located, negotiated, signed on both
ends and then held up because of financing. It is important for you to understand that the big money
deals are much easier to finance.
CASH/PASSBOOK SIGNATURE LOAN

This is the technique Russ used to build his line-of-credit when he was 20. He had no local banking
relationships at all, other than his checking account, so he deposited $1,000 in a local community
bank, and then asked for a short-term loan, using that money as collateral. He took the loan money,
deposited it in a second bank, and took out another loan to repay the first loan early. Then he went
back to the first banker and asked for another loan to pay off the second loan - also early.
Using this process, he established himself with local bankers as trustworthy and reliable, so they
would feel comfortable with him when he applied for a larger loan to buy real estate. And don’t be
overly concerned about interest. If you borrow $1,000 at 10 percent, you’ll only pay $8.30 a month in
interest - a wise investment for the returns you’ll gain.
If you have $2,500, $5,000, or $10,000 in the bank, you can build tens of thousands of dollars in
accessible seed cash very quickly. Let’s assume you have $10,000. Take $5,000 to one bank and start
your signature loan line-of-credit. Then take the other $5,000 to another bank and do the same thing.
Expand to five banks each, using the same strategy and you’ll have $50,000 in cash at your disposal,
relatively quickly, any time you need it. From there, the sky is the limit with the right cash-generating
vehicle.
COMMUNITY BANKS
Stay away from the largest banks, as they tend to be impersonal and inflexible in their loan policies,
especially when dealing with smaller depositors. Community banks are almost always more aggres-
sive in trying to acquire customers, and they offer more personalized service.
This is an important step even if you have credit, and especially if you don’t. If your credit rating is
good, chances are it’s focused on the consumer side - bank credit cards, store charge accounts,
Special Report Seven: Real Estate Financing Guide 7 - 1

personal home mortgage, etc. - and not the commercial side. You need to build a relationship with
several bankers as a commercial borrower. If you don’t have credit, or if you have poor credit, this
will help you overcome that disadvantage.
There is an abundance of ways to start setting yourself up with some seed capital. Let’s assume
you’re dead broke. You can use your charge card to get a $1,000 cash advance, or you may be able to
borrow $1,000 from your mom, dad, or whomever. Just get the $1,000 and put it in a local commu-
nity bank.
ESTABLISHING A BANKING RELATIONSHIP

About a week after your account has been set up, call and request an appointment with the branch
manager. Bankers are very open to this type of meeting - they like contact with the community. Just
don’t barge in unannounced and expect them to drop what they’re doing to chat with you. Go in as
scheduled, in a businesslike manner, and ask about the different services the bank offers, what types
of loans it makes, what types of customers it’s looking for, even what the goals of the bank are.
At the end of the meeting, ask for a short-term passbook loan of $1,000, which is, by happy coinci-
dence, the amount of money you have on deposit with the bank. Since this is your first meeting and
you don’t have an established relationship with the bank, the banker will probably lend you the
money but will want to put a lien on your savings account. This way the loan is 100 percent secured,
which is a very safe loan. When you repay the loan, the lien will be released.
By short-term, we mean a period of six months or a year, which is standard for a passbook/signature
loan. You can pay it back sooner, of course - and, if you follow my plan, you probably will. “Pass-
book loan” is a generic term, and different banks may have different names for this type of loan, but
any experienced banker will understand what you mean. You won’t make installment payments on
this loan; you’ll make scheduled interest payments once or twice a year, and pay the amount of the
loan in full at the end of the term.
Chances are the banker will want to know why you want the loan. Your answer could be that you want to
consolidate some bills, pay off a charge card, or something of that nature. There’s an endless list of reasons
why someone would want a short-term loan. Explain that you have a commission check, tax refund, or
family gift due in the next 60 days, and you’ll be using those funds to repay the loan.
Will the banker wonder why you don’t just use your savings? Probably not, because borrowing
against savings is a common and smart thing to do. If the subject comes up, point out that you want
to keep your savings safely in the bank, earning interest, and that it’s a lot easier to repay a loan than
it is to replace spent savings. That’s just a fact of human nature, and an experienced banker will
understand, and probably like your reasoning.
LOAN PROCEEDS
Once you’ve received the proceeds of your passbook loan, take that $1,000 to another community
bank, open another savings account with it, and go through the same procedure. Then use the money
from the second loan to pay back your first passbook loan early. Give the first banker a call, tell him

you’ve enjoyed doing business with him and you’re looking forward to building a long-term relation-
ship with him and his bank. Leave your initial deposit in the bank, and wait a few weeks.
Then go back in, with an appointment, and ask for another loan. The second or third time you do
this, the banker usually will not put a lien on your savings account. That means you’ve gotten a
signature loan, which is an unsecured loan guaranteed only by your signature. But even though your
savings account may not have a lien on it, leave the money where it is. Don’t shake up the banker by
pulling your money out. Use your loan money to pay back the passbook loan at the second bank.
Then, as you’ve already done, call the second banker, thank him for the excellent service, wait a few
weeks, and apply for a signature loan at that bank also.
LINE OF CREDIT
Now, though you have not bought a business or property or made any money, you have accomplished
something significant. You have established a line-of-credit at two banks where you can sign for
$1,000 (or more) at each, for a total of $2,000 any time you need it, without having to come up with
collateral. After you’ve established a few $1,000 lines-of-credit, you can begin building them to
$2,500, then $5,000, then $10,000, and on up.
It’s possible you may have to do several guaranteed loans before you get the signature loan, depend-
ing on your overall financial status and the bank’s policies. That’s okay, because the cost to you is a
little bit of time and a very nominal amount of interest; the benefits are that you’ve begun laying the
foundation of your wealth.
After you’ve paid back both signature loans, take $500 from each savings account, go to a third
bank, and repeat the entire procedure. When Russ did this the first time, he went to five different
banks, deposited and then borrowed $1,000 from each of them. After he was finished, he had a
$5,000 line-of-credit - money available to him on his signature alone.
UNSECURED CREDIT
If you’re thinking that you couldn’t get an unsecured signature loan, think again. Credit cards are
essentially unsecured loans, and if you have one in your wallet, you have access to almost instant
cash up to your credit limit. If you can get unsecured money from one source, why shouldn’t you be
able to get it from another?
After Russ had successfully negotiated and paid back two or three passbook/signature loans, he
began receiving offers for more lines-of-credit from other banks. You’ve probably gotten plenty of
these, too: a direct-mail marketing promotion that tells you you’ve been pre-approved for a credit
card, a loan, or a line-of-credit of $1,000, $5,000, or more, and all you have to do is sign the applica-
tion to open your account. He received one that was a book of checks; when he wrote a check, he
was actually writing myself a loan.

A WORD OF CAUTION ON UNSOLICITED CREDIT
Some companies that market credit cards by mail ask for an up-front fee to establish your account.
Don’t pay it. Legitimate lenders don’t need you to give them money before they can lend you money.
You may not realize how valuable even small lines of signature credit can be. Most people see them-
selves spending their borrowed money on consumer items, thereby building debt, and they feel quite
noble when they decline an offer for more credit. But as you start to change your relationship with
money, you’ll see that you can use these borrowed monies to build wealth.
SECURED CREDIT CARDS

For example, let’s say you’ve had a bankruptcy and bad credit, but you have a valid reason. The
reason can’t be that you’re a loser, deadbeat who just likes to rip people off. But if you’ve had a
divorce, loss of job, fallen on legitimate hard times, or some other valid circumstance, there are
lenders who will work with you and lend you money.
Let’s assume you have to start with a secured credit card. First of all, a secured credit card means you send
the credit card company or bank $250 to $500. They issue you a credit card with that limit. Actually it’s
almost the same as the passbook/signature loan, just a different form of loan. Anyway, as you use the card
and make your payments on time, the Credit Card Company or bank will report your successful payments
to the credit bureau. This good credit will start to show up on your credit report.
This is the start to repairing your credit and building towards bigger credit lines. Let’s say you build a
little credit and use the funds to buy an inexpensive, fixer-upper property with owner financing. Now
when you do your financial statement, you’ll be able to show a credit card and a house that you’ve
been paying on successfully. This is how you begin to build from nothing or less than nothing. .
EQUITY LINE OF CREDIT

There are several conflicting theories on this. We’ll explain them and you use your own judgment.
One of the easiest loans to get is an equity line-of-credit on your own home. Some financial advisors
say that you should not do this and that you should always try to pay your home off.
We agree and disagree. If one is sitting on tens of thousands of dollars in equity and can tap this
source for seed capital, they should consider it. The equity is not making you any money sitting in
the house. Why not put it to use and leverage it into sound moneymaking investments that can
catapult your net worth and cash flow?
Russ and his wife used the equity in their first home to get started. Without that, they had little or no
money to start with. They’ve used the equities in several of their homes over the years when needed.
Once you are making some good money and have your assets building, you should consider paying
the home down. That would be smart business and a good decision.

LIFE INSURANCE POLICY LOAN
If you have cash value built up in your insurance policy, chances are you’re only getting a two to
three percent return on your money. Whole life is one of the biggest rip-offs (in our opinion) we’ve
ever seen. The insurance companies have you overpay on premiums for the promise of this cash
savings plan for you, and pay you two percent to three percent while they have your money.
Guess what? They buy real estate; invest in mortgages and other securities and assets! Last time we
looked, several of the biggest insurance companies (we won’t mention names, but they are household
names) had real estate portfolios averaging some 5.6 billion dollars, each. The insurance companies
are getting your money cheap. Then they’re investing it in real estate! This is what you should be
doing! Consumers are such saps. It’s ridiculous. But here’s your chance to fight back, take control
and win.
DISCOUNT MORTGAGE
If you own a home that has long-term seller financing, try approaching the seller for a discount. For
example, let’s assume you bought a house or rental property for $100,000. You put up a $10,000
down payment and the seller is carrying the financing for 25 years at eight percent. If you’ve owned
the property for a year or more, it’s possible (in many cases) that the seller’s circumstances have
changed. The seller may have been “motivated” to sell and agreed to hold the financing for 25 years,
but they now may want or like to get the cash sooner.
You owe the seller approximately $90,000. You’re making monthly payments now and for the next 25
years. The seller is locked into these terms. Suppose you approach the seller with this proposal: “Mr.
Seller, I owe you $90,000 and I’ll be making the payments to you for the next 25 years. How would
you like to get some or all of your cash within the next month or so, so you don’t have to wait the 25
years to get it?”
Many times sellers will jump at this type of offer. Remember now, you are giving the seller a bonus
by paying him off. Contractually, you don’t have to do this; therefore, there should be some consider-
ation to you for giving the seller this bonus. Customarily, your consideration would be a discount on
what you owe.
Typically, we would start at least 25 percent off what’s owed. Sellers will obviously want to negotiate
in some cases, so you must be prepared with the least amount of discount you can live with. If he
goes with 25 percent, you’d have $90,000 less 25 percent, or a $22,500 discount. If the seller agreed,
you’d have to come up with $67,500 and you’d be paid in full.
Just for having a little bit of knowledge, you could make $22,500 for a day’s work. Did you need an
MBA for that? Did you need to be born wealthy or lucky? Of course not. You need some knowledge,
some ideas, and a little action.
Now, of course, your question is where do you get the $67,500 to pay the seller off. Simple - you go
to several of the banks you’ve established rapport with and ask for a $67,500 loan. The property is

worth $100,000. You’re asking for a $67,500 loan or only 67 percent loan to value. A banker who is
not lent up (see banking segment) would jump on that loan.
Then consider, when you’re explaining the need for the loan, that you are getting a $22,500 discount
and reducing your debt from $90,000 to $67,500. The bank is going to think you’re a genius, trust
me. We’ve negotiated up to 30% discounts, so it is a realistic technique and will work.
USING THE RENTS

Once you have a few apartment units, you should go to your bank and ask for a line-of-credit for
your rents. Here’s the simple explanation, logic and reason. You tell the banker that your rents are due
on the first of the month, as is your mortgage payment. However, your tenants sometimes don’t pay
until the 5th or 7th of the month. Tell him that you like to get all your payments made on the first and
would like to get a $2,000 (whatever your rents are, plus add a little extra) line-of-credit. What you’ll
do is cut the mortgage payment checks on the first, using the line-of-credit. Then as your rents come
in, you’ll pay the line-of-credit (L.O.C.) off each month.
Your banker will love this sound business reason and logic for the loan. These are the types of loans
banks love and the kinds of service they’re in business to provide. Don’t be surprised if, when you
ask for $5,000, the banker actually asks you if you think that’s enough. If you’re conservative with
your request, they’ll usually offer more. Surprise, surprise!
PARTNERS
Don’t overlook this hidden little gold mine. Short-term partners can help you grow much quicker.
The concept for finding them and splitting the profits is simple. You’re the pro. You find the deals,
you do all the work in finding, negotiating, buying and fixing (if necessary) the property. The partner
puts up all the cash and you split the profits up to 50/50.
When Russ was just getting started, he was having trouble getting loans from banks and he was low on
cash. He found a six-unit building that was bargain priced. The seller was willing to take a pretty low
down payment and he was willing to hold all the financing. This was a perfect scenario, especially since
the property had a hefty positive, monthly cash flow. The only problem was that he did not have enough
cash to cover the down payment and the fix-up costs (fix-up was approximately $20,000). Also at this
point, he could not borrow any more money from the bank. So there he was, stopped from proceeding any
further toward his goal of financial independence. This will probably happen to you, too, sooner or later.
Remember this, there’s always a way to keep it going. You just need to keep feeding your mind with new
books, tapes, workshops and any other means that come along.
Here’s what Russ did. He approached the seller, since the seller was short on cash and didn’t have
any immediate buyers. Russ was totally truthful with him. He explained his goals to him and showed
the seller his other properties. Then Russ found out the seller’s needs. His job was being transferred
and he had to move. He didn’t want to leave the property in the hands of a property manager - he

wanted to sell. He was also an investor who had made money in real estate before, so he understood
the game somewhat. Russ told him he thought he could solve both of their problems.
Why not become partners on the property? Russ proposed that the seller sell the property to a part-
nership that the two of them would form. They would buy at the seller’s price and terms and split the
down payment and each pay half. (The seller just reduced the amount of the down payment by half,
so he actually came up with no cash himself.) Their new partnership would then have a mortgage
payable to the seller’s wife and the payments would be made to her.
The seller and Russ together (with the seller’s good credit) would go to the bank and borrow the fix-
up money. Now the seller would be the stronger qualifier, but Russ would get credit as a borrower
who’s now qualifying for more loans, and paying them successfully. They agreed to borrow $25,000,
even though the fix-up costs were only about $20,000. They each put $2,500 cash in their pockets.
(So Russ ended up with none of his money in the deal and now owned 50 percent of it.) His end of
the partnership was to oversee the entire fix up, and handle the management of the property. He
would be paid 10 percent of the gross rents off the top for managing ($240 per month). The partner-
ship would then would pay all of the building expenses from the rents and split the profits 50/50.
This was a great deal for Russ and, boy, what a motivating catalyst. Russ solved his no-money prob-
lem, saw that this could continue to work, and it just made his confidence and belief in himself grow
a hundred fold. It was a great deal for his new partner, too. He made some money by selling the
building, and then made another profit as 50 percent owner of the new partnership when he sold. He
was able to move with the peace of mind that the property was in good hands. That’s a great WIN-
WIN deal.
HOW TO FIND PARTNERS
Above is one example on how partners can be useful. It is also a good example of the creative use of
a partner. Other ways to find partners might be through the use of simple, three-line classified ads in
your local newspaper. You might run an ad that says:
Money partner wanted.
Secured by real estate plus 50%.
Call 951-8100.
We’ve used real estate agents as partners, too. Let’s say you want to buy a property and a “scrap” real
estate agent lists it. If it’s a $200,000 property, the commission to the real estate agent could be
anywhere from $14,000 to $20,000. Remember that the seller is the one who pays the commission.
We’ve approached real estate agents many times on good deals and proposed that, if we buy the
property, they kick in their commission as the down payment and we’ll give them up to a 50 percent
ownership and split of profits. That’s found money for them and us (or you). If the real estate agent
doesn’t sell the building, he makes nothing. Here’s a chance for the real estate agent to get found
money and turn it into long-term profits. I may also (as part of the inducement) tell the real estate
agent that, when we sell, we’ll let him list the property, handle the sale, and let him get another
commission on the re-sale.
There are many creative ways to use partners. Keep an open mind and an open ear for any and
all possibilities.
KEYS TO CREATIVE REAL ESTATE FINANCING
Our KEYS TO CREATIVE REAL ESTATE FINANCING advanced training will open the door to
huge cash flows and profits.
YOU WILL LEARN HOW TO:

• Create a mortgage, then flip it for financing
• Exchange properties without tax consequences
• Structure financing with bad credit or no credit
• Prepare and present a powerful financial statement
• Make your home equity worth 10 times its value
• Convert real estate notes into purchase money
• Discover money partnerships in your own hometown
• Win favorable terms from equity-only, “hard” money lenders
Call our consultants at 800-741-7877 to register for this advanced training.

