The Salt Lake herald-Republican. [volume] (Salt Lake City, Utah) 1909-1918, 1909-12-05
SMALL INVESTORS
SEEK MORTGAGES
Eastern Financial Concerns
Find Demand for Real ES-
tate Securities.
INDICATION OF PROSPERITY
BANKS ARE LoANINo ON long
LEAsEHoLDs.

Small investors are coming into the
mortgage market again, says a New
York exchange. and. according to the
big lending companies, one Of the most
hopeful signs, which indicates a period
oT renewed prosperity, is the fact that
he small investor who has less than
$4,000 TO lay aside to produce income.
Is beginning TO realize the value of
mortgage investments. One of the larg-
est companies in Manhattan during the
past week sold mortgages aggregating
more than $3.50, 900.
The prevailing rate for building
loans IN Manhattan. Bronx and Brook
lyn during the past week has been
per cent, although many large loans
were placed at Az per cent. The
slightly hardening tendency that has
been noted in the market is due not
TO any scarcity of money, but TO the
great demand caused by the number
of building operations that are going
on In all three bOTOughs.
In Manhattan and the Bronx during
the past week there were 2S6 mort
cages recorded, involving S4.244, 444. OF
these forty-six In Manhattan for ST.
1884 carry a 8 per cent rate, and
fOtty-seVen in the Bronx for S542, 40S
call for 6 per. cent interest. In Brook
lyn 1S1 for S431.e25 carry per cent
rate.
Loans on Leases.
81 am convinced that banks and trust
companies in certain instances can
make loans upon ninety nine-year lease
holds with a reasonable degree of safe
ty," said II. c. Robinson, a Cleveland
bank official, in a recent address to the
rear estate board Of that city. Contin-
uing, he said:
The subject is one worthy of serious
study. We live in times when won
drous changes are taking place in our
commercial and Industrial develop
ment. New economic conditions are de-
handing new facilities for doing bust
ness, and the nine-nine-year lease un-
doubtedly plays an important part in
this development by providing an easy
method for passing the control Of val
liable property into the hands of those
best adapted to bring forth its highest
utility. I do not hesitate to say, how
ever, that banks and trust companies
as a rule do not look with favor upon
loans upon ninety-nine-year lease /
holds.
Caution Always Necessary.
THE reason for this is self-evident. |
A loan puon a fee made with good judg- /
ment and the exercise of proper caution /
to an amount not exceeding One-half /
the value of the property is conceded /
by every one TO be an absolutely safe
Investment, and the bank making the
Oan has no further concern about this
investment beyond the collection of its
interest:
The