­

British Guardian Observer criticism of Russ Whitney The Observer is a major British Newspaper (https://observer.guardian.co.uk/). I was unable to find a link that would enable readers to find this story ("Can you win with Whitney?"). If any reader can supply it, I would appreciate it. https://observer.guardian.co.uk/cash/story/0,6903,1020178,00.html "Normally '£4,200, but only '£1,800 if sign up right now" If I read the August 17, 2003 Observer article correctly, Whitney is giving his get-rich-quick real estate seminar in Britain with virtually no change from the U.S. version. For example, they tell the audience that the three-day seminar costs '£4,200 (4,200 pounds) normally, but only '£1,800 if you sign up today. I guess the Brits are lucky he didn"t just price it in dollars and make them look up the exchange rate. The Observer chose its words carefully, but left little doubt that they were skeptical about Whitney' seminar. "But if the quality of the "free" information is anything to go by, would-be property magnates might have difficulty reaping a return on [the] outlay [for the seminar]." The Observer said their experts found parts of Whitney' seminar incorrect. "Put '£1,000 into a savings account"¦" Whitney is still pushing the old "open a $1,000 savings account, borrow against it, pay it off, do it again" shtick. Only in England, it' '£1,000 instead of $1,000. This is supposed to increase your creditworthiness. I say it' at least 30 years out of date in the U.S. The Observer' experts said there are penalties for early loan payoff at many British lenders. And an Equifax

representative said credit reporing works about the same as in the U.S. That is, such a brief stunt would provide little evidence of one' good credit. David Shamy The Whitney instructor in Britain was David Shamy. It seems to me I have been hearing his name for about twenty years as one of the gurus who has been knocking around as a real estate investment speaker "on the circuit." He is an American. Seems like Whitney ought to have British instructors in Britain. Use tenant security deposits for down payment Whitney advocates using the tenant security deposits that are credited to you at closing for down payment money. The Observer says that most tenant security deposits in the U.K. are "stakeholder" deposits which means they cannot be touched by the landlord except to pay for tenant damage upon move out. As a general rule, that is probably also true in the U.S. It varies by state. Keep for 30 days to use on next property The Observer also says Shamy told the audience to hang onto tenant security deposits for 30 days after they move out so you can use them as down on your next property. Well, unless you expect to sell that next property within 30 days, that won"t be much help. Also, British law apparently requires security deposits to be returned within 14 days after the tenant moves out. Whitney is going to charge British citizens thousands for a real estate seminar and can"t be bothered to check with British real estate people to eliminate advice that does not apply to the United Kingdom? Would it be that much of an imposition for him to give the seminar free to a bunch of British real estate guys and have them stop the speaker whenever he said something that did not apply to England? Installment sales Shamy reportedly told the British audience to seek seller financing pointing out to sellers that they could spread the gain over years thereby benefitting multiple times from a capital gains tax exemption. The Observer quotes two British tax experts as saying, essentially, that Britain has no counterpart to the U.S. installment sale tax treatment. In Britain, you have to pay the entire gains tax when you sell regardless of whether you are not going to get all the money until later because you took back a mortgage. I am astonished that Whitney is apparently just teaching the same stuff in Britain as he teaches in the U.S. Seems obvious to me that you would have to modify it according to local law and custom. Also, some of what works in the U.S. may simply have no counterpart in another country. For example, in the U.S., many states have tax lien certificates. But others do not and there is no counterpart by another name. The tax lien certificate investment opportunity simply does not exist in many states. John T. Reed John T. Reed on real-estate-investment information Copyright 2004 by John T. Reed, a.k.a. John Reed, Jack Reed, 342 Bryan Drive, Alamo, CA 94507, Voice: 925-820-7262, Fax: 925-820-1259, www.johntreed.com

Log in to comment
­