PROPERTY TAXES
SPECIAL REPORT EIGHT

SPECIAL REPORT EIGHT
PROPERTY TAXES
Property is assessed and taxed regardless of whether it is for business or personal use. Therefore, an
understanding of the taxing process will prevent your property from being overtaxed.
While the importance of the property tax as a source of revenue for individual states has greatly
diminished, it is still the primary source of revenue for local government. It is estimated that there are
65,000 different government entities, including 13,000 cities and counties that currently impose a
property tax.
ASSESSED VALUE
“Assessed Value” is the equitable assessed valuation an assessor places on each parcel of taxable real
estate within an assessment jurisdiction that is a uniform percentage of market value. ** Interna-
tional Association of Assessing Officers
SURVEYING
Recording each property was originally prescribed by the federal government. Recognizing the need
to record expansion beyond the original thirteen colonies, the federal government established the six-
mile survey system following the end of the revolutionary war. A number of standards grew from
this act. Tracts or subdivisions of properties are identified through the use of a plat map.
Within the plat, additional subdivisions could be made and identified by a number. Our block and lot
identification systems grew from that. Every property is given a property identification number that
must be properly noted in all correspondence with the assessing and taxing authorities.
A major federal influence of the 20th century is conformity in record keeping and appraising. With
the advent of federally insured loans, Federal Housing Administration (FHA), Veterans Administra-
tion (VA), and Farmers Home Administration (FHA), standardized forms began to be used, espe-
cially in the area of appraisals. The expansion of the secondary market brought further standardiza-
tion since the mortgage associations insisted on utilization of their prescribed forms for any transac-
tion in which they participated.
The original survey system also set some standards for addressing the size of property that is still
used today - the use of chain measurement and the acre:
1 chain equals 66 feet
1 chain x 10 equals an acre
1 acre 43,560 square feet
1square mile equals 640 acres
Special Report Eight: Property Taxes 8 - 1
In the assessment process, land and what is on it are assessed separately and exact measurements are
essential. Each state sets the standards upon which the appraisal process is based, including key
dates, valuation standards, method of appointment and term of the property assessor, exemptions and
tax relief, staff qualifications and operating manuals.
ASSESSING PROPERTY
The first step in the assessment process is an inspection of the property to be assessed. Most state laws
require an inspection to be made on a regular basis. However, this time frame varies state to state.
The assessor takes on-site notes of every conceivable aspect of a property. Generally, replacement or
maintenance improvements do not add to value, however, if usable or livable space is increased, then
it most certainly will. Also, energy efficiency improvements, such as storm doors and windows,
stripping and a more efficient boiler do not increase value.
TYPES AND CLASSES OF PROPERTY

Unimproved property is the land itself. Improved property is the land plus what was put there (i.e., a home
and garage). When a parcel is being considered, the land and the improvements are assessed separately.
The results are then combined to provide the overall assessment. Whether the land is valued by per acre
price, square footage or frontage, it is a lot easier to determine value on the land itself.
Another thing to consider is the different classifications of properties. These classifications are
important because there are different ways to set value, and different methods are used in the same
jurisdictions, depending on the class of property.
COST APPROACH
The cost approach starts with the actual construction cost that it would take to duplicate the building. Then
subtract the various forms of depreciation and arrive at the figure by adding in the value of the land. There
are three ways to estimate replacement cost: the quantity survey, in place and the unit method.
The quantity survey is what a contractor would do before constructing a building. Cost of materials,
labor and overhead would all be itemized in detail. Although it is the most complete, it is the most
difficult to do and therefore, the least used.
In place is based on the same principle as the quantity survey, but the cost is estimated by the value
of components. A shingle roof costs “x” amount per square foot and the exterior walls would cost
“y” dollars a square foot to replicate.
The unit method uses either the square or cubic footage of the building and multiplies it by a known
cost factor. These factors have been developed by the construction and insurance industries. Because
of ease of use, it is the fastest and most used determinant.

DEPRECIATION
There are three types of depreciation that will have to be considered when assessing property: physi-
cal, functional and external.
Physical depreciation falls into two categories, incurable and curable. Incurable depreciation is the
normal wear and tear on the structure and is estimated in terms of life span. If a building has a life
span of 30 years and it is 10 years old, the depreciation factor would be one third. Curable deprecia-
tion takes into consideration damage to the structure that would have to be repaired. If the roof badly
needs replacement, the cost of a new roof would be deducted from the value.
Functional Depreciation is derived from obsolescence. A tiny kitchen unable to accommodate mod-
ern appliances, bathrooms without showers, or a cellar built with rocks – complete with sump pump
– that can never be finished are all things that would cause a reduction in a building’s value.
External Depreciation is usually associated with location problems - a home on a major highway, a
high school or factory next door, a hazardous waste site discovered two blocks away. These are all
factors that would reduce value.
MARKET DATA APPROACH

The market data or direct sales approach defines value as equal to that of similar or comparable
buildings that have been recently sold. It is the method most taxpayers are comfortable with and the
method easiest to present to a special master or judge. However, the biggest rap against it is that not
enough effort is put forth to find quality comparables. The comparables must be as close to each
other as possible.
INCOME APPROACH
The income approach, based upon the earnings of a building, is used primarily for office and large
apartment buildings. Rents and leases determine the value here, not the replacement cost. Two inner
city buildings could be almost identical, but if one rent roll is much more than the other, it will be
much more valuable, even if they are only a block apart. It is not unusual for negotiations to purchase
a building to be focused almost entirely on a multiplier of the rent roll – taking into consideration the
shape of the building, of course.
These are investment properties and to have value, they must allow the investor to recapture his
initial investment and, at the same time, generate a fair return on his/her investment. If these two
factors are not present, investors should choose to put his/her money elsewhere. Communities look to
attract investors to provide badly needed jobs and housing, and the income approach attempts to
satisfy both parties.
UNDER THE INCOME APPROACH YOU:

• Arrive at gross income.
• Derive net income.
• Select a method to get a rate of return, the capitalization rate.
• Select a method for capital recapture.
• Compute the value.

MASS APPRAISAL APPROACH
What has evolved is an appraisal process based on three basic approaches, but really using the cost
approach as its model. It involves the collection of market and cost data and the creation of a model
for large classifications of properties. It also allows a real property assessor’s office to have a
sufficient database that one can adjust up or down from the model for every conceivable alteration
or change, creating, in reality, an individual assessment for each property.
Always bear in mind that conditions change in areas and in properties. That’s the reason why assessors,
armed with such a model, still re-inspect on a regular basis. And this is precisely one of the reasons why
people challenge tax bills, for the model might not reflect the accurate conditions of the property, or take
into account an external factor which is starting to affect property values. It also assumes that the
assessor has in their possession a record of property that is 100 percent accurate.
THE TAX PROCESS

It is not the real property assessor or his assessment of the property that determines your real estate
bill. In fact, he is really quite removed from the process. Various independent boards, agencies and
authorities levy charges and taxes that might be included on your bill. In some cases, they are billed
separately and carry a different due date.
Examples are school boards, water and sewer districts, fire, health, economic development, etc. In
Lee County, Florida, the county tax collector reports that there are 27 different county assessment
bills mailed each year.
THE BUDGET PROCESS

The process begins when the chief executive meets with the budget director. They review the local
economy and tax growth, and discuss what programs the chief wants to expand or contract. Out of this
meeting comes a rough guideline on where the budget will go, such as a 3 percent growth rate or a 2
percent overall decline. The budget director then sends a memo to all the department heads outlining the
projected needs and sets a deadline for each department to submit a proposed budget. When all the
departments respond, they are reviewed to insure they have complied with the guidelines.
PRELIMINARY BUDGET
At this point, a preliminary budget is in place. The chief executive and budget director review the
document, approving or disapproving the agencies’ requests and making changes. What typically
follows is a series of meetings with each agency head until an agreement is reached with each for
their next fiscal year budget.
EXECUTIVE BUDGET
The budget director determines the total amount needed to fund the budget, say $100 million. The
local tax collector provides an estimate of other tax revenues that they expect to receive during that
year, for example $10 million. Now, the amount required is $90 million. Next, they review all the
aid programs they might receive from the federal government, state, county, etc. – perhaps $15

million worth – and reduce the required amount even further to $75 million. This is the executive
budget presented to the legislature and made public.
The property assessor now takes the assessment roll, reduces the amount by the exemptions that are in
effect, both institutional and individual, and gives the chief executive a certified assessment roll. The
assessment roll is the total dollar value of the properties the real estate tax will be levied against. They take
the dollar number required to be raised, $75 million in our example, and figure out how much money will
be raised per $1,000 of assessed value. The mill, 1/1000 of a dollar or a tenth of a cent, measures this
amount of money. The resulting ratio or number is then multiplied against every individual assessment to
determine a preliminary or proposed tax assessment. The process is called millage.
Meanwhile, the legislative process has started. Each department’s budget is reviewed at committee
meetings and public input is called for at public hearings. The legislature puts together its version of
the budget and submits it to the chief executive for his signature. That is the law, but in reality, once
the legislature has determined what it wants, a series of negotiations take place with the chief execu-
tive and his staff. The budget submitted by the legislature, in almost every case, is one in which they
have already reached an agreement.
BUDGET ADOPTION
The chief executive signs the budget into law and the real property assessor takes the assessment
rolls, figures out the millage rate and prints out the tax roll. That roll is certified by the property
assessor and given to the tax collection official. The tax collector then sends a real estate tax bill to
every property owner or person to be notified, such as a mortgage holder or mortgage-servicing
bureau. In large jurisdictions, the bill could be a computer tape, listing all taxes due on properties for
which a mortgage-servicing bureau might be responsible.
DISCOUNTS
Fiscal years and tax collection cycles differ in most communities. For years, governments were
forced to issue tax anticipation notes (TANs) to generate revenue to cover expenses during the initial
phase of the fiscal year until sufficient revenues were raised. For example, in Lee County, Florida, its
budget year starts January 1, but the real estate taxes, its main source of revenues, is not due until
March. Government and the public naturally had to pay interest for the use of this money, adding an
additional budgetary expenditure.
To reduce this expenditure, most jurisdictions began to offer their citizens a discount if they prepaid
their taxes. Lee County, Florida offers the following tax discounts:
4% if paid in November
3% if paid in December
2% if paid in January
1% if paid in February
Actual Amount if paid in March
Most jurisdictions also offer taxpayers the additional options of paying taxes on an installment or
quarterly basis. You should become familiar with the discounts and installment plans of your juris-
diction because improperly applied discounts are a major source of errors on your tax bill.

DELINQUENT TAXES
In Florida, taxes become delinquent April 1 of each year, at which time a 3 percent penalty is added
to the bill. Florida is a tax certificate state, which means that, in addition to normal foreclosure
options, it auctions directly to the public a certificate covering those taxes in arrears.
By statute, the tax collector must conduct a tax certificate sale on or before June 1st for the preceding
year’s delinquent taxes. He must advertise the sale, including the legal description of each property in
arrears, the listed owner of the property and the amount of the certificate to be sold. The advertise-
ment must be in a local, general circulation newspaper. (In Lee County, the ad is placed for four
consecutive weeks.) The face amount of the tax certificate includes the amount of delinquent taxes,
the 3 percent interest, a 5 percent tax collection commission and the property’s proportionate share of
the advertising costs.
There is a maximum interest rate of 18 percent that someone could bid for the certificate. These certifi-
cates allow the owner two years to redeem the property by satisfying all charges, including the tax certifi-
cate holder’s interest rates. One bids in terms of the interest rate. If you were the only bidder and bid 18
percent, you won. If someone else bid 17-1/2, then to win, you would have to bid lower.
EXEMPTIONS
All states pass enabling legislation, giving its real estate taxpayer some sort of relief. It is referred to
as enabling legislation because the local legislative body must pass a bill implementing its use. While
state law restricts the type of exemptions to be given, local jurisdictions have to opt for implementa-
tion, so check to see what exemptions apply in your area.
There are three categories of exemptions: institutional, government purpose and individual.
Institutional exemptions provide relief for broad categories of properties based upon use. Religious
institutions, hospitals, cemeteries, schools, tribal lands and certain not-for-profit and charitable
institutions are the most common ones.
Government purposes exemptions are enacted to assist the government in preserving, protecting or
enhancing sections of its community. Historical sites or districts are an example of government
granting an exemption or abatement in the name of preservation. Agricultural purposes, wetlands and
forest preservation reflect a protective type of exemption. Economic development, urban renewal,
and rehabilitation are enhancement exemptions.
Individual exemptions are granted solely on the merit of the individual or individuals owning the
property. Examples are the disabled, the blind, homestead exemptions, and, by far the two most
popular, the senior citizen and veteran exemptions.
Generally, there are differences in how much relief you receive by class of exemption. Institutions
such as houses of worship are usually fully exempt from property tax. Government purpose exemp-
tions tend to be partial abatements for a stated period of time. Exemptions tied to one’s income are
commonly referred to as “circuit breakers.”

THE RIGHT OF APPEAL
Every state gives the property owner an avenue to contest an error or the assessment of their
property. While the names might change, the structure is very similar in nature.
CIVIL PROCEDURES PREVAIL

These are civil procedures. Therefore, the law presumes that the assessor is correct and he or she gets
the benefit of the doubt. It is up to you to present the evidence and your case, dispelling any doubt as
to the soundness of your approach. If you are presenting five factors as to why the assessment is
wrong and one of them is weak, start with three of the strong ones (laying the groundwork), review
the weak one and finish with your best point. That first impression and your summation is what
should be remembered most.
APPEALING THE ASSESSMENT

Remember that you are not contesting the tax – that is set by the executive and the legislative body.
You are only appealing the assessment process and its conclusion. Also, many months may go by
before you receive a hearing, let alone a decision from the courts.
Here is a snapshot view of what the appeal process may look like in yearly or fiscal year cycle.
January to February 28 The filing period for any exemptions for which you qualify.
March to April You prepare your case.
May to July You request an informal conference.
August 15 Your proposed tax notice is mailed.
September 9 The last day an appeal can be filed (25 days from the day it was mailed).
September 14-29 The Value Adjustment Board (VAB) hears the appeal.
Last day plus 20 days The VAB must render all decisions.
October 25 The tax roll is certified by the real property assessor.
November 1 Tax bills are mailed out.
December 24 The last day to file a judicial appeal (60 days after the tax roll is certified
or within 60 days of when the VAB rendered your decision).
THE INFORMAL CONFERENCE

The informal conference has two steps. First, if you see an error on the bill, go to the tax collector’s
office and request an explanation. Here is where you make sure that the prepayment discount or the
late payment fee was determined properly.
The second is to actually call and request an appointment with the assessor who was responsible for
the assessment on the property itself. Now, the real property assessor and his staff may or may not
be in the same office as the tax collector. In Lee County, Florida they are, but in many jurisdictions
they are separate departments.
Before you prepare for the conference, think about the dynamics of such a meeting. This is the
individual who you feel did not do their job properly, so how you approach them is important. No
one likes to be told they did a poor job.

