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Russ Whitney’s first fortune by John T. Reed 1

In one of his books, Russ Whitney claims to have made his “first fortune” in “upstate New York.” I went there to check. Here are Whitney’s real estate deals in New York. Because he sold most of his properties in package deals, I have to organize them according to those packages rather than in chronological order.
Address
3160 Guilderland Avenue Rotterdam, NY
11 Eagle Street, Schenectady, NY
21 Eagle Street, Schenectady, NY
23-25 Eagle Street, Schenectady, NY
Purchase date
3/11/77
12/4/78
1/9/79
1/9/79
Type
1-family house
5-unit
4-unit
4-unit
Co-owners
wife
wife
wife
wife
Type title
deed
land contract
deed
land contract
Puchase price and terms
$20,000, $4,000 down, $1,500 fixup, $14,500 seller mortgage
$36,700, $4,000 down, $32,700 seller wraparound land contract
$25,000, $3,500 down, $21,500 seller mortgage
$26,000, $2,500 down, $10,594.26 five-year seller wraparound land contract, “assumption” of $12,905.74 existing mortgage
Sold to
two construction workers who are named on page 75 of Whitney’s book Building Wealth—they were his partners in owning Mumford Avenue and Schenectady Street
Sale date
6/29/82
Sale price and terms
$143,000, $10,772 down, $36,500 seller wraparound land contract, “assumption” of $95,728 existing liens
Net profit or loss
$36,800 (purchase price differential), loss of -$4,728 in cash, $36,500 wrap
Roughly speaking, Whitney and his wife laid out $15,500 in cash and got back $10,772 in cash plus they took back a $36,500 wraparound land contract. Not taken into account are time spent or operating income or loss, if any.
Comments
Refinanced $11,000 out while owned, but had to pay it all back later
.
(the terms Whitney claims on p.4 of Overcoming… for 21, 23-25 Eagle are slightly off compared to the documents in the county clerk’s office)
Here is a duplex that Whitney bought, got fire insurance from after it burned, then deeded it to a tenant of the building.
Address
812 Grant Avenue, Schenectady, NY
Purchase date
11/15/79
Type
2-family house
Co-owners
wife
Type title
land contract
Puchase price and terms
$10,000, $1,252.41 down, $8,747.59 seller wrap land contract
Sold to
a tenant of the property plus another man
Sale date
10/30/81
Sale price and terms
Deed says, “This conveyance is without monetary consideration and is accepted with the understanding that the [buyers] are to pay all back taxes together with Abstract of Title costs and are to modify and correct any code violations.”
Net profit or loss
Loss of $1,252.41. They gave the property away.
Comments
Building was badly damaged by fire. Received fire insurance proceeds of $18,000, then apparently did not repair. Says handyman who received building did some repair work on some other buildings of his in return.
Here is another multi-property package sold to the two construction workers.
Address
8 Hawk Street, Schenectady, NY
20 Swan Street, Schenectady, NY
455 Hulett Street, Schenectady, NY
Purchase date
12/3/79
.7/3/79
6/7/78
Type
3-unit
.4-unit
2-unit
Co-owners
wife
.wife
wife
Type title
land contract
land contract
deed
Puchase price and terms
$23,000, $153.23 down, $17,846.77 “assumption” of existing mortgage, $5,000 seller wrap land contract
$25,500, $1,500 down, $24,000 “assumption”
$6,500, $1,500 down, $5,000 first mortgage
Sold to
two construction workers who are named on page 75 of Whitney’s book Building Wealth—they were his partners in owning Mumford Avenue and Schenectady Street
Sale date
1/29/82
Sale price and terms
$72,000, $10,507.22 down, “assumption” of $16,707.63 existing first, subject to second of 4,324.55, subject to $33,510.60 third, $4,950 wrap land contract fourth to Whitney
Net profit or loss
$17,000, $7,353.99 cash increase and $4,950 wrap to Whitney
Comments
Land contract from Whitney says this property had been cited for building code violations
.
Land contract from Whitney says this property had been cited for building code violations
Here is a deal so nutty I cannot follow it.
Address
16 Eagle Street, Schenectady, NY
Purchase date
Good question. Whitney and the previous owner signed a mortgage against this property to Pioneer Savings Bank on 9/14/79. On 9/21/79, the previous owner deeded the property to his wife. On 9/28/79, the wife deeded the property to her husband and Whitney. On 10/22/79 the previous owner and Whitney gave a mortgage on the property to the wife of the previous owner.
Type
6-unit
Co-owners
Previous owner as tenants in common
Type title
deed
Puchase price and terms
$44,000, $25,000 mortgage to wife, also got $15,000 HUD Title I property improvement loan, spent that and additional $4,000 on fixup
Sold to
Whitney’s favorite Realtor®
Sale date
Good question. The only sale-type document I could find with Whitney’s name was an option to Whitney’s favorite Realtor®. That was dated 7/10/80.
Sale price and terms
The option gave the Realtor® the right to buy the property for $50,000 until 7/10/88! On p.8 of his book Overcoming…, Whitney claims he sold the building to the Realtor® for $51,000 and that the previous owner let Whitney have $5,500 in cash while he took back a $5,500 mortgage.
Net profit or loss
$5,500 cash
Comments
This is fishy as heck. The fact that Whitney and the previous owner both signed a Title I mortgage before Whitney became the owner sounds extremely strange at best. That mortgage contains a handwritten note to send the tax bills to the previous owner, who lived in Florida and was now Whitney’s co-owner, to Whitney’s Rotterdam, NY house. The typed portion of the mortgage also indicated that Whitney and the Florida seller both lived at Whitney’s address in Rotterdam.
The deeding back and forth between the husband and wife is nutty. The option is nutty and I found no papers with Whitney’s name on them indicating that the property was sold to the Realtor®. Whitney appears to have departed from title without having to sign a deed.
I would appreciate hearing from readers who have theories about why this deal was done this way. One wrote to say he knew a guy who did a similar deal and went to jail for it.