Copyright 2002, 2003 by John T. Reed
Last update 4/3/03

Russ Whitney makes many claims of spectacular success in real estate investment. I went to where he invested to investigate those claims. Here is what he claims, in his book Building Wealth and elsewhere, and what I found.

Source What Whitney claims What Reed found
subtitle of Building Wealth he went “from rags to riches through real estate” Because of plum union jobs, Whitney and his wife apparently earned over $100,000 a year in 2003 dollars when he was 20. So much for “rags.” For whether he acquired “riches through real estate,” read on.
many places that he is a high school dropout He has a General Equivalency Diploma (G.E.D.) (p.2 of Overcoming the Hurdles and Pitfalls of Real Estate Investing, a 1984 Russ Whitney book) It is likely that he obtained this while in New York State prison for second degree robbery. He says that is the case. When he gave a written statement to police in connection with a 1980 hit-and-run, he said he was a high school graduate.
p. 18 Building Wealth read a get-rich real estate book and “Three weeks later, I made $11,000.” All he did was refinance his house at 3160 Guilderland Avenue in Rotterdam, NY and borrow $11,000 more than he needed to pay the previous owner who had taken back a mortgage. He paid interest on the $11,000 for 8 years, then paid the $11,000 back on 12/12/85.
p. 18 Building Wealth

p.40 Building Wealth

“By the time I turned 23, I was able to quit my job, because I had become financially independent.”

“When I tell people I was financially independent at age 23, their reaction is usually one of awe.”

Whitney turned 23 on 11/18/78. At that time, he owned a home at 3160 Guilderland. It was worth about $25,000 and had $25,000 of mortgages on it. He also bought 455 Hulett Street, a slum duplex in Schenectady, NY for $6,500 on 6/9/78. It had a $4,000 mortgage on it. Although he quit his union job, Whitney's wife apparently continued to work at what he refers to as “the slaughterhouse” where he met her.
p. 47 Building Wealth By the time I was 25, I owned well over $1 million in real estate On his 25th birthday, 11/18/80, Whitney had $98,000 of highly leveraged real estate. Here are the addresses and purchase prices/values:
Addresses Purchase price/value
3160 Guilderland, Rotterdam, NY $20,000
455 Hulett, Schenectady, NY $6,500
20 Swan Street, Schenectady, NY $25,500
812 Grant Avenue, Schenectady, NY $9,747
8 Hawk Street, Schenectady, NY $23,000
23-25 Eagle Street, Schenectady, NY $13,094.26

He was legal owner of the home and 455 Hulett. The others were mostly land contract purchases, the documents for some of which said Whitney was a tenant paying rent and that he would get the deed only when he paid off the land contract. In one other property not on the list because he no longer owned it when he turned 25, 16 Eagle Street, the previous owner added Whitney as a part owner in return for his management services and gave him $5,500 cash when the property was sold. See for details.

p. 47 Building Wealth By the time I was 25, I…was an owner or partner in several other businesses. The Schenectady County assumed name indexes for 1976 to the present contain no company names associated with Russ Whitney.

Whitney claims to have used the names R&I Enterprises and R&I Contracting during this period, but they were never registered as required by law or listed in the Schenectady phone books of the years in question and appear to have existed only on Whitney's business cards, stationery, and loan applications.

The Schenectady telephone books from 1976 to the present contain no entries for Russ Whitney other than the apartment where he lived in Albany in 1976 and his home in Rotterdam in 1977 and thereafter.

According to his own books, he was a licensed real estate salesman on his 25th birthday. His license hung at the Plumb Realty office in Rotterdam, NY.

According to Whitney's books and testimony in a civil suit against him, Whitney was a salary-plus-commission manager or straight-commissioned salesman—depending upon whom you believe—for Confederation of Organized Purchasers, Inc., which Whitney describes as a “furniture co-op.” This company went bankrupt on 1/29/82. Whitney says he invested $12,000 in this company and lost all of it and that he worked for them for a year and was paid nothing for his work. (p. 19 Overcoming…)

I have not been able to find any other businesses that he was associated with on his 25th birthday.

back cover of Building Wealth self-made millionaire at age 27 In 1988, when Whitney was 33, he threatened to declare bankruptcy to avoid paying a million-dollar judgment against him. You are not allowed to declare bankruptcy unless you have a negative net worth, that is, your debts are greater than your assets. If Whitney was eligible for bankruptcy at age 33 because of a one-million-dollar judgment, it is extremely unlikely that he was a millionaire then, let alone six years before when he was 27.

Above, I described what real estate Whitney owned on his 25th birthday. Here are the real estate transactions he did between his 25th and 27th birthdays.

10/30/81 Deeds 812 Grant Ave., Schenectady to tenant and another person “without monetary consideration.” In other words, he gave the property away. Deed says buyer is to pay back taxes and correct housing code violations. Whitney says the consideration was the tenant was to do some work at his other buildings.

Claims to purchase $198,500, 6-unit at 343 Cape Coral Parkway, Fort Myers, FL in partnership with friend. $25,000 down each putting up half that amount. Whitney says it had negative cash flow of $600/month. (p. 33 Overcoming…) Each owner lives in one unit.

6/8/81 Claims to flip (buy and sell in same day) 813-819 Lincoln Avenue, Schenectady for $5,000 profit. .

In April of 1981, Whitney claims he only has $4,000 in the bank. Whitney puts $100 deposit on FL lots, changes mind, and forfeits $100 deposit.