There are three types of errors with which you are going to confront them: a faulty assessment based
on an error, a condition with the property that would change its value or one where you feel
comparables indicate you are being over assessed.
AN ERROR
Any error entered on a record or into a computer base describing your property could make a major
difference in the actual assessment. Simply tell the assessor, “Look, I know you based your assess-
ment on my property record, but whoever filled it out originally made this error.” You then show how
and where they are wrong. They will tell you that they will take this new information under advise-
ment. Shortly thereafter, you will receive a new proposed tax bill in the mail. They have no intention
of allowing you to go further to a hearing and disclose publicly that their property card contained
wrong data.
CHANGED PROPERTY CONDITION

You have a fire, water damage or bad leak that floods your basement every time it rains. You have
even been forced to install a sump pump in your basement. Numerous supporting photographs have
been brought along as evidence. Your position is, “Gee, I know you couldn’t possibly have known
about this condition. I’m sure you will agree that this severely diminishes my chance of selling my
house for what it once would have brought on the market. Its value is now much less.” Here again, a
review or maybe even a reassessment may be conducted but the chances are you are going to prevail.
The same assessor will present the government’s side at a hearing and they will not be anxious to be
sitting there when you show these conclusive photos and state that your assessor ignored them.
OVER ASSESSED
This is the hardest to present at an informal meeting because they feel they have adequately done
their job. Look to see if you have been uniformly assessed, ask your market value and what the
Coefficient of Dispersion is. Talk about the overall condition of your property compared to the ones
around it. The high school they built next door will hurt the value and your property will not be
worth the same as other similar properties in your city. You might be offered a compromise here, but
it will rarely be what you are looking for. After all, you are questioning their ability. Don’t be bashful
in letting them know that you are fully prepared to go to the next step, the formal hearing. If they are
not receptive, start preparing the necessary papers for your formal hearing even before the new
proposed tax bills are mailed, since you only have twenty-five days to have your formal appeal
submitted. Make sure you end on a professional note because you will be facing this same assessor at
the formal hearing.
THE FORMAL APPEAL

It is called the Tax Commission, the Board of Equalization and Assessment, the Board of Assessment
Review or, in Florida, the Value Adjustment Board. It’s a board, independent of the Office of the
Chief Assessor, whose primary responsibility is to hear property owners appeal their appraisals and,
thereafter, render a decision. The appraisal office can provide you with the forms necessary to
initiate your formal appeal. In most cases, you will be required to submit a processing fee for each
property. The majority of jurisdictions, as in Lee County, Florida, will refund the fee when you win
your case.
Remember, this is a formal hearing and relevant information not furnished, such as an unrecorded
second mortgage could put you in violation of the law. The same goes with the information you
provide. It must be accurate to the best of your knowledge. You will receive a formal notification and
the time you will appear. You will then be called to appear by the special master. Your case will be
reviewed to make sure you submitted your case in advance of the prescribed time frame and if so,
you will be sworn in to make your case.
THE ASSESSOR’S TESTIMONY

The assessor will testify, making his case why you shouldn’t receive tax relief. There will be a court
reporter or a recorder to transcribe the entire process. You mustn’t lose sight of the original premise
that the assessor is presumed to be correct, so you must show they made a mistake or an omission or
didn’t consider relevant data.
At this point, you are probably thinking, “Hey, that’s unfair. The assessor has five days to review my
materials and I don’t get to see his.” Most jurisdictions feel this is true and will allow you to review
and copy his file on the case before the hearing, although with some, you may have to resort to filing
an official freedom of information request to gain access.
Don’t let the setting intimidate you. Most boards of review members are elected officials who will
not want to appear as “anti-taxpayer.” In Florida, the board is composed of three elected members of
the county and two elected members of the school board. They are hearing the appeals of the people
who vote them into office and, in a close one, which way do you think they will lean? It’s human
nature. So, respect them and give them the tools so they can vote your way. It’s not the tax that’s too
high, it’s the assessment, so act accordingly.
THE DECISION
The next step is waiting for the determination. Jurisdictions are aware of the tax process timetable, so
they attempt to respond as quickly as possible. Under Florida law, the VAB has twenty days after its
last deliberation to render decisions on every appeal.
The next recourse is usually the courts, and if you still feel your case has merit, go for it. The prob-
lem here is that most people will not go to court without an attorney. Attorneys, as we know, are
expensive so, if your tax bill is $3,000 and you win a major victory, say a 1/3 reduction or $1,000, it
might barely cover your legal costs. It is primarily the commercial and large apartment complexes
that go to court and receive major tax breaks.
REAL PROPERTY SMALL CLAIMS

Many jurisdictions are starting to recognize this inequity and have extended the small claims concept
to the assessment appeal process. They have established a Small Claims Assessment Review with a
minimal filing fee, conducted by a court appointed referee. Attorneys are not needed. These are
usually restricted to owner-occupied cases, and you have the option of going to one or the other for
each appeal. However, you can’t go to small claims and then go to the circuit court or Supreme Court
of the state.
Every state has real property laws in their state statutes, which are available at the public library, or
in most states the state statutes are on-line. Pay special attention to the pages explaining administra-
tive and judicial review of property taxes. They are not as complicated as you may think.

THE AUDIT PROCESS
Auditing of a real property tax bill can be divided into three distinct areas of possible errors. The
first two, site discrepancies and building errors, are directly related to the property record. The third
deals with the manner in which the property was assessed. The property record is the official record
of the property and the basis upon which the assessor will make his determination of value. Any
error or omission on that record, however small, could have a major impact on the ultimate assess-
ment and final tax bill.
Every property record in your jurisdiction is public information and in most states the information is
available on-line. However, you will most likely need a certified or true copy if you pursue the appeal
process. The fee for getting a copy in most jurisdictions is only one dollar, and it is a wise investment.
IS IT THE CORRECT PROPERTY?

First, make sure the property listed is correct. The best way to do so is to get a property description
from your deed. A sample from a deed follows:
Lot 32, THE ROOKERY, a Subdivision, according to the plat thereof as recorded in Plat Book 38,
page 58, of the Public Records of Lee County, Florida. Documentary Tax Pd. $ 202.95
DO THE DIMENSIONS MATCH AND IS THE MATH CORRECT?

Make sure that the dimensions on your deed match those on the property record exactly. If there are
any discrepancies, have the property measured.
Redo all the math calculations, making sure they are correct (i.e. 8,000 square feet or 1/3 of an acre).
The lot might be 80 x 125 feet, but there are main-line water and sewer pipes that run through one
side, eliminating 15 feet of usable space. The assessor hadn’t considered this when he quoted as
usable 60 x 100 feet.
ARE THE PROPERTY EASEMENTS, DEED COVENANTS, AND ZONING RESTRICTIONS LISTED?
Perhaps the deed contains an easement by the electric company and they have power lines running on
the property.
This would be applicable if part of the backyard opens onto a golf course and may not be fenced off,
so it is open for communal use.
Is the lot on the corner of a commercial strip, although a local zoning ordinance restricts it to resi-
dential development?
ARE ANY SITE DETERIORATION FACTORS OR OFF-SITE FACTORS LISTED?

Is the property subject to spill-offs or major soil erosion?
A fast food restaurant opened next door to your duplex, high traffic roads are located nearby, the
airport runway was extended to two blocks away (big noise problem), a factory opened up two blocks
away and a high school is down the block. These are all reasons for a property appraisal lower than
normal market value.

ARE THE EXEMPTIONS LISTED?
Have you applied for and been granted any of the exemptions allowed in your jurisdiction?
ARE THE APPROPRIATE TAXING DISTRICTS NOTED?

Assessment districts cut through county, city and school district boundaries. It is very possible to
have a wrong district listed.
PROPERTY IMPROVEMENTS
Remember, the property record is the official assessment of the property and any error or omission would
mean a change of the assessment. Now let’s go over the audit process for improvements to the property.
IS THAT YOUR HOUSE?

Make sure the diagram on the property record is your building and/or buildings.
Verify the building description. Does it list the house as a two-family when it is a one-family home?
Does it list the house as two stories, when in reality it is a one-story building with an unfinished
dormer? Is it a full basement, fifty percent basement, poured concrete, cinder block, concrete slab, or
crawlspace? It is very important to check square or cubic feet estimating. Is the Livable Square
Footage Accurate? Here again, very, very important. Is the Math Accurate? Redo the calculations to
make sure the numbers are accurate. Verify the Building Composition. Has it been listed as brick
when, in reality, it is a frame house?
Verify the Roof Composition. Shingle, not tile or slate. Verify the Heating System. Does it state gas
when it is electric or oil? Is the property central air or does it have separate units? Does it have a one,
two, or three car garage? Are the interior components such as special flooring, fireplaces, etc. de-
scribed accurately?
ARE ANY ADDITIONS OR IMPROVEMENTS LISTED?

If a porch, back deck, patio, pool or tool shed are listed, check the size, construction and condition of
each. Were there replacements due to depreciation that should not be considered as improvements?
YEAR BUILT?
Is the correct year the building was built used in depreciating the improvements?
ARE THERE ANY DEFECTS IN THE BUILDING NOT LISTED?

This is the last check under the property audit and it is one of the most important. Are there defects
in the building because of inferior construction that the assessor was not aware of? Is the pool broken
and been out of use for years? Is the entire building substandard? Does the basement flood? Are
there major cracks because of settling? Was there fire or water damage, anything that would diminish
its value? Is the layout of the house out of the ordinary such as a one-bedroom house in the suburbs,
one bath for three bedrooms, one closet in the entire house? Is there anything in the interior plan of
the building that would diminish its value while not being seen from the outside? You should prepare
a detailed list of these, complete with photographs and repair estimates, if possible.
ERRORS IN ASSESSMENT
The third phase of the audit process deals with the assessment process itself. The assessment could
be wrong, not because of any erroneous information about the property, but because it was over
assessed in relationship to other properties in your area.
CHECK THE COEFFICIENT OF DISPERSION
The coefficient of dispersion (C.D.) is the assessed value divided by its market value that is set by the
jurisdiction. You have to inquire what the figure is for your area. Do the math for your property based
upon the assessor’s number. Is it in line with the mandated C.D. for your area? If not, your case is building.
UNIFORMITY OF ASSESSMENT
Was your property assessed uniformly with others in your community? Check the courthouse for
recorded deeds, the multiple Listing Service (MLS) at a local realtor’s office or data at the assessor’s
office itself for fifteen recent sales of properties similar to yours. Take what they were assessed at,
divide by the sales price and get the C.D. for each. Add up the fifteen percentages and divide that
number by fifteen and you will have an average assessment sales ratio or C.D. Is this figure in line
with the one on your property? If not, although yours might have been assessed correctly, they have
not been uniform in their assessment practices and your assessment should be lower.
PURCHASE PRICE
Another way to challenge the assessment process is if the property was recently purchased and the
purchase price was lower than the value set by the assessor. You have to show that it was a hands-off
transaction and that the seller was not distressed and sold at a much lower price than value. If it sold
for a much lower figure because the property was distressed and in need of repair, then document the
repairs and their cost and make that your case for appeal.
Compare your assessor’s value determination to the asking price of similar homes in your area using
the local newspaper and/or the MLS. Most will agree that the asking price is always a little inflated
in relationship to the value. If you find them to be similar, then you again have a good case to argue
that you have been unfairly assessed.
COMPARABLES
The next approach is obtaining actual comparables for the property. The closer to your property the
comparables are, the better case you will have. Most experts in the field will tell you to get a mini-
mum of three comparables of identical homes with lower assessed value than yours. We agree, but
also look for three more properties with similar assessments that are clearly more valuable than
yours. This little extra touch really adds to the contrast and strengthens your case substantially.
BURDEN OF PROOF
Remember, when disputing the assessment on your property, the burden of proof is on you, the
contester. The assessor is deemed to be correct.
STATE PROPERTY TAX LISTING

The following listing is provided to give you an overview of the process for each state as well as the
name, address, telephone number, and website of the applicable office. However, since changes may
have occurred since the printing of this book, you should contact your state or local office and
inquire about any recent changes.

ALABAMA
Department of Revenue, 50 N. Ripley Street, Montgomery, AL 36132
205-242-1525; www.ador.state.al.us/
Alabama uses a classification system with the market-value approach; and, the taxes are considered
ad valorem (according to value). It provides exemptions for homesteads, senior citizens, the disabled
and a limited veteran exemption.
ALASKA
Dept of Community & Business Development, 550 W. 7th Ave., Ste 500, Anchorage, AK 99501
907-465-2280; www.dced.state.ak.us/
The assessment responsibilities lie with the municipalities (boroughs) to assess property at its full
and true value using the market value approach. However, not all municipalities levy property taxes.
There are also exemptions provided for the senior citizen and disabled veterans and localities may
provide a substantial homestead exemption.
ARIZONA
Department of Revenue, Taxpayer Information, P.O. Box 29086, Phoenix, AZ 85038
602-542-5221; www.revenue.state.az.us/
Arizona uses a fairly complicated classification system. County assessors use either the replacement
cost less depreciation method or sales analysis; however, limits are placed on the percentage the
assessment can go up in any given year. They also have exemptions for veterans, the disabled and
seniors who have lost their spouse.
ARKANSAS
Assessment Coordination Department, 1614 West Third Street, Little Rock, AR 72201
501-324-9240; www.accessarkansas.org/dfa/
Arkansas uses the coefficient of dispersion method for assessing properties by applying a percentage
to the “true market value” of the property. The taxes are considered ad valorem (according to value),
collected by county government, and provide limited exemptions for disabled veterans and low-
income seniors. Arkansas has a reputation as difficult to appeal.
CALIFORNIA
State Board of Equalization, PO Box 942879, Sacramento, CA 94279-0090
800-400-7115; www.boe.ca.gov/
California is a full-assessment state using the market value approach at the county level, but limits
the amount an assessment can go up in any one year. Exemptions include homestead, intangible
personal property, low-value, and veteran exemptions as well as others. California has an appeals
process in place.
COLORADO
Dept of Local Affairs, Div of Property Taxation, 1313 Sherman Street, Room 519,
Denver, CO 80203
303-866-2371; www.dola.state.co.us/
Colorado uses a limited classification with a market-value approach; and, the assessment responsibil-
ity is at the county level. Exemptions are provided for the disabled and senior citizens. It also has an
appeals process to protest the amount of the property value.
CONNECTICUT
Office of Policy and Management, 450 Capitol Avenue, Hartford, CT 06106-1308
860-418-6200; www.opm.state.ct.us/
Connecticut uses the market-value approach with a coefficient of dispersion. It provides exemptions
on a limited basis for the disabled, veterans and senior citizens and allows for a cap on certain senior
citizen property taxes. It also allows its municipalities (townships) to opt for additional disabled
veteran, senior citizen, homestead, and environmental exemptions.
DELAWARE
Division of Revenue, Economic Development Office, Carvel State Office Building, 820 N. French
Street, Wilmington, DE 19801
302-571-3302; www.state.de.us/revenue
Delaware is a full assessment state using the market value approach at the county level. The indi-
vidual county also dictates the type and amount of exemptions allowed. For example, Sussex County
has exemptions for qualifying disabled and senior citizens as well as a senior citizen school property
tax credit and a tax subsidy filing. An appeals process is in place.
FLORIDA
Dept of Revenue, Tax Information Svcs, 1379 Blountstown Highway, Tallahassee, FL 32304-2716
850-488-6800; www.myflorida.com/dor/property
Florida is a full assessment state using the market value approach; and, provides exemptions for
homestead, senior citizens, disabled veterans, blind persons, the disabled and widow or widower.
County government is responsible for the assessment process and taxes are considered ad valorem
(according to value). An appeals process is in place.
GEORGIA
Dept of Revenue, Property Tax Division, 4245 International Pkwy, Suite A, Hapeville, GA 30354
404-968-0707; www2.state.ga.us/departments/dor/ptd/index.html
Georgia uses the market value approach with a coefficient of dispersion; and, property is assessed at
the county level. It provides exemptions for homestead, senior citizens and veterans and taxes are
considered ad valorem (according to value). An appeals process is in place.
HAWAII
Taxation Department, 830 Punchbowl Street, Honolulu, HI 96813
808-587-4242; www.state.hi.us/tax/
Hawaii is a full assessment state using the market approach. It provides homestead, senior citizens,
disabled and limited environmental exemptions. The county government is responsible for the assess-
ment process and an appeals process is in place.

