Evening star. [volume] (Washington, D.C.) 1854-1972, 1908-10-09
MORTGAGES AS INVESTMENTS.
Good and Bad as security-Exer-
else Skill and Caution.
from Moody's Magazine.

'toiA 1o0us ""eoAiue'
Che mortgage is the best form of invest
ment for the ordinary man who is up-
versed in the arts Of high finance and I'M
familiar with the intricacies of corporate
bookkeeping. OF course, there are good
and bad mortgages, and careful investi-
cation is necessary in order to select the
good mortgages.
A parcel of real estate. however, with
the buildings erected upon 1t. is the sim
plest kind of property to investigate. The
safest of underlying securities is depend
able upon the amount of equity in pro-
portion to the amount Of the mortgage,
therefore 1t Is imperative that the IN
weston shall know to a nicely the value OF
the property upon which he loans his
money.
If it is possible to discover the value of
any kind Of property by investigation, 1T
is certainly possible to determine the
value OF compact piece of improved. in
come-producing real estate situated with
hin thriving city.
To be sure there is none of that specu-
lative element in mortgages which renders
corporate stocks and bonds attractive.
But it must be remembered that many an
| investor looking for profit in addition
to the interest purchases corporate bonds
which he lhaving received tip Is
certain will appreciate substantially in
value in a few years. But, alas! how
| many such investors count the depreci2-
ton instead of appreciation in the value
of their bonds. Investment with an eye
/ to security Of principal should be made
without any speculative purpose. II one
speculates he looks to an appreciation In
value and disregards the income feature.
The safest investment is that which re-
turns no profit to the investor other than
| a stipulated income.
| The savings bank, which is extremely
| conservative in its management. hedged
in y. In rfotG
. its investments, derives its largest income
| from mort cages The savings bank real
| izing the truth of the old maxim. the
smaller the speculative element. the
netting not over per cent and mortgages
netting as high as per cent Therefore.
| when the bank pays the depositor per
cent interest and invest this same de-
positor's money in bonds netting only or
3k per cent, 1t Is clear that the bank loses
| money upon this transaction and would
be unable to continue the liberal rate OF
interest to its depositors were 1t not for
the per cent land just at present 5it
per cent? mortgages. The latter not only
| give great security to the principal but
also a very generous rate OF income
| Therefore. We may say that although the
mortgage investor is assured Of no ap-
probation in the value of his investment
he is also assured to an equal extent of no
| depreciation. While the chance OF fluc-
| tuation is imperative to speculation, It Is
In no way essential to a conservative In
vestment
| The mortgage has not a very ready
market for its sale But the mortgage is
an investment permanent in character,
and. like any other investment. is not in
tended to b. sold and resold. Neverthe-
less. II some unforeseen contingency re-
quires that the investor raise cash upon
| his securities. he can take his mortgage,
together with his policy of title insur-
ance. and appraisal by an acceptable APP
| yr % GyooH ~{ol ;~ct tt,,ti ~nA
| borrow cash upon it.
| Mortgages have the advantage of run
ming for a shorter time than bonds. Any
property, whether 1t be Industrial, rail-