Prosperity Through Property

My boyfriend and I are toying with the idea of buying investment property. We like the idea of a "fix and flip"-buy a handyman special for well under market value, fix it ourselves, and sell it in a few months for a hefty profit that we can roll into our next investment. Trouble is, by the time our realtor gets us in the door to look at a new listing, it's already got two or three offers on it, sight unseen. Frankly, we're getting a little discouraged. We blame Russ Whitney.

Whitney, 49, is chairman, president and CEO of Cape Coral's Whitney Education Group, which preaches the gospel of real estate salvation to TV viewers and would-be entrepreneurs all over the world. At his headquarters, where 350 people work, and at locations across the world, Whitney and his team tell about 60,000 students a month that they can make millions and transform their lives by successfully investing in real estate.

It's a classic American dream, and Whitney is the real-life success story that makes those thousands believe. Just as he rose from rags to riches, beating huge odds to attain wealth, he promises, others can succeed by using his formula and applying tenacity.

Whitney's bio is Charles Dickens meets John D. Rockefeller. His youth wound thorough a series of unfortunate circumstances, including a rough family life and a brush with the law that landed him behind bars. He ran with a bad crowd who one day stole money out of a store's open till and fled. He was caught, though, and did a little time, during which he vowed to change his life. At the age of 20, as a slaughterhouse worker in upstate New York, the high school dropout, who was struggling to support his young family, made his first real estate investment. In just three weeks, he says he made an $11,000 profit. More investments followed, and Whitney was financially independent by the age of 23. By 27, he'd made his first million. Today, Whitney has written three how-to books, says he does multimillion-dollar real estate deals on a regular basis, and owns his own jet. Who wouldn't want a piece of that?

Whitney moved his family to Cape Coral in the early '80s, after discovering the area on a real estate scouting trip with a buddy. "I saw an anomaly," he explains. "In Fort Myers, you had an older city that was full of rehab properties. In Cape Coral, you had vacant land waiting for spec homes. So you could make money in Fort Myers and invest it in Cape Coral."

Although Whitney didn't buy much in Cape Coral the first several years he was here, he's stepped up his efforts in the last five. Now, he says, the market is hot. "I've made more money here in the last three years than I made in the last 25," he says.

He recently tightened his corporate belt, however, laying off 15 percent of the global workforce, mostly workers at the corporate office in Cape Coral. Whitney says the company was overstaffed and needed reorganizing to help cut expenses. The headquarters suffered damages in Hurricane Charley, also adding to financial challenges.

According to a Reuters abridged financial summary of the company published in 2004, "for the nine months ended Sept. 30, sales totaled $109.3 million, up from $54.3, million. Net loss totaled $16.2 million, up from $6.5 million. Results reflect an increase in the number of attendees at the training courses, offset by increased advertising and sales and interest expenses."

Whitney says sales are reported when enrollment is made; however, the company "can't book the profits" until students attend classes and pay tuition.

Learn to Earn

You might have seen Whitney on a late-night infomercial; this is often his first line of approach, followed by a free seminar. The intensive three-day seminar, offered in locations around the country, whets the appetite of prospective real estate entrepreneurs.

According to Whitney, about 10 percent of those who attend the free seminar "qualify" for further training. "They preview the agenda and the curriculum," says Whitney. "The tuition is $1,700, so that eliminates a lot of people. Plus, many are looking for a get-rich-quick scheme, and this is not that."

Whitney admits to few comparisons between his and other real estate investment training programs. "There is no other program like ours," he says. "Real estate investing has generally been something people learn in a seminar, or they get a few books. But the truth is, real estate is a post-secondary career topic; and it requires substantial training. We've created a conventional curriculum, like a junior college program that takes place in the classroom and in the field." He rattles off a partial list of topics covered: foreclosures, preforeclosures, wholesale, land syndication, lease options, commercial real estate. But it's a long-term commitment. In fact, the typical Whitney student continues training for a period of one to three years. "You can't go to a two-day seminar and learn everything you think there is to know about real estate," says Whitney, "just like you can't go to a two-day seminar to be a lawyer and then go litigate a murder case the next day."

The reason the training works, says Whitney, is precisely because it involves a commitment. "Why does college work?" Whitney asks. "We look for the serious, long-term student that understands the importance of education." A money-back guarantee offers an added level of security, though he claims that few students take advantage of it.

Whitney's students run the gamut in age, background and experience in real estate. And while there's no special affinity for numbers or bricks and mortar required, Whitney offers, "Just like being a doctor isn't for everyone, you have to have an interest and want to do it."

The training is intense, he says, and a huge commitment. Not only have students paid the $1,700 for the class; they're spending more for airfare, hotel and meals.

Cape Classroom

At a recent training session in Cape Coral, attendees had come from across the country. "I couldn't afford to take a real vacation," joked David Billman, who had traveled from Indiana. Billman, who's currently in residential construction, said that the recent birth of his son inspired him to seek financial independence.

Michelle Charles, a dentist from Orlando, had a more specific agenda: "I'm a very organized person. But I came to this training to learn to be better organized and present myself better when I approach the bank."

Truck driver Carl Brown and his wife, Joy (who works for BellSouth), came from North Carolina to attend the training. They'd attended a "get motivated" seminar sponsored by their church, where Whitney was a speaker. Their reason for attending? Simple: financial independence.

Training begins at 8 a.m. and runs as late as 6 p.m. One primary trainer leads sessions such as "Working with a Mortgage Broker," "Landlording and Tenants" and "Community Banks," and takes students on a tour of potential properties. Guest speakers pop in, too. The training stays lively, even during those long after-lunch hours when heads might otherwise start to bob. Dozens of students sit in rapt attention as presenters offer insider knowledge and common-sense advice, sprinkled with a liberal dose of Tony Robbins-style change-your-life affirmations.

Life change is the underlying theme here. Even the title of the training session, "Russ Whitney's Millionaire U Intensified Real Estate Training," sets the goal pretty high. The training book is dotted with inspiring, New Age-like lists and pointers, such as the question: "How do you change your thought process?" Answer: "Stop using your brain and start using your mind!" Then there's Whitney's mantra for making money: "The hands that I shake, the actions that I take, the decisions that I make." One pictures 60,000 Millionaire U graduates with these sayings taped to their bathroom mirrors.

Nevertheless, Whitney's plan does seem to work for many of those who apply its lessons. His Web site is filled with dozens of testimonials from current and former students who say they changed their lives and their fortunes through real estate investments.

And there's no question that real estate has been very good to Russ Whitney. In addition to several properties in Cape Coral, he also owns a 17-story office building in Orlando and Gulfstream Construction and Develop-ment Corp., a Cape Coral construction company that builds 500 houses a year. Whitney's business has expanded to Costa Rica, England, Ireland, Scotland, Canada and Spain. He's got his eye on Prague and Warsaw. He rattles off profits-in the millions-that he's made from several recent land deals.

And his predictions for the future of the red-hot Florida real estate market? "I don't see it going down," he says. "People are buying waterfront, and 342 days of sunshine."

An Embattled Empire?

Russ Whitney has developed followers and believers, but he has his share of detractors, too. Whitney's company has an unsatisfactory record with the Better Business Bureau. According to the BBB Web site, the agency has received 150 complaints in a 36-month period, including 47 complaints related to sales practices, 35 concerning refund disputes, 30 for unsatisfactory business performance and 38 related to "other business practices." The BBB Web site also stated that Whitney Education Group has met with BBB staff and "has taken action to resolve previously unanswered complaints."