IDAHO
Department of Revenue and Taxation, State Tax Commission, 700 W. State Street, Boise, ID 83722
208-334-7733; www2.state.id.us/tax/
Idaho is a full assessment state using the market value approach with property assessed at the
county level. It provides for homestead, farmer, disabled, senior citizen, and veteran (POW) exemp-
tions. An appeals process is in place.
ILLINOIS
Property Tax Appeal Board, Wm. G. Statton Office Building, 401 South Spring, Room 402,
Springfield, IL 62706
217-785-6067; www.state.il.us/agency/ptab/
Illinois uses a market value approach and property is assessed at the county level. (The only juris-
diction that has opted for the classification system is Cook County.) It has exemptions for home-
stead, home improvement, senior citizens, and disabled veterans; and, an appeals process is in place.
INDIANA
State Board of Tax Commissioners, 100 N. Senate Avenue, Room N-1058, Indianapolis, IN 46204
317-232-3777; www.in.gov/dlgf/
Indiana recently changed to the market value approach to assess property at the county level. It
provides exemptions for homestead, senior citizens and veterans; and, has an appeals process in
place.
IOWA
Dept of Revenue and Finance, Taxpayer Services, P.O. Box 10457, Des Moines, IA 50306-0457
515-281-3114; www.state.ia.us/
Iowa is a full assessment state using the market value approach and property is assessed at the
county or city level. It has sixteen (16) property exemptions and five (5) tax credits including
homestead, elderly and disabled, mobile home, agricultural, and family farm.
KANSAS
Department of Revenue, Division of Property Valuation, 915 SW Harrison Street, Room 400N,
Topeka, KS 66612
785-296-2365; www.ksrevenue.org/pvd/
Kansas uses the fair market approach to assess property at the county level. The state has a home-
stead property tax refund for those who are at least age 55, totally and permanently disabled or
blind, or have at least one dependent child. However, there are also five additional requirements to
qualify for the refund. An appeals process is also in place.
KENTUCKY
Revenue Cabinet, 200 Fair Oaks Lane, Frankfort, Kentucky 40620
502-564-8338; www.revenue.state.ky.us/

Kentucky is a full assessment state using the market value approach. It provides exemptions for the
disabled and for senior citizens. The exemptions only apply to the basic property tax. County govern-
ment is the jurisdiction given the primary assessment responsibility. An appeals process is also in
place.
LOUISIANA
Tax Commission, 923 Executive Park Ave, Suite 12, P.O. Box 66788, Baton Rouge, Louisiana 70896
504-925-7830; www.louisianaassessors.org/
Louisiana has a classification system in which classes are assessed at different levels using the fair
market value approach. A standard homestead exemption is provided as well as additional improve-
ment exemptions that may be determined by the individual parishes.
MAINE
State Tax Assessor, Property Tax Division, 14 Edison Drive, Augusta, Maine 04332
207-287-2011; www.state.me.us/revenue/propertytax/
Maine is a full assessment state that uses an alternative to the fair-market approach similar to the
highest and best use concept at the township or municipality level. Exemptions are provided for
senior citizens and to veterans. An appeals process is in place.
MARYLAND
Department of Assessment and Taxation, 301 W. Preston Street, Baltimore, Maryland 21201
410-767-1184; www.dat.state.md.us/
The state’s Department of Assessments and Taxation issues assessments based on the fair-market
approach; and, then each unit of the state (state, county, and city) sets their own tax rates. Exemp-
tions are provided for the blind, disabled veterans, and homestead. An appeals process is in place.
MASSACHUSETTS
Department of Revenue, 51 Sleeper Street, Boston, Massachusetts 02205
617-887-6367; www.dor.state.ma.us/
Massachusetts employs a classification system and uses the coefficient of dispersion method with
the fair market value approach at the local level. It allows exemptions for senior citizens, the dis-
abled, blind persons and qualifying veterans. Local jurisdictions may also opt for a homestead or
environment exemption. An appeals process is in place.
MICHIGAN
State Tax Commission, Treasury Building, 4th Floor, Lansing, Michigan 48922
517-373-0500; www.michigan.gov/treasury/
Michigan classifies property and uses the coefficient of dispersion method with the fair market value
approach at the local level. It permits exemptions for blind persons, homestead, senior citizens and
veterans. An appeals process is in place.

MINNESOTA
Department of Revenue, 600 North Robert Street, St. Paul, Minnesota 55146-7704
612-296-3403; www.taxes.state.mn.us/
Minnesota employs a classification system with different assessment levels per class and uses the
fair market value approach. Exemptions are granted for the disabled and senior citizens with
homestead provisions. Responsibility for the assessment process is divided between county, town
and city governments; and, an appeals process is in place.
MISSISSIPPI
State Tax Commission, Property Tax Division, 1577 Springridge Road, Raymond, MS 39154
601-923-7631; www.mstc.state.ms.us/
Mississippi uses a classification system with different levels of assessment assigned to each class.
The assessment is then based on fair market value at the county level. Exemptions are granted to
the senior citizen and disabled. An appeals process is in place.
MISSOURI
State Tax Commission, 621 E. Capitol Avenue, P.O. Box 146, Jefferson City, Missouri 65102-0146
573-751-3505; www.dor.state.mo.us/stc/
Missouri employs the classification system with different levels of assessment assigned to each
class. The assessment is then based on fair market value at the county level. A property tax credit
program is in place for senior citizens and disabled veterans; and, an appeals process is also in
place.
MONTANA
Department of Revenue, 124 N. Roberts, 3rd Floor, PO Box 5805, Helena, Montana 59604-5805
406-444-6900; www.discoveringmontana.com/revenue
Montana employs the classification system with different levels of assessment assigned to each
class. The assessment is then based on fair market value. Property is assessed at the county level;
however, the state is responsible for the assessment roll. Exemptions are provided for homestead
property and veterans; and, an appeals process is in place.
NEBRASKA
Dept of Revenue, Property Tax Division, 301 Centennial Mall S., Lincoln, Nebraska 68509-4818
402-471-2920; www.state.ne.us/
Nebraska is a full-assessment state using the fair-market-value approach at the county level. A
homestead exemption is available for senior citizens over age 65, the disabled, disabled veterans
and their widow(er); and, an appeals process is also in place.
NEVADA
Department of Taxation, 1550 E. College Parkway, Suite 115, Carson City, NV 89706
775-687-4820; http://tax.state.nv.us/

Nevada uses the coefficient of dispersion method for assessing properties at fair market value at the
county level. Exemptions are provided for the blind, disabled veterans, orphans, and widows; and, a rebate
program is available for senior citizens meeting specific criteria. An appeals process is also in place.
NEW HAMPSHIRE
Department of Revenue Administration, Property Appraisal Division, 45 Chenell Drive, PO Box 457
Concord, New Hampshire 03302-0457
603-271-2687; www.webster.state.nh.us/revenue/
New Hampshire is a full assessment state that uses a variation of the fair market value approach at
the municipal level. Exemptions are provided for the physically handicapped and senior citizens, and
a tax credit is available for qualifying veterans. Localities may opt to increase the exemptions.
NEW JERSEY
Department of the Treasury, Division of Taxation, 50 Barrack Street, Trenton, New Jersey 08646
609-292-6400; www.state.nj.us/treasury/taxation/
New Jersey is a full assessment state using the fair market approach at the municipal level. Exemp-
tions are in the form of tax deductions given to qualified disabled persons, veterans, senior citizens
and their surviving spouses. An appeals process is in place.
NEW MEXICO
Taxation and Revenue Dept, 1100 S. St. Francis Drive, P.O. 630, Santa Fe, New Mexico 87504-0630
505-827-0870; www.state.nm.us/tax/
New Mexico uses the coefficient of dispersion method with the fair market value approach at the
county level. Exemptions are provided for qualified low income and senior citizens; and, an appeals
process is in place.
NEW YORK
Office of Real Property Services, 16 Sheridan Avenue, Albany, New York 12210-2714
518-486-5446; www.orps.state.ny.us/
A classification system of assessment is used in Nassau County, New York City and certain other
municipalities. The rest of the state uses the full assessment method at the municipality level with
limited exemptions provided for the disabled, homestead, senior citizens, and veterans. New York
has an appeals process in place.
NORTH CAROLINA
Department of Revenue, Property Tax, P.O. Box 871, Raleigh, North Carolina 27602
919-733-7711; www.dor.state.nc.us/practitioner/property/
North Carolina is a full-assessment state using the fair market value approach at the local level.
Exemptions are granted for the disabled, senior citizens, and disabled veterans. An appeals process
is in place.

NORTH DAKOTA
Office of State Tax Commissioner, State Capitol, 600 E. Boulevard Ave., Bismarck, North Dakota
58505-0599
701-328-2770; www.state.nd.us/taxdpt/
North Dakota employs the classification system using a fair market value approach at the local level.
Exemptions are available for the disabled, homestead, senior citizens and veterans. An appeals
OHIO
Department of Taxation, 30 E. Broad Street, Columbus, Ohio 43266-0030
614-466-5744; www.state.oh.us/tax/
Ohio uses the coefficient of dispersion method with the fair market value approach at the local level.
Exemptions are available to the disabled and senior citizen under the homestead exemption. An
appeals process is in place.
OKLAHOMA
Tax Commission, 2501 N. Lincoln Building, Oklahoma City, Oklahoma 73194
405-521-3178; www.oktax.state.ok.us/oktax/
Oklahoma uses the coefficient of dispersion method with the fair market value approach at the
county level. It offers homestead, senior citizen, and totally disabled exemptions. An appeals process
is in place.
OREGON
Department of Revenue, Property Tax Division, 955 Center Street. N.E., Salem, Oregon 97301-2555
503-378-4988; www.dor.state.or.us/
Oregon is a full assessment state using the fair market value at the county level. Veterans are given
reduced assessments; and, the disabled and senior citizens may defer paying their property taxes. An
appeals process is also in place.
PENNSYLVANIA
Department of Revenue, 4th and Walnut Streets, Harrisburg, Pennsylvania 17128
717-787-8201; www.revenue.state.pa.us/revenue/
Pennsylvania uses the coefficient of dispersion method with the fair market value approach at the
city or county level. Exemptions are allowed for the disabled, senior citizens, and veterans as well as
low income tax deferrals, when offered by the local taxing body. An appeals process is in place.
RHODE ISLAND
Division of Taxation, One Capitol Hill, Providence, Rhode Island 02908
401-277-2885; www.tax.state.ri.us/
Rhode Island is a full assessment state using the fair market value approach. Localities (townships
and municipalities) can opt for a coefficient of dispersion method. Exemptions are available for
veterans and localities may opt for exemptions for the disabled and senior citizens. An appeals
SOUTH CAROLINA
Tax Commission, Property Division, 301 Gervais, P.O. Box 125, Columbia, South Carolina 29214
803-898-5000; www.sctax.org/dor/
South Carolina uses the classification system with different levels of assessment assigned to each
class using the fair market value approach at the county level. Exemptions are provided for certain
veteran classifications and the disabled. In addition, a homestead exemption is available for senior
citizens and the totally blind or disabled. An appeals process is in place.
SOUTH DAKOTA
Dept of Revenue, Division of Property Taxes, 445 East Capitol Avenue,
Pierre, South Dakota 57501
605-773-3311; www.state.sd.us/revenue/
South Dakota is a full assessment state using the fair market approach at the county level. Exemp-
tions are provided for the disabled, senior citizens and veterans. A property tax refund program is
also in place for qualifying senior and disabled citizens. An appeals process is in place.
TENNESSEE
Division of Property Assessments, 1400 James K. Polk State Office Building,
505 Deaderick Street, Nashville, Tennessee 37243-0277
615-401-7737; www.comptroller.state.tn.us/
Tennessee employs the classification system with different levels of assessment assigned to each
class using the fair market value approach at the local level. Exemptions are granted to the disabled
and senior citizens. An appeals process is in place.
TEXAS
Office of the Comptroller, Property Tax Division, 4301 W. Bank Drive, Suite 100,
Austin, Texas 78746
512-305-9999; www.cpa.state.tx.us/taxinfor/proptax/
Texas is a full assessment state using the fair market value approach at the county level. Exemp-
tions include a homestead exemption, with additional exemptions for the disabled, senior citizen,
and disabled veteran. An appeals process is also in place.
UTAH
State Tax Commission, Property Tax Division, 210 North 1950 West, Salt Lake City, Utah 84134
801-297-3600; www.tax.ex.state.ut.us/property/
Utah is a full assessment state using the fair market value approach at the county level. Exemptions
are provided for qualifying primary residences, the blind, the disabled, senior citizens and disabled
veterans. An appeals process is in place.

VERMONT
Department of Taxation, Division of Property Valuation and Review, 109 State Street, Montpelier,
Vermont 05609-1401
802-828-2865; www.state.vt.us/tax/
Vermont uses a classification system and the coefficient of dispersion method with the fair market
value approach at the local level. Exemptions are provided for qualifying veterans; and, an appeals
VIRGINIA
Department of Taxation, Property Tax Division, 600 East Main Street, 4th Floor, P.O. Box 47471,
Richmond, Virginia 23219
804-786-4021; www.tax.state.va.us/
Virginia is a full assessment state using the fair market approach at the local level. Exemptions are
provided for the disabled and senior citizens as well as properties that have had substantial renova-
tion. An appeals process is also in place.
WASHINGTON
Department of Revenue, General Administration Building, 11th Ave and Columbia Street, Olympia,
Washington 98504
360-570-5900; http://dor.wa.gov/
Washington is a full assessment state using the fair market value approach at the county level. Ex-
emptions are provided for the disabled and senior citizens; and, additional exemptions are given for
property improvements. Also, senior citizens that do not qualify for the exemption may be allowed to
defer the taxes. An appeals process is in place.
WEST VIRGINIA
Department of Tax and Revenue, PO Box 2389, Charleston, West Virginia 25328-2389
304-558-3333; www.state.wv.us/taxdiv/
West Virginia uses a classification system and coefficient of dispersion method with the fair market
value approach at the county level. Homestead exemptions are provided for qualifying disabled,
disabled veterans, and senior citizens. An appeals process is in place.
WISCONSIN
Department of Revenue, 2135 Rimrock Road, P.O. Box 8971, Madison, Wisconsin 53708-8971
608-266-9758; www.dor.state.wi.us/
Wisconsin is a full assessment state that uses a classification system and the fair-market-value
approach at the local level. Exemptions are provided for homestead and to qualifying veterans. An
appeals process is in place.

WASHINGTON, D.C.
Office of Tax and Revenue, Customer Service Center, 1st Floor, 941 North Capitol Street NE,
Washington, DC 20002
202-727-4829; http://cfo.washingtondc.gov/
Washington, D.C. is a full assessment jurisdiction using the fair market approach that also utilizes
property classifications. Exemptions are provided for homestead, lower-income households, and
senior citizens. An appeals process is also in place.

