Seems some rust is magnetic and some is not:
"Rust is a non-technical term which doen NOT give compositional information (well, yes it does signify it is (mostly) a mixture of iron and oxygen). Ignoring real world rust which will have sulfates, nitrates, chlorides, all sorts of impurities in it...
Iron rusts from Fe to Fe2O3 Ferric Oxide. Red Rust is not ferromagnetic (what we typically mean with the term "Magnetic") . Ferrous Oxide FeO (black rust) IS magnetic. Don't take my word for it! Put a steel nail under water keeping air out. The black rust will be attracted to a magnet. Or you could try pulling some flakes of rust apart. (on a very rusty (wet) surface) They will get darker and darker and if you're lucky you'll find some very dark if not black rust. Check to see if its magnetic. It is. So, if the question is is red rust magnetic, then everybody else is right. If the question is, is there lots of rust that is magnetic then think of all the sunken ships and all that black rust. Go try it!
Fe(metal) +O2 => FeO (black) => + O2 => Fe2O3 (red)
Black rust will turn to red rust as it dries out (the water just helps keeping the oxygen away) but in an open glass of water a nail will rust red just fine."