2/1/82 Whitney says, “My cash was very low, about $5,000 to $6,000. I had literally no income at all.” (p. 37 Overcoming…)

3/82 Whitney says he buys “run-down seven-unit in downtown Fort Myers, FL” for $75,000 with $7,000 down. Needs aunt and uncle in Reno to partner with him to split down payment with him to close.

3/82 Whitney finds a commissioned sales job “after a jillion interviews” selling vending machines. Three months later, he quits. (p. 38 Overcoming…)

6/82 “I was broke!” [emphasis added] (p. 39 Overcoming…)

6/29/82 Sells 11 Eagle, 21 Eagle, 23-25 Eagle Street, Schenectady and home at 3160 Guilderland on land contract to two associates for $143,000—$10,000 down and a $36,500 wraparound land contract to Whitney. Rest: assumption of underlying mortgages. Whitney starts receiving dunning notices from creditors of the properties he sold in Schenectady in 7/82. Buildings stop being profitable. Excessive maintenance expenditures. Manager falsely reporting occupied apartments as vacant. (p. 35 Overcoming…) House unrentable because of well problem

?/82 Gets FL real estate sales license. Tries to sell lots. “My prospecting was not very successful. I had been flailing away at all these things that hadn't really made me any money at all.” [emphasis added] Quits after less than one month. (p.39 Overcoming…)

“This took place sometime in November of 1982 [the month Whitney turned 27]. It had been almost ten months since my move to Florida. I had made little or no progress up to now.” (p. 43 Overcoming…)

This is the point at which he claims on the back cover of Building Wealth to have become a “self-made millionaire.” It appears to me, based on the above, that his net worth on his 27th birthday was actually around $10,000 to $20,000. His New York properties appeared to be in the dumper. All he owned in FL was half of the $25,000 equity in the 6-plex and half the $7,000 equity in the run-down 7-unit. He was also being sued in Schenectady by the family of a pedestrian that Whitney hit with his pickup truck on 11/15/80. It was that lawsuit that eventually resulted in a million-dollar judgment against Whitney in 1987. Whitney appears to have been unemployed on his 27th birthday. His wife may have been as well. He mentions no job for her. Managing his ten units, one of which he lived in, would only take about 10 hours per week.

p.77 Building Wealth “I became a millionaire in my early twenties in New York.” The last day of his “early twenties” was 11/17/80, the day after he surrendered to police to be arrested for leaving the scene of a personal injury accident. See above for details of the $98,000 of real estate he owned on the last day of his early twenties.
p. 19 Building Wealth “By the time I was 27, I had been written up in several publications as one of the youngest self-made millionaires in the United States! ” The 12/12/02 Dilbert cartoon that sums up my feelings on this very well. Dogbert was being interviewed about his business success by a reporter. When asked his secret, he first asked if the reporter was going to confirm what he said by checking with his employees. When the reporter said he was too lazy to do that, Dogbert told an outlandish story about how he curried favor with his employees. The reporter was thrilled with the scoop.

Also, which publications said Whitney was a millionaire? I can tell you which ones it was not. It was not any magazine listed in the Readers Guide to Periodicals, or the Wall Street Journal, Barron's, the San Francisco Chronicle, the New York Times, or Facts On File. Who's Who in Real Estate was published in 1983. It contains about 10,000 biographies. Russ Whitney is not one of them.

My best guess if it's true is that the periodical that touted Whitney did little or no fact checking and was one which profited from promotion of Whitney—like Mark Haroldsen's Financial Freedom Report.

p. 68 Building Wealth “[Starting] my own contracting company…is a technique [that] allowed me to make $117,000 of tax-free money during my first year in real estate.” Whitney's first year in real estate was 3/11/77 to 3/10/78. He still worked full-time at Tobin Packing Co. at that time. The only other thing he did during that period was buy a home, putting $4,000 down and agreeing to a $14,500 seller mortgage.

I have no idea what possible basis he could have for claiming to have made any money, let alone $117,000, during this period. When Whitney brags about “tax-free” money, he is usually referring to borrowing. But I see no evidence in his books or public records that he borrowed or otherwise made any money in this time period.

p.47 Building Wealth Says he moved to FL because:
• he was financially independent
• better climate
• better growth prospects
He appears to have had at least three other reasons:
• being sued for $2.5 million by the family of the pedestrian he hit on 11/15/80
• FL is one of only several states that allow bankrupt persons to keep their home equity without limit as long as the property is not more than one acre.
• Tobin Packing Co., his wife's apparent employer, was in financial difficulty throughout the period and closed in the Fall of 1981
p. 47 Building Wealth “made my first fortune in Upstate New York” See above and separate article on that claim. He appears to have had a negative net worth when he left “upstate New York” because of little success in real estate and a $1.2-million-dollar judgment against him.
p. 47 Building Wealth I turned $1,000 into $4.7 million in 18 months The 18-month period in question appears to have started shortly after he bought the six-plex in Fort Myers. Let's call it 3/1/82 to 9/1/83. Furthermore, he appears to be saying he turned $1,000 in cash into $4.7 million of cash and equity in real estate.

3/82 Whitney says he buys “run-down seven-unit in downtown Fort Myers, FL” for $75,000 with $7,000 down. Needs aunt and uncle in Reno to partner with him to come up with enough down payment to close.

To be continued

  paid no federal income taxes for years Could be three reasons for that:
• No income
• Cheated (Says he passed one audit)
• Income was sheltered by depreciation

It would appear that Whitney made these claims thinking no one would ever check. If he had not sued me, he might have been right.

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