FREQUENTLY
FREQUENTLY ASKED
ASKED QUESTIONS
QUESTIONS
SPECIAL
SPECIAL REPORT
REPORT NINE
NINE
Entrepreneur’s Start Up

SPECIAL REPORT NINE
FREQUENTLY ASKED
QUESTIONS
BUSINESS ENTITIES
WHAT IS A C CORP?
The name “C Corporation” refers to a legal business entity chartered by the state. To have a C Cor-
poration you must file Articles of Incorporation and pay the required state fees and taxes with the
appropriate state agency (usually, the Secretary of State).
HOW DOES A C CORP PAY TAXES?

A C corporation has a separate legal and tax life distinct from its shareholders. A corporation pays taxes at
a corporate income tax rate and files its own corporate tax forms each year (IRS Tax Form 1120).
WHAT ARE THE RULES AND REGULATIONS REGARDING A C CORP?

To retain the corporate existence and thus the benefits of limited liability and special tax treatment,
those who run the corporation must follow corporate rules. Annual meetings must be held, minutes
of the meetings must be taken, and officers must be appointed. Most importantly, the corporation
should issue stock to its shareholders and keep adequate capitalization on hand to cover any antici-
pated business debts.
CAN I AVOID DOUBLE TAXATION?

Generally, corporations are taxed on its own profits. Any profits paid out in the form of dividends are
taxed again to the recipient as dividend income, at the individual shareholder’s tax rate. However,
most small corporations seldom pay dividends. The employee/owners are paid salaries and fringe
benefits that the corporation may deduct on their taxes. The result is that only the employee/owners
end up paying any income taxes on this business income and double taxation rarely occurs.
WHAT ARE THE BENEFITS OF USING YOUR C CORPORATION FOR QUICK BUYING
AND SELLING?
The C Corporation protects you from the IRS dealer tax penalties. If someone buys and then quickly
resells property in their own name, they will be hit with some stiff tax penalties called the “dealer tax
penalties.” Some people think that there is a limit to the number of quick transactions per year before
one is classified as a dealer. This is not the case. The IRS tax code does not specify a number. So that
is one reason why it is so important for a new investor to get incorporated right away.
Special Report Nine: Frequently Asked Questions 9 - 1

A C Corporation also provides protection from being sued by a tenant or contractor. And, there are
tax savings when buying items such as computers and cars, and reimbursing yourself for business
training classes using a C Corporation that can save you thousands of dollars yearly.
WHAT IS A LIMITED LIABILITY COMPANY (LLC)?

Popularity has grown with the Limited Liability Company (LLC) because it combines some of the
best features of a partnership and a corporation. The owners (called “members”) of the LLC are not
personally responsible for debts and there is no dual taxation. However, business earnings are taxed
to its members.
Another difference between an LLC and a corporation is that LLC’s do not have to distribute income
in proportion to the interest of a member. Distribution of profits in an LLC is subject to employment
tax. Unlike S Corporations, this entity allows for more than 75 shareholders and in some cases, two
or more classes of stock may be created. Overall, in an LLC, no member has personal liability and
members enjoy the flexibility it provides for ownership and business management.
HOW DO I MANAGE AN LLC?

Member-managed or manager-managed. In a member-managed LLC, all members (owners) manage
all business transactions. A manager-managed LLC only has a certain number of members making
the decisions, while the other owners share the profits. In this type of entity, decision-making mem-
bers decide who will have what responsibility in the company. Sometimes, titles are given such as
“president” and “vice-president”.
HOW DOES THE IRS VIEW LLCS?

The IRS treats single-owner LLCs as sole proprietorships, and all business revenue and expenses are
shown on Form 1040 schedule “C”. If two or more members own the LLC, it may be classified as either a
partnership or a corporation for tax purposes. Refer to www.irs.gov for additional information.
WHAT IS A LIMITED PARTNERSHIP?

A Limited Partnership is a partnership that has at least one limited partner and one general partner.
To set up an LP you need to file a certificate with the state where the limited partnership was
formed. This is usually filed with the Secretary of State.
WHAT ROLE DOES THE GENERAL PARTNER PLAY?

The general partner is responsible for all the business operations, controls cash distributions to the
partners, and handles management decisions. The general partner has unlimited liability and stands
to lose the most if sued. Creditors of the partnership can go after the general partners’ personal assets
if the limited partnership’s assets are insufficient. The general partner is also liable to third party
lawsuits, such as a slip and fall. Therefore, instead of you being the general partner, set up a corpora-
tion or limited liability company. It will give greater liability protection to its owners.
WHAT IS THE ROLE OF THE LIMITED PARTNER?

The limited partner has no control over management decisions and generally has no liability other
than their financial contribution to the partnership. Should the company be sued, creditors cannot
confiscate their personal assets. In exchange for this limited liability, the limited partner forfeits his
rights to manage and control the partnership.

HOW IS A LIMITED PARTNERSHIP TAXED?
The limited partnership does not pay taxes as an entity. It files an information tax return to the IRS
and issues Form 1065 to the partners. Each partner then files income or loss on their individual tax
return and must pay income tax on all gains whether or not the profit is distributed.
HOW CAN I PROTECT MY ASSETS WITH A LIMITED PARTNERSHIP?

To protect your personal and business assets, you can set up several limited partnerships. One limited
partnership can own your real estate and another partnership can own your cash and another your
cars. This is added protection in the event that one partnership is sued; then, only a portion of your
assets can be touched.
WHY USE A LIMITED PARTNERSHIP FOR RENTAL PROPERTIES?

Asset protection – That is when the lawsuit comes from outside of your business (such as a car
wreck) your properties are protected from being seized in a lawsuit.
Lawsuit Protection – That is when the lawsuit comes from inside your business. (A tenant slips, falls
and sues. By structuring your limited partnership with your corporation as one partner and you as the
other, stops the lawsuit from affecting you personally.
Tax savings – The limited partnership can pay for trips, computers, etc.
WHAT IS SOLE PROPRIETORSHIP?

The sole proprietorship is the most common type of business organization in the United States today.
Simply put, sole proprietorship means single owner. All income, expenses and debt lie totally with
the owner. All of the profits are the owners. There is no continuity of ownership. The business termi-
nates with the death of the owner or the dissolution of the business.
WHO IS LIABLE IF MY SOLE PROPRIETORSHIP IS SUED?

There is no form of asset protection involved in a sole proprietorship. The business debt is your debt
and if sued, you are personally liable for the result of the suit. If someone suffers an injury related to
your business, sues you and wins, they can take your business assets and your personal ones as well.
You can buy liability insurance against this event. Many times sufficient coverage is cost prohibitive
for the small business owner.
WHAT IS A DBA?
Many sole proprietorships operate under a DBA (Doing Business As) or fictitious name. This means
that you, John Jones, as a sole proprietor are “doing business as” Ace Contracting, your “fictitious
name”. Your governmental authority may require you to register yourself as a DBA and to publish the
Registration of a Fictitious Name in the local newspaper. In addition to the cost of the ad, this can
require a processing fee and the filing of an application with the clerk of court.
HOW ARE SOLE PROPRIETORSHIPS TAXED?

A sole proprietorship does not file a separate tax return. All business revenue and expenses are
shown on schedule “C” of form 1040 (your individual tax return). Your business profits are subject
to self-employment taxes (social security and Medicare taxes). If you have employees, it is also
necessary to file a payroll tax return.
COMMUNITY REINVESTMENT ACT
WHAT IS CRA?
CRA stands for Community Reinvestment Act, a federal legislation passed in 1988 to combat com-
munity discrimination.
WHAT IS REDLINING?
Banks can no longer participate in the illegal practice of flagging communities as unsafe or high-risk
investments. Banks are monitored for CRA compliance.
The FDIC reviews banks and rates them according to the following four levels of compliance:
• Outstanding
• Satisfactory
• Needs Improvement
• Substantial Non-compliance
Therefore, every bank must have a folder that states its CRA objectives; a copy of the last CRA
review; and, these must be made available to customers.
On the Internet, the FDIC (www.fdic.gov under “Regulations and Examinations”) lists the banks that
are getting ready to undergo their next review. They will also tell you how banks fared on their last
exams. When searching for a CRA loan, go to a bank that had unsatisfactory marks, and you will be
well received.
WHAT IS THE ADVANTAGE OF CRA FOR FIRST-TIME HOMEBUYERS?

Higher debt-to-income ratios are allowed: 33-35% of your income for housing payments; 40-45%
total indebtedness.
OTHER ADVANTAGES INCLUDE:

• Market or below-market interest rates
• Low down payments
• Lenient credit guidelines (Nontraditional credit obligations such as rent, utilities,
phone bill, and car insurance are acceptable verifications of credit.)
• No PMI required (Private Mortgage Insurance – insurance that is provided by a non-
government insurer that protects the lender if the borrower defaults.)
• Lower monthly payments
• Qualify for more mortgage money
WHO IS ELIGIBLE?
First-time homebuyers – anyone who has not owned their own home in the last three years, including
displaced spouses; and, low-to-moderate income bracket
WHO CAN YOU TALK TO ABOUT A CRA LOAN?

You can talk to the CRA officer at a big bank, CRA office within your county, City/County Commu-
nity Reinvestment agency, City/County Planning Departments, Department of Human Services,

Social Service providers, or Not-for-profit agencies (Habitat for Humanity). Or, you can go to the
U.S. Catalog of Federal Domestic Assistance (Reference book in library or available at
www.cfda.gov.).
WHAT ARE SOME SOURCES OF CRA MONEY?

C.D.B.G. – Community Development Block Grant funds are federal money that is allocated to the
states who then award to entitlement areas, typically urban revitalization areas.
H.O.M.E. – Home Ownership Made Easy funds are federal money distributed by the state. It is used
to fund down payments and/or closing costs, as determined by local advisory committees that make
recommendations to local government.
S.H.I.P. – State Housing Initiatives Partnership (Florida) are State funds given to local governments
who determine how to utilize these funds. Typically down payment and/or closing costs are subsi-
dized if you are a first time homebuyer in the low-to-moderate income category or you haven’t
owned a home in 2 years.
H.A.P. – Housing Assistance Plan is similar to H.O.M.E. and S.H.I.P. programs and is sometimes
limited to rental housing.
HOW DO YOU RESEARCH CRA LOANS AT THE BANK?

Ask for copy of the bank’s guidelines. Find out who administers its CRA loans. Ask if that individual
is available to speak with you. When you present yourself to the banker, state you are an investor and
want to invest in low- to moderate-income property, and you want to understand the bank’s CRA
objectives. (Most will not do mobile homes (vehicles) but will do manufactured homes.) Make sure
you understand what they will or will not do.
WHAT POSITIVE IMPACTS DO REINVESTING IN YOUR COMMUNITY HOLD?

Improvements in the community will make it a pleasant place to live (while potentially accelerating
the appreciation of the property!)
HOW WILL THE COMMUNITY REINVESTMENT ACT HELP YOU AS AN INVESTOR?

Navigating the maze of funds available help you (the investor) find money for prospective buyers.
CREDIT, DEBT & BANKRUPTCY

I HAVE BAD CREDIT. WHAT CAN I DO?
Even if your credit rating is bad, there are things you can do today to clean it up. With approximately
60 percent of the information on credit reports outdated or incorrect, it is a good idea to check your
credit report yearly. Since three separate companies (Equifax, Trans Union & Experian) maintain
your credit history, it is best to get a copy of each when reviewing your credit. While one may state a
flawless record, the other one may report some negative information that would make it difficult to
obtain a loan.

No matter how bad your credit has been in the past, don’t give up. Here are a couple of things to
consider. First, a bad credit report from any individual entity can only stay on your report for seven
years. After that, it is removed and cannot be used against you. The only exception to this rule is
bankruptcy. It can be reported for 10 years, but after that it is also removed.
Second, most lenders are more concerned with how you’ve handled recent credit than what happened
years ago. Even with a bankruptcy, if you’ve not had any further bad credit and have kept your bills
paid on time since then, you may still be able to qualify for a loan after two or three years.
If you don’t have a strong credit history, then start developing good spending habits. Put yourself on
a budget; determine what are legitimate monthly expenses (rent, gas, utilities, phone). Then decide
what you can do without, or what you can do with less. Instead of eating lunch out every day, bring
your lunch to work. If you currently have the premium cable package, change to basic. Instead of the
cappuccino every morning, reward yourself only on Fridays for sticking to your budget. Changing
just a few spending habits can make a huge difference in your monthly income.
Begin now to clean up your credit report and limit your spending. In no time at all, you will have
lenders ready to make you a loan.
WHAT ARE FICO SCORES?

FICO stands for Fair Isaac & Company. Credit scores are reported by three major credit bureaus,
Equifax, Experian and TransUnion. Scores are not the same on each bureau’s report because each
bureau places a slightly different value on different items. Scores may range from 364 to 840. Lend-
ers today have found that there is a relationship between loan delinquencies and credit scores.
Studies have determined that half of all borrowers with FICO scores below 550 are more likely to be
90 days late once on their mortgage. However, it was determined that only two out of 10,000 were
delinquent with a score of 800 or more. Since then lenders have started to take a closer look at FICO
scores when making their decision to approve mortgage loans. A lender will generally not give you a
loan with a score of 530 or lower.
FICO scores are calculated using a “scorecard”. Some things that affect FICO Scores are:
• Too many credit inquiries
• Delinquencies
• Revolving credit card balances near the maximum limit
• Too many accounts opened within the last twelve months
• Short credit history
• Tax liens, judgments, or bankruptcies
• Too few revolving accounts
• Too many revolving accounts
FICO scores may affect more than whether or not you get approved. It can also affect how much
interest you pay on the loan. Other factors that influence an underwriter’s decision may be low debt-
to-income ratios, larger down payment and savings history. One of the most important things to
remember when shopping for a mortgage loan is to have as few inquiries for your credit report as
possible. Do not let each lender or mortgage broker ask for a credit report. Wait until you have

determined what lender you want to use then have that one company obtain a credit report. Several
credit inquiries within the last 90 days will not only have to be explained, but will also lower your
FICO score. Your credit history is important, but your credit score will determine your interest rate.
I’M PAYING TOO MUCH INTEREST ON MY CREDIT CARDS. WHAT CAN I DO?
Start to eliminate any unnecessary and burdensome credit cards, specifically the high-interest-rate
store cards — Sears, JC Penney and others at typical rates of 20% or above. Avoid or cancel gas
company cards — cards with rates that typically run as high as 24.99%. High interest VISA and
MasterCard cards using two-cycle billing methods (e.g., Discover), and any other high-interest credit
cards should be replaced with lower interest rate cards offered on a regular basis by various banking
institutions. In order to qualify for these lower-rate cards, keep in mind that you will need to have a
stellar credit rating. Otherwise, you will not qualify for the best rates and you may not qualify for
one of their credit cards at all.
WILL I QUALIFY FOR LOWER INTEREST RATE CREDIT CARDS?

The best way for you to determine whether or not you will qualify for the lowest interest rate credit
cards is by closely reviewing your credit history. If you have been denied credit within the past 60
days or if you are, or have been, unemployed recently, you will qualify for a free credit report from
the credit reporting agency that the lender used to evaluate your credit file. Otherwise, the major
reporting agencies will charge you about $8 to get a copy of your report. If you have any credit
concerns you should probably pull a report from each of the three major agencies.
If you want to avoid the fee, you can get an excellent, free overview of your credit history and credit
rating by visiting www.eloan.com. An excellent breakdown of the factors that went into evaluating
your overall score will be included. Based on this score, lenders determine your likelihood of repay-
ing loans, and this weighs heavily in deciding whether or not you will qualify for the best interest
rate credit cards.
If, after you have checked your credit reports and credit scores, you conclude that you have a high
rating, you will likely want to apply for one or two of the low rate credit cards. Simply pick the one
or two cards that best meet your needs and apply for them.
WHAT DOES BANKRUPTCY LEGISLATION STATE?

In recent years, credit card issuers have significantly increased their mail solicitations to marginally
qualified individuals and offered them credit cards at high interest rates. At the same time, these
cardholders are encouraged to be consumers, to live the American Dream, and buy!
Now, lenders say they need “protection” — perhaps from themselves. The chances are high that, in
time, such cardholders might need to seek relief through bankruptcy. The profits of card issuers and
lenders are at an all-time high. They have already covered potential losses from bankruptcies by
increasing interest rates to the highest limits permitted by the individual states, many of which seem
more intent on helping the card issuers than in protecting their citizens.
Pending legislation is an attempt to slow the alarming, increasing trend of bankruptcy applications by
restricting or eliminating the consumer’s ability to totally wipe out personal debts. Instead, consum-
ers who are already under the gun would be forced to repay debts over an extended period of time,

based on a typically complicated arithmetic “test” that would “determine” the filer’s ability to repay
at least a portion of their debts. If, under this formula, it is determined that an individual can repay a
portion of their debts, he or she will be put into a mandatory repayment program by the courts and
the bankruptcy filing will be denied, at least partially.
WHY FILE FOR CHAPTER 13 BANKRUPTCY?

You can file Chapter 13 to stop a foreclosure on your house, make up missed mortgage payments and to
keep your house. You can also pay off back taxes and stop interest from accruing on your tax debt. Filing
Chapter 13 papers with the bankruptcy court stops creditors in their tracks. When you file for Chapter 13
bankruptcy (or any other kind of bankruptcy), something called the “automatic stay” goes into effect
immediately. Chapter 13 stops creditors from trying to collect what you owe them. At least temporarily,
creditors cannot legally garnish your wages, empty out your bank account, go after your car, house or
other property, or cut off your utility service or welfare benefits. Some people file Chapter 13 bank-
ruptcy simply to buy time. If, for example, you are behind on several of your mortgage payments and the
bank is about to foreclose on you, you can file Chapter 13 bankruptcy papers to stop collection efforts,
and then attempt to sell the house before the foreclosure.
WHAT ARE THE CONSEQUENCES OF FILING CHAPTER 13 BANKRUPTCY?

For the entire length of your case (three to five years), you will be living under a strict budget; the
bankruptcy court will not allow you to spend money on anything it deems a luxury. If you have a
regular job with regular income, the bankruptcy court will probably order that the monthly pay-
ments be automatically deducted from your wages and sent to the bankruptcy court.
If you file Chapter 13 bankruptcy, it can stay in your credit file for up to ten years from the day you
file your papers. However, most Chapter 13 bankruptcies stay on your credit file for no more than
seven years. That’s still a long time. Once you have fulfilled your repayment obligations, you can
take steps to improve your credit. Some Chapter 13 programs state that if you have paid off at least
75% or more of your debts, and attend money management seminars, you can apply for credit from
specified local creditors. A business, even a sole proprietorship, cannot file for Chapter 13 bank-
ruptcy in the name of that business. If a business gets into financial trouble, they generally file
Chapter 11 bankruptcy when they need help reorganizing their debts.
WHAT IS CHAPTER 7 BANKRUPTCY?

Chapter 7 is the simplest and easiest form of bankruptcy. Chapter 7 bankruptcy law permits families
to keep certain property so that they can continue to function in society. Any individual, couple or
business can file Chapter 7. It causes unsecured debt to be discharged (wiped out) but leaves se-
cured and priority in place.
WHAT ARE SOME REASONS FOR FILING BANKRUPTCY?

In Good Faith Filings:
Unemployment caused by layoff or illness; debts left over from an ill-fated attempt to start a new
business ; or a temporary disability that becomes permanent.
Less than Good Faith Filings:

Living off lines of credit and credit cards when it is apparent you are not going to be able to pay
back the increasing balances.

HOW DOES BANKRUPTCY AFFECT MY CREDIT RATING?
Most people regain credit within two years by demonstrating good payment habits following their
bankruptcy. However, it will stay on your credit report for seven years. By making these payments on
time each month, good credit is being reported on their behalf. So, with most of their old debt dis-
charged and nothing but on-time payments being reported for at least two years, many ex-bankruptcy
debtors find themselves regaining a good credit rating again. You need to be sure to make your
payments on time to recover from bankruptcy.
CONDOMINIUMS AND MOBILE HOMES

WHAT SHOULD I BE CONCERNED ABOUT WHEN BUYING A CONDOMINIUM?
First, you need to make sure that the condo association will let you sublease the unit. You should get
a copy of the “Condominium Document” from the Realtor. This will delineate rental rules and will
disclose many other things relevant to your purchase and ownership. Many condominiums require an
interview by the Board of Directors before they will approve the property transfer. If this is the case,
you can ask about the state of the condo budget and the “reserves” in place. A condominium associa-
tion can elect to hold reserve accounts for the future replacement of items of common property (roof,
parking lot pavement, elevator replacement, air conditioner replacement, exterior painting, etc.). If
reserves are kept, you will pay a few more dollars per month in association fees to fund the reserve
accounts. This helps to preclude the potential for a large assessment when common property items
need replacement or major repair. If no reserves are in place, you should budget for assessment.
Discuss this with the Realtor and with the Association President if possible.
CAN I LEASE OPTION A MOBILE HOME?

Yes, you can lease/option a mobile home. You can buy land, put a used mobile home on the land,
build a garage and refinance to pull cash out. You can then sell or lease/option the property. This can
be very profitable. You can also do a lease option on an existing mobile home. Many mobile home
parks don’t allow renters, so see if the park in which you are interested will allow a rent-to-own
tenant. They should not have a problem with that if you present yourself in a professional manner.
WHAT EXPENSES SHOULD I PAY ON THE MOBILE HOME ONCE IT IS RENTED?

It’s good to keep complete control of all expense items except utilities during the lease period. Lot
rent, outstanding financing, insurance and taxes or fees should be controlled and paid by you, as
owner. This ensures that you don’t get any unpleasant surprises from unpaid bills. All these items
should be rolled into the rental figure that you charge the tenant/buyer. If they fail to exercise their
option, the only change you have to make for a new tenant/buyer is utilities.
FINANCING
CAN I USE HARD MONEYLENDERS TO FINANCE CASH FOR A FORECLOSURE
PROPERTY?
Yes, generally hard money can be used in any purchase situation as long as the loan-to-appraised
value of the property is 65% or less.

WHAT ARE THE DRAWBACKS TO USING A HARD MONEYLENDER?
Hard moneylenders loan money for qualified projects quicker than conventional lenders, but at a higher
rate and for a shorter period of time. The loan-to-value usually ranges from 50%-65%, but may be up to
80% for purchase or special circumstances. However, the interest rate is generally from 10% and higher
and points range from 3-10 points at the lender’s discretion. The borrower must pay the closing costs and
due diligence and commitment fees (1/3% to 1/2% of the loan amount). Also, third-party reports may
include appraisals or environmental reports and must be paid by the borrower.
WHAT DO I NEED TO PROVIDE TO THE LENDER IN ORDER TO CLOSE THE LOAN?

1. A project description that is clear, concise, realistic, and honest.
2. The Project must be viable, have no title or environmental risk, and have an exit
strategy. Borrower must be experienced, flexible and confident in their abilities and
the feasibility of the project.
3. The Borrower must not be insistent on terms, and allow the lender to use their own
judgment to make the best deal possible relative to their risk in the project.
4. The Borrower must be willing to pay the lender’s investigative cost and all closing
costs, including any third-party reports.
The borrower must provide a project profile for review by the hard moneylender. The profile may be
several pages and consists of details of the borrower, the property or project, the funding require-
ments, and the exit strategy.
IF I AM APPROVED FOR A LOAN TO COVER THE PURCHASE PRICE OF A

PROPERTY, BUT THE SELLER IS OFFERING FULL SELLER FINANCING, WHICH
METHOD SHOULD I USE?
The choice is yours. Consider the costs associated with conventional financing and the time involved
versus the convenience of seller financing. Also, compare the interest rates associated with each method.
WHY WOULD A SELLER OFFER FINANCING IF THEY WANT TO GET RID OF THE
PROPERTY AND PUT MONEY IN THEIR POCKETS?
There are many personal reasons why sellers offer financing but these two are most often the motiva-
tion. First, the seller avoids capital gains tax on the gain portion of the proceeds of the sale. Second,
the amount that the buyer pays for the property is thousands of dollars more than if the seller had
“cashed out” in the transaction.
WHAT ARE FANNIE MAE AND FREDDIE MAC?

Fannie Mae, or Federal National Mortgage Association (FNMA), is a private corporation. Freddie
Mac, or Federal Housing Loan Mortgage Corporation (FHLMC), is a stockholder-owned corporation
chartered by Congress in 1970. Neither company lends money directly to the consumer. Instead, they
buy loans on the secondary market and package them into investments known as mortgage-backed
securities. Both also have guidelines used by lenders to qualify the loans for purchase.
WHERE CAN I FIND MORE INFORMATION ON VARIOUS GRANTS AND LOANS AND
MORTGAGE INSURANCE PROGRAMS OFFERED BY THE FEDERAL GOVERNMENT?
Visit www.cfda.gov and www.hud.gov for more information.

WHAT IS THE FHA?
The National Housing Act of 1934 created the Federal Housing Administration (FHA), a government
agency within the Department of Housing and Urban Development (HUD), in order to encourage
lenders to invest money in the mortgage market, thus providing economic stimulus to the depressed
construction market. Remember that FHA does not make loans to borrowers, it does not process
loans and it does not build or insure houses.
WHAT DOES THE FHA DO?

HUD’s Federal Housing Administration mortgage insurance program helps low- and moderate-
income families become homeowners by lowering some of the costs of their mortgage loans. This
program provides mortgage insurance to protect lenders (banks, mortgage companies, and savings &
loan associations) against the risk of default on loans to qualified buyers. Insured loans may be used
to finance the purchase of new or existing single-family and multifamily homes, manufactured
homes, as well as to refinance debt.
WHAT TYPE OF MORTGAGE INSURANCE PREMIUM WILL I HAVE TO PAY ON AN

FHA-INSURED LOAN?
In order to obtain an FHA-insured loan, prospective homebuyers are required to pay one of two types
of mortgage insurance premiums (MIPs). The first type is the ‘Upfront MIP’; the second type is an
annual premium MIP. The ‘Upfront MIP’ is calculated as a percentage of the loan, regardless of the
duration of the mortgage and, as the name implies, it is payable in cash or can be financed in the
loan. The annual premium for MIP is calculated on the unpaid balance of the loan and is included in
the monthly mortgage payment.
WHY CHOOSE FHA LOANS?

Many people select FHA-insured loans because of low down payment requirements (as little as 3%)
and the fact that FHA will accept “riskier” borrowers. If your funds for a down payment are modest
or if you want to conserve your money for other types of investments, consider going the FHA route.
Check with local lenders for their 30-year fixed interest rates on FHA mortgages and obtain a good
faith estimate of closing costs.
ARE THERE ANY LIMITS TO THE AMOUNTS THAT CAN BE INSURED FOR FHA?
Yes, HUD limits amounts that may be insured. This ensures that the program serves low- and moder-
ate-income people. FHA has set limits on the dollar value of the mortgage loan. These figures vary
over time and by place, depending on the cost of living and other factors (higher limits also exist for
two- to four-family properties).
WHAT IS SECTION 203 (K) REHABILITATION MORTGAGE INSURANCE?

Section 203(k) insurance enables homebuyers and homeowners to finance or refinance a home plus
the cost of its rehabilitation through a single mortgage. This program offers a solution that assists
both the borrower and lender by insuring a single, long-term, fixed- or adjustable-rate loan that
covers both the purchase and rehab of a property. This type of loan saves borrowers time and money,
and also protects lenders by allowing them to have the loan insured before work has been completed
on the property.

WHAT ARE THE STIPULATIONS FOR A 203(K) LOAN?
The home must be at least one year old. The extent of rehabilitation may range from relatively minor
to virtual reconstruction and the total value of the property must still fall within the FHA mortgage
limit for the area. The value of the property is determined by either (1) the value of the property
before rehab plus the cost of rehab, or (2) 110 percent of the appraised value of the property after
rehab, whichever is less.
All persons who can make the monthly mortgage payments are eligible to apply. Income eligibility
requirements vary depending on your demographic area. Check with your local lending institution
for income eligibility guidelines.
Some of the eligible activities for rehabilitation include, but are not limited to:
• Structural alterations and reconstruction
• Modernization and improvements to the home’s function
• Elimination of health and safety hazards
• Changes that improve appearance and eliminate abandonment
• Reconditioning or replacing plumbing; installing a well and/or septic system
• Adding or replacing roofing, gutters, and downspouts
• Adding or replacing floors and/or floor treatments
• Major landscape work and site improvements
• Enhancing accessibility for a disabled person
• Making energy conservation improvements
Applications must be submitted to the local HUD Field Office through an FHA-approved lending
institution.
WHAT IS SECTION 8 HOUSING?

Section 8 Housing is privately owned rental units participating in the low-income rental assistance
program. Landlords receive subsidies on behalf of qualified low-income tenants, allowing the tenants
to pay a limited proportion of their incomes toward the rent.
DO I HAVE TO FOLLOW CERTAIN GUIDELINES TO PARTICIPATE IN THE SECTION 8

PROGRAM?
HUD guidelines for Section 8 are available on the HUD website at “www.hud.gov.” They expect the
landlord to provide “minimum housing”, not great or exceptional housing, but at least minimum housing.
If the tenant does not honor their end of the contract, you, as the landlord, have some rights. For
example, if the tenant doesn’t live up to their end of the contract, they lose their donation, which is
very good leverage for getting you paid.
LAND TRUSTS
HOW CAN I PROTECT MY REAL ESTATE?
The land trust is the most effective form of ownership to maintain your privacy and protect your real
estate. The solution for holding title to real estate is simple: put it in a land trust and develop a legal
entity as the beneficiary. If properly setup and implemented, your name will be hidden from public
records. To transfer real estate into a land trust there are virtually no tax consequences, nor does it
require a separate tax identification number or income tax return. You will continue to report the
property for income tax purposes, as though you still own it.
HOW DO I TITLE THE LAND TRUST?

If you have several properties, you can title each land trust by the address of the property such as
“123 Main Street Land Trust.” This will help you to easily keep record of every trust.
WHAT IS A TRUSTEE AND WHO SHOULD I CHOOSE?

The Trustee is the legal manager of the property. His/Her name will be displayed on the title there-
fore, that person should have a different last name than you. You can use your attorney or accountant
as the Trustee. You, the owner, are considered the Beneficiary. If you deed into trust, state, “Jeff
Smith quit-claim deed to 123 Main Street Land Trust.”
IF MY “TRUSTEE” HIRES MY C CORP AS THE PROPERTY MANAGER IN A LAND

TRUST, DOES THE CORPORATION NEED TO HAVE A REAL ESTATE BROKER’S
LICENSE TO MANAGE THE PROPERTY?
Your corporation would normally need a real estate broker’s license to manage real estate, but not for
your own property. Since you can trace the ownership of the management company and the property
back to you, you do not need the license.
DO I NEED TO HAVE THE ASSIGNMENT OF BENEFICIAL INTEREST IN A LAND

TRUST DOCUMENT WITNESSED?
The signature of a witness, and potential future testimony, helps to prove that a document was cre-
ated and executed in the manner and time frame stated. Otherwise, it’s hard to prove that you did it
when you say you did.
WHEN TRANSFERRING PROPERTIES FROM MY NAME TO A LAND TRUST, SHOULD

I USE A WARRANTY DEED OR A QUITCLAIM DEED?
The preference is to use a warranty deed because any recorded instrument affects the chain of title.
When a title company reviews the chain of title, they make a judgment call on the potential prob-
lems. When you deliver a warranty deed, you are standing behind (guaranteeing) the good title to the
property. Depending on the title company and the area of the country, quitclaim deeds raise ques-
tions. The number one question is “If you didn’t deliver a warranty deed, there must be something
wrong. What is it you’re not telling us?”
IF MY LIMITED PARTNERSHIP IS THE OWNER OF THE PROPERTY, BUT MY C

CORPORATION IS THE PROPERTY MANAGER, WHICH ENTITY DO TENANTS PAY
AND WHICH ONE PAYS FOR ADVERTISING AND REPAIRS?
Most people collect money in the corporation as the property manager. The easiest way to handle
expenses is to have the corporation pay all expenses from the collected rents.
DO THE PROFITS STAY WITH THE CORPORATION OR MUST THE CORPORATION

DISTRIBUTE THE MONEY?
The profits belong to the property owner - the Limited Partnership. Whenever you want to distribute
profits, the corporation will pay them to the LP (deposit to the LP bank account). The LP general
partner (yes, it’s the same corporation) will then issue 2 checks - 1 for 1% to the general partner and
1 for 99% to the limited partner.
CAN I USE MY C CORP AS THE TRUSTEE FOR MY LAND TRUST?

Yes, you can have your corporation as trustee, however, you may want to consider another alterna-
tive. One major purpose of using a land trust is privacy. With a trust, only the trustee’s name is
typically in the public records. With a corporation, the president’s name is in the public records. If
you are the president of your corporation and your corporation is the trustee...it is quite easy to see
that you are associated with the property.
LEASE OPTION
IF I PURCHASE A PROPERTY WITH AN $85,000 LOAN, MUST I PAY OFF THE LOAN
BEFORE I CAN LEASE OPTION IT?
You can offer the property for lease option at any time. You do not have to wait until you pay off the loan.
REHABS
WHAT ARE SOME INEXPENSIVE WAYS TO IMPROVE MY PROPERTY?
There are a few ways to apply Russ Whitney’s method of “forced appreciation” on every piece of
property you own. With little out-of-pocket cash, you can increase the value of your property by
putting up a new mailbox or adding shutters. You can also replace the front door and tile the entry.
Painting the kitchen cabinets will give the kitchen a fresh look and adding a new faucet, if budget
permits, will add to the overall appeal. Next, try some new door handles and new shower curtains.
Putting up a “nice” shower curtain for around $20 will give the bathroom an inexpensive facelift.
Paint or replace the trim and switch plate covers. Refresh the landscaping around the property by
planting shrubbery – you want the property to have a nice curb appeal.
SECTION 1031 EXCHANGES

WHAT IS A 1031 EXCHANGE?
Property that is held as an investment can be exchanged for property of like kind wherein the capital
gains taxes will be deferred. Exchanges can consist of any parcel of real estate – land for houses,
stores for land, duplexes for houses. All proceeds from the sale go into a trust account with an attor-
ney or in escrow with a title company. You cannot show any receipt of funds (meaning you cannot
put the money in your bank account). However, the intermediary holding the money must not have
had transactions with you (either personal or business) in the past two years. You then have 45 days
to designate a new property or group of properties to exchange. Once you find the property, you have
180 days to close.
IS THE MONEY TAXABLE?

Any cash taken out and any lowering of mortgage balances is taxable. But, if you do it right, you
never have to pay taxes on 1031 exchanges. As long as you are making like-exchanges, the money is

not taxable. After a significant time has passed, you can refinance to take out cash. However, you
should wait at least six months. You don’t want to refinance two days after you make the exchange –
this wouldn’t look good in the eyes of the IRS!
CAN I DO A 1031 EXCHANGE WITH AN LLC?

One little unknown benefit of an LLC occurs when property owned by two partners is sold. One
partner can take cash distribution and pay his portion of the tax while the other partner can take his
share of the profit and roll it over into a 1031 tax-free exchange purchase.
CAN I USE A 1031 EXCHANGE WHEN REHABBING AND RESELLING A PROPERTY?

A specific requirement for a tax-deferred exchange under Section 1031 is that the property must be
held for investment or for productive use in a trade or business. Further, the property cannot be held
as inventory. When you purchase a property with the intent to resell it ASAP, that’s considered
inventory. If you purchase land and subdivide the land for resale as lots, that’s considered inventory.
IF I AM BUYING A PROPERTY THAT STATES THE SELLER IS USING A 1031

EXCHANGE, HOW DOES THIS AFFECT ME AS A BUYER?
A 1031 Exchange is nothing to worry about. All it does is notify everyone concerned of the seller/
buyer transfer of the property involved under the Starker Exchange Provisions. This does not impact
you as a buyer.
TENANTS AND LANDLORDS

SHOULD I TALK TO OTHER LANDLORDS IN THE AREA ABOUT OUR MARKET?
Sure! Call the other Landlords. You may make some very good contacts. You will also get the pulse
of your different target areas. You may find that certain landlords are charging more or less than
others. Also, you may find that some property management companies are getting more or less than
others. If you do find this, the next step would be to find out why. By knowing this information in
your local area, you are able to consistently get top-of-the-market rent for top-of-the-market rental
units. Remember, this is your money we’re talking about, so learn all you can.
HOW DO I SCREEN A TENANT?

Screen your tenants by doing the following:
• Review their credit report
• Review any criminal report
• Search for any prior evictions
• Verify employment
• Check the previous two landlords
SHOULD I COLLECT ANY DEPOSITS FROM THE TENANT BEFORE I RENT THE
UNIT?
It is in your best interest to collect the last month’s rent in advance. If the tenant defaults on his rental
agreement, the deposit will help offset some of the legal costs of an eviction. A cleaning/security
deposit is collected to defray damages occurring while the tenant occupies the unit. As the landlord,

you have the right to keep any or all of the deposit money if the tenant has damaged your property
beyond what would be considered normal wear and tear. Use good judgment when determining what
is and what is not normal wear and tear. Normal use will age any property.
HOW MUCH OF A NOTICE MUST I GIVE FOR A RENT INCREASE?

State law determines what notice you must give for a rent increase. Ask your attorney or call Legal
Aid for an answer. On a month-to-month tenancy, you most likely will not be required to give more
than 30 days notice, perhaps less, but you must verify the law that applies in your state.
IS IT LEGAL FOR A LANDLORD TO ENTER RENTAL PROPERTY?

A landlord has the right to legally enter a rental in case of an emergency, to make needed repairs or
to show the property to prospective new tenants or buyers. Some states allow landlords the right to
enter during a tenant’s extended absence (generally seven days or more) to maintain the property as
necessary and to inspect for damage or needed repairs. In most cases, a landlord may not enter just to
check up on the tenant and the rental property. Typically most states require landlords to provide
advance notice (usually 24 hours) before entering a rental unit. Without advance notice, a landlord or
manager may enter rented premises while a tenant is living there only in an emergency, such as a fire
or serious water leak, or when the tenant gives permission. To find out how much notice a landlord
must give a tenant before entering, check with your state’s landlord-tenant statutes.
I DON’T WANT PETS IN MY UNITS. HOW DO I ASK TENANTS TO REMOVE THEM?

If no lease is in effect, present the tenant with a new lease requiring a pet deposit and an increase in
rent due to increased insurance costs. If a current lease does not mention pets, inform the tenant that
your policy will be that no pets are allowed or that a pet deposit must be paid. If the tenant complies,
you can change the rules on lease renewal.
WHAT ABOUT PETS FOR THE DISABLED? DO I HAVE TO ACCEPT THEM?

In accordance with the Federal Fair Housing Amendments Act, landlords may not prohibit service
animals used by disabled people. A service animal is considered to be “any guide dog, signal dog, or
other animal individually trained to provide assistance to an individual with a disability.” If other
tenants feel you are being unfair to them, simply tell them that you are complying with Federal law.
WHAT ELSE CAN I DO BESIDES CHARGE A PET DEPOSIT?

Another avenue that can generate income is eliminating the Pet Deposit that you currently require
and replacing it with a $10 to $20 or more per month Pet Fee, in the form of additional rent for each
cat or dog. Using this strategy serves to keep the first month’s check low, while at the same time
generating $120 to $240 or more in additional annual rent. By adopting a more liberal pet policy you
are improving your ability to retain residents by accepting pets that would be rejected elsewhere and,
thereby, limiting your tenant’s option to vacate.
HOW DO I GET TENANTS OUT OF THE UNIT WHILE I REHAB THE PLACE?
Begin by discussing the situation with the tenant. They may voluntarily vacate, perhaps take a vaca-
tion, while you complete the inside work. Outside work can be done during the work/school day
when no one is home. Read the lease document carefully. If it’s a “boilerplate” lease, you may have a
remedy for major repairs built in.

WHAT DO I DO IF A TENANT IS NOT PAYING HIS/HER RENT?
On the 2nd day (or whatever day you decide), send a three-day notice warning you will initiate an
eviction. At the end of the 3-day warning period, start the eviction. Period. No exceptions. Most
tenants will pay before the end of the 3-day period, or pay when the eviction is started. If the eviction
was started, do a stipulation, which puts the eviction on hold, but can be reactivated if non-payment
re-occurs. If you do not know how to do an eviction, go to the courthouse and ask which attorneys do
the most evictions in your county. Do not ask which are the best attorneys! You will find that usually
the best, and the cheapest, attorneys do the most evictions. Then hire that attorney and ask for a copy
of all of the forms served. During the process, you may negotiate with the tenant to leave to end the
process sooner. Some landlords have removed doors to apartments, shut off water or electricity, or
simply started moving a tenant’s belongings to the curb, when they hadn’t paid rent. This type of
retaliation is not only nasty, but also illegal. Non-payment of rent is a normal, occasional business
expense. You will never eliminate it, but you can learn how to minimize it.
WHAT CAN I DO TO GET TENANTS TO VACATE, OTHER THAN EVICT THEM?

Try offering them a hundred dollars, if they will go now and leave the place in decent shape. This
may be way cheaper in the long run.
In some states, rather than hire an attorney for eviction, you can file a small claim for non-payment
on the rent. It’s cheaper and, in many cases, faster to get to court.
If you are going to be a volume landlord, learn to do your own evictions when necessary.
TITLE 1 LOAN (FHA)

WHY SHOULD I USE AN FHA TITLE 1 LOAN?
If the equity in your home is limited, a Title 1 loan may be able to help you. In a Title 1 loan, the
banks make the loans and the FHA insures them (authorized by Title I of the National Housing Act).
You can use the loan for materials when you do fix-ups on your own, or pay for a contractor’s or
dealer’s materials and labor. However, make sure you furnish the lender with a completion certificate
when the work is finished.

TIME MANAGEMENT
FORMS
SPECIAL REPORT TEN

SPECIAL REPORT TEN
TIME MANAGEMENT
FORMS
THINGS TO DO TODAY LIST
DATE___________________________
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Special Report Ten: Time Managment Forms 10 - 1

APPOINTMENTS
TIME PERSON COMPANY LOCATION
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PHONE CALLS
PERSON/COMPANY PHONE NUMBER
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WEEKLY REMINDER
Week of _____________________ Through _______________________
MONDAY
TUESDAY
WEDNESDAY
THURSDAY
FRIDAY
SATURDAY
SUNDAY

MONTHLY REMINDER
MONTH OF _________________________
SUN MON TUES WED THURS FRI SAT

CONTACT FOLLOW-UP SHEET
NAME_________________________________________ PHONE # _______________________
DATE MAIL PHONE VISIT CONTACT NAME STATUS OF THE CONTACT

ADDITIONAL
RESOURCES
SPECIAL REPORT ELEVEN

SPECIAL REPORT ELEVEN
ADDITIONAL
RESOURCES
WHITNEY EDUCATION GROUP, INC.®
BOOKS
Building Wealth: From Rags to Riches Through Real Estate
This book teaches you how to get start-up money and turn it into instant success in sixty days or less,
how to turn debt into huge amounts of cash, how to make money, whether the economy is up or
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How to Obtain, Increase and Preserve Your Credit

In addition to obtaining or building credit, this book (on CD) shows you how to choose and use your
credit wisely. It reveals vital credit information whether you are building, re-establishing, expanding
or protecting your credit.
Overcoming The Hurdles and Pitfalls of Real Estate Investing

This book tells the amazing story of how Russ, at age 25, turned $1000 into $4.7 million in just 18
short months. It includes the inspiring personal notes of one of America’s youngest self-made
millionaires.
HOME STUDY COURSES AND OTHER PRODUCTS

Building Wealth Home Study Course
The Building Wealth System is a complete home study version of Russ’ Intensified Real Estate
Training. The system includes manuals, software, videos, and CDs so you can learn the powerful
techniques of this dynamic training right in your own home.
Building Wealth Live! Quick Start System

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includes manuals and CDs to learn the methods and techniques taught in the “live” training.
Business Success System

This training program, consisting of three in-depth manuals, teaches you how to start or buy a
business, how to market your business, and how to invest the profits of your business to build wealth.
Special Report Eleven: Additional Resources 11 - 1
Discount Notes and Mortgages
This training program teaches you, through the use of manuals, videos, and CDs, how to buy real
estate mortgage notes and other financial instruments at a discount and then broker them to sources
right in your community.
Millionaire U Video Collection

This 21-tape video collection covers the three days of Intensified Real Estate Training including the
real-world ins and outs of identifying, negotiating, and buying and managing massive cash flow real
estate.
Mortgage Payoff Acceleration Program (MPAP)

This unique home business is part of a premier nationwide membership company that assists
homeowners in reducing the term of their mortgage in the form of a simulated biweekly, automatic
debit service.
One in a Million 90 Day Challenge

This program uses audiocassettes, a life log, and an achievement manual to study and improve five
areas of your life: attitude, health/physical fitness, relationships, spiritual growth, and monetary.
Travel Agency in a Box

This program comes complete with everything you need to become an Independent Travel Agent
including photo identification card, an interactive CD, and comprehensive reference materials and
web access. Travel agent discounts on lodging, cruises, car rental, etc. are included.
Wealth Intelligence Network

This is a membership network that includes Hotline Consultants for taxes, real estate, small business,
insurance, investments, debt and credit management and consumer buying and a monthly magazine
providing money strategies and investment tips.
SOFTWARE
Business Success System Software
The Business Success System software is powerful, integrated software designed to meet the
demands of today’s small business owner. It includes a business assessment, business letters, a legal
assistant, a business plan creator, and an agenda template.
Real Estate Success System Software

The Real Estate Success System software automates the loan and property analysis process and
provides templates for contracts and offers, financial statements, and loan pre-qualification.

TRAINING
Real Estate
Call our consultants at 800-741-7877 to find a training academy near you. It is taught by our national
instructors and will enhance your communication and negotiation skills, and provide training in how
to work with bankers, brokers, and Realtors.
topics as wholesale buying, foreclosures, purchase options and much more.
Teach Me To Trade
The training takes you step-by-step through the mechanics of a real-time stock transaction. It covers
everything from general market forecasting to advanced technical analysis of stock examples, and
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topics as master trading, single stock futures and much more.
Call our consultants at 800-741-7877 to find a training academy near you. It is taught by experienced
and successful instructors who will teach you how to structure your investment plans and analyze
stocks before you buy them.
HOW TO ORDER
To order any of our books, home study courses, software or other products, call 800-741-7877 or go
to www.russwhitney.com and order online.
All products from Whitney Education Group, Inc.® are dedicated to helping you become wealth
intelligent.
SMALL BUSINESS ADMINISTRATION (SBA)

The U.S. Small Business Administration (SBA) provides a variety of technical, financial and
advocacy services to America’s small business community. In addition, the SBA provides a wealth of
information on starting a business at their home page (www.sba.gov) under “Starting”.
The Agency’s small business financial assistance programs are comprised of a wide range of loan
programs, each targeted at different markets. While the SBA does offer a limited number of grant
programs, these are generally designed to expand and enhance small business technical assistance.
The SBA does not generally offer grants to start or expand small businesses.

SBA Offices
REGION I
Regional Office for Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and
Vermont
10 Causeway Street, Suite 812, Boston, MA 02222
617-565-8415
Connecticut District Office

Federal Building, 330 Main Street, 2nd Floor, Hartford, CT 06106
203-240-4700
Maine District Office

Federal Building, 40 Western Avenue, Room 512, Augusta, ME 04330
207-622-8378
Massachusetts District Offices

10 Causeway Street, Room 265, Boston, MA 02222-1093
617-565-5590
Springfield Branch Office

1441 Main Street, Suite 410, Springfield, MA 01103
413-785-0268
New Hampshire District Office

143 North Main Street, Suite 202, Concord, NH 03301-1257
(603) 225-1400
Rhode Island District Office

380 Westminister Mall, 5th Floor, Providence, RI 02903
(401) 528-4561
Vermont District Office

Federal Building, 87 State Street, Room 205, Montpelier, VT 05602
802-828-4422

REGION II
Regional Office for New Jersey, New York, Puerto Rico, Virgin
Islands
26 Federal Plaza, Suite 3108, New York, NY 10278
212-264-1450
New Jersey District Office

Two Gateway Center, 15th Floor, Newark, NJ 07102
973-645-2434
New York District Offices
Elmira Branch Office, 333 E. Water Street, 4th Floor, Elmira, NY 14901
607-734-8130
Rochester Branch Office, 100 State Street, Suite 410, Rochester, NY 14614
716-263-6700
Melville Branch Office, 35 Pinelawn Road, Suite 207W, Melville, NY 11747

516-454-0750
New York District Office, 26 Federal Plaza, Room 31-00, New York, NY 10278
212-264-2454
Buffalo District Office, Federal Building, 111 West Huron Street, Room 1311, Buffalo, NY 14202
716-551-4301
Syracuse District Office, 401 South Salina Street, 5th Floor, Syracuse, NY 13202
(315) 471-9393
Puerto Rico and US Virgin Islands District Office

Federico Degetau Federal Building, 252 Ponce DeLeon Boulevard, Suite 201, San Juan, PR 00918
787-766-5272
REGION III
Regional Offices for Delaware, District of Columbia, Maryland,
Pennsylvania, Virginia, and West Virginia
900 Market Street, 5th Floor, Philadelphia, PA 19107
215-580-2SBA

Delaware District Office
824 N. Market Street, Suite 610, Wilmington, DE 19801
302-573-6294
District of Columbia District Office

1110 Vermont Avenue, N.W., Suite 900, Washington, DC 20005
202-606-4000
Maryland District Office

10 South Howard Street, Suite 6220, Baltimore, MD 21201-2565
410-962-4392
Pennsylvania District Offices

Harrisburgh Branch Office, 100 Chestnut Street, Room 108, Harrisburg, PA 17101
717-782-3840
Wilkes-Barre Branch Office, 7 North Wilkes-Barre Boulevard, Wilkes-Barre, PA 18702

570-826-6497
Philadelphia District Office, 900 Market Street, 5th Floor, Philadelphia, PA 19406
215-580-2SBA
Pittsburgh District Office, 1000 Liberty Avenue, Room 1128, Pittsburgh, PA 15222
412-395-6560
Virginia District Office

400 North 8th Street, Suite 1150, Richmond, VA 23240-0126
804-771-2400
West Virginia District Office

West Pike Street, Suite 330, Clarksburg, WV 26301
304-623-5631
REGION IV
Regional Offices for Alabama, Florida, Georgia, Kentucky,

Mississippi, North Carolina, South Carolina, and Tennessee
1720 Peachtree Road, N.W., Suite 496, Atlanta, GA 30309-2482
404-347-4999

Alabama District Office
2121 8th Avenue North, Suite 200, Birmingham, AL 35203-2398
205-731-1344
Florida District Offices

North Florida District Office, 7825 Baymeadows Way, Suite 100-B, Jacksonville, FL 32256-7504
904-443-1900
South Florida District Office, 100 S. Biscayne Boulevard, 7th Floor, Miami, FL 33131
305-536-5521
Georgia District Office

1720 Peachtree Road, N.W., 6th Floor, Atlanta, GA 30309
404-347-4147
Kentucky District Office

Federal Building, 600 Martin Luther King, Jr. Place, Room 188, Louisville, KY 40202
502-582-5971
Mississippi District Offices

101 West Capitol Street, Suite 400, Jackson, MS 39201
601-965-4378
Gulfport Branch Office, 2909 13th Street, Suite 203, Gulfport, MS 39501
228-863-4449
North Carolina District Office

200 North College Street, Suite A2015, Charlotte, NC 28202-2137
704-344-6563
South Carolina District Office

1835 Assembly Street, Room 358, Columbia, SC 29201
803-765-5377
Tennessee District Office

50 Vantage Way, Suite 201, Nashville, TN 37228-1500
615-736-5881

REGION V
Regional Offices for Illinois, Indiana, Michigan, Minnesota, Ohio,

Wisconsin
Federal Building, 500 West Madison Street, Suite 1240, Chicago, IL 60661-2511
312-353-0357
Illinois District Offices

500 West Madison Street, Room 1250, Chicago, IL 60661-2511
312-353-4528
Springfield Branch Office, 511 W. Capitol Avenue, Suite 302, Springfield, IL 62704
217-492-4416
Indiana District Office

429 North Pennsylvania Street, Suite 100, Indianapolis, IN 46204-1873
317-226-7272
Michigan District Offices

477 Michigan Avenue, Room 515, Detroit, MI 48226
313-226-6075
Marquette Branch Office, 501 South Front Street, Marquette, MI 49855

906-225-1108
Minnesota District Office

100 North 6th Street, Suite 610, Minneapolis, MN 55403-1563
612-370-2324
Ohio Branch Offices

525 Vine Street, Suite 870, Cincinnati, OH 45202
513-684-2814
Cleveland District Office, 1111 Superior Avenue, Suite 630, Cleveland, OH 44114-2507
216-522-4180
Columbus District Office, 2 Nationwide Plaza, Suite 1400, Columbus, OH 43215-2592

614-469-6860

Wisconsin District Offices
Madison Office, 740 Regent Street, Suite 100, Madison, WI 53715
608-264-5263
Milwaukee Office, 310 W. Wisconsin Avenue, Suite 400, Milwaukee, WI 53202

414-297-3941
REGION VI
Regional Offices for Arkansas, Louisiana, New Mexico, Oklahoma,

Texas
4300 Amon Carter Boulevard, Suite 108, Ft. Worth, TX 76155
817-885-6581
Arkansas District Office

2120 Riverfront Drive, Suite 100, Little Rock, AR 72202
501-324-5871
Louisiana District Office

365 Canal Street, Suite 2250, New Orleans, LA 70130
504-589-6685
Oklahoma District Office

210 Park Avenue, Suite 1300, Oklahoma City, OK 73102
405-231-5521
New Mexico District Office

625 Silver Avenue, S.W., Suite 320, Albuquerque, NM 87102
505-346-7909
Texas District Offices

Corpus Christi Branch Office, 606 N. Carancahua, Suite 1200, Corpus Christi, TX 78476
361-888-3331
Houston District Office, 9301 Southwest Freeway, Suite 550, Houston, TX 77074-1591
713-773-6500
Lubbock District Office, 1205 Texas Avenue, Lubbock, TX 79401-2693

806-472-7462

Rio Grande Valley District Office, 222 East Van Buren Street, Room 500, Harlingen, TX 78550
956-427-8533
San Antonio District Office, 727 East Durango, Room A-527, San Antonio, TX 78206
210-472-5900
Dallas/Fort Worth District Office, 4300 Amon Center Boulevard, Suite 114, Ft. Worth, TX 76155
817-885-6500
El Paso District Office, 10737 Gateway West, Suite 320, El Paso, TX 79935
915-633-7001
REGION VII
Regional Offices for Iowa, Kansas, Missouri, and Nebraska

323 West 8th Street, Suite 307, Kansas City, MO 64105-1500
816-374-6380
Iowa District Offices

Des Moines District Office, New Federal Bldg, 210 Walnut Street, Room 749, Des Moines, IA
50309
515-284-4422
Cedar Rapids District Office, 215 4th Avenue, S.E., Suite 200, Cedar Rapids, IA 52401-1806
319-362-6405
Kansas District Offices

Kansas City District Office, 323 West 8th Street, Suite 501, Kansas City, MO 64105
Wichita District Office, 100 East English Street, Suite 510, Wichita, KS 67202
316-269-6616
Missouri District Offices

Springfield Branch Office, 620 S. Glenstone Street, Suite 110, Springfield, MO 65802
417-864-7670
St. Louis District Office, 815 Olive Street, Room 242, St. Louis, MO 63101
314-539-6600
Nebraska District Office

11145 Mill Valley Road, Omaha, NE 68154

REGION VIII
Regional Offices for Colorado, Montana, North Dakota, South Dakota, Utah, Wyoming
721 19th Street, Suite 400, Denver, CO 80202-2599
303-844-0500
Colorado District Office

721 19th Street, Room 426, Denver, CO 80202-2599
303-844-2607
Montana District Office

301 South Park, Room 334, Helena, MT 59626
406-441-1081
North Dakota District Office

Federal Building, 657 2nd Avenue, North, Room 219, Fargo, ND 58108-3086
701-239-5131
South Dakota District Office

110 South Phillips Avenue, Suite 200, Sioux Falls, SD 57104-6727
605-330-4243
Utah District Office

Federal Building, 125 South State Street, Room 2231, Salt Lake City, UT 84138-1195
801-524-5804
Wyoming District Office

Federal Building, 100 East B Street, Room 4001, Casper, WY 82602-2839
307-261-6500
REGION IX
Regional Offices for Arizona, California, Hawaii, Nevada, and

Pacific Islands
455 Market Street, Suite 2200, San Francisco, CA 94105
415-744-2118

Arizona District Office
2828 North Central Avenue, Suite 800, Phoenix, AZ 85004-1093
602-745-7200
California District Offices

Fresno District Office, 2719 North Air Fresno Drive, Suite 200, Fresno, CA 93727-1547
559-487-5791
Los Angeles District Office, 330 North Brand Boulevard, Suite 200, Glendale, CA 91203-2304
818-552-3210
Sacramento District Office, 660 J Street, Suite 215, Sacramento, CA 95814

916-498-6410
San Diego District Office, 550 West “C” Street, Suite 550, San Diego, CA 92101-3540
619-557-7250
San Francisco District Office, 455 Market Street, 6th Floor, San Francisco, CA 94105
415-744-6820
Santa Ana District Office, 200 West Santa Ana Boulevard, Suite 700, Santa Ana, CA 92701
714-550-7420
Hawaii District Office

300 Ala Moana Boulevard, Room 2-235, Honolulu, HI 96850-4981
808-541-2990
Nevada District Office

300 Las Vegas Boulevard South, Suite 1100, Las Vegas, NV 89101
702-388-6611
Pacific Islands
Guam Branch Office, 400 Route 8, Mongmong, GU 96927
671-472-7419
REGION X
Regional Offices for Alaska, Idaho, Oregon, and Washington

1200 6th Avenue, Suite 1805, Seattle, WA 98101-1128
206-553-5676

Alaska District Office
222 West 8th Avenue, Room A36, Anchorage, AK 99513-7559
907-271-4022
Idaho District Office

1020 Main Street, Suite 290, Boise, ID 83702-5745
208-334-1696
Oregon District Office

1515 S.W. Fifth Avenue, Suite 1050, Portland, OR 97201-5494
503-326-2682
Washington District Offices

Spokane District Office, 801 West Riverside Avenue, Suite 200, Spokane, WA 99201-0901
509-353-2809
Seattle District Office

1200 6th Avenue, Suite 1700, Seattle, WA 98101-1128
206-553-7310
SERVICE CORPS OF RETIRED EXECUTIVES (SCORE)

The Service Corps of Retired Executives (SCORE) and the Small Business Development Center
(SBDC) provides free one-on-one counseling to those interested in starting and expanding a busi-
ness. This includes critiquing your business plan, legal requirements, marketing, and licenses needed
for your business.
BUSINESS INFORMATION CENTERS (BICS)

Business Information Centers (BICs), supported by local SBA District Offices, can assist you by
providing access to state-of-the-art computer hardware and software, and through counseling by
Service Corps of Retired Executives (SCORE) volunteers. BICs have resources for addressing a
broad variety of business start-up and development issues.
You can receive help with writing a comprehensive business plan, evaluating and improving your
marketing and sales techniques, diversifying into a new product and/or service area, pricing your
products, or exploring exporting opportunities. The BIC web site is http://www.sba.gov/bi/bics.
SMALL BUSINESS OWNERS

Since small business owners are in the unique position of having gone through the process you are
just starting, seek them out whenever possible. They can provide you with a wealth of knowledge
and experience.

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SPECIAL

© 2003 Whitney Education Group, Inc.®

CHOOSING YOUR BUSINESS

STARTING YOUR BUSINESS

BORROWING MONEY FOR YOUR BUSINESS

LOCATING YOUR BUSINESS

REAL ESTATE INVESTMENT STRATEGIES

REAL ESTATE FINANCING GUIDE

FREQUENTLY ASKED QUESTIONS (FAQ)

TIME MANAGEMENT FORMS

©2003 Whitney Education Group, Inc.®

The entrepreneurial personality is comprised of an intriguing blend of ingredients. Most successful

ENTREPRENEURIAL PERSONALITY TEST

Special Report One: Are You An Entrepreneur? 1—1

Your score for Independence ___________

Your score for Self-Discipline __________

Your score for Creativity __________

DRIVE AND DESIRE

Special Report One: Are You An Entrepreneur? 1—2

Your score for Drive and Desire __________

Your score for Risk-Taking __________

Your score for Confidence __________

Your total Entrepreneurial Personality Test score __________

Special Report One: Are You An Entrepreneur? 1—3

Special Report One: Are You An Entrepreneur? 1—4

©2003 Whitney Education Group, Inc.®

There are a host of possibilities that you may consider:

Ask yourself questions such as:

Special Report Two: Choosing Your Business 2-1

Special Report Two: Choosing Your Business 2-2

SHOULD I BE IN MY OWN BUSINESS? IF SO, WHY?

1. I want financial independence 1. Lack of self confidence

Special Report Two: Choosing Your Business 2-3

Special Report Two: Choosing Your Business 2-4

YOUR OWN SMALL INDEPENDENT BUSINESS

BUY AN EXISTING BUSINESS

Special Report Two: Choosing Your Business 2-5

MORE BUSINESS IDEAS

Special Report Two: Choosing Your Business 2-6

Special Report Two: Choosing Your Business 2-7

Special Report Two: Choosing Your Business 2-8

Special Report Two: Choosing Your Business 2-9

Special Report Two: Choosing Your Business 2-10

Special Report Two: Choosing Your Business 2-11

©2003 Whitney Education Group, Inc.®

Date Research Completed_____________________________________________

2. Registering A Business Name

Date Research Completed_____________________________________________

Special Report Three: Starting Your Business 3-1

Date Research Completed_____________________________________________

Date Research Completed_____________________________________________

Date Research Completed_____________________________________________

Date Research Completed_____________________________________________

Date Research Completed_____________________________________________

Special Report Three: Starting Your Business 3-2

1. Stationery and Business Cards:

2. Business Registration: _________________________

3. Permits, Licenses: _________________________

4. Equipment and Supplies: _________________________

5. Other Expenses: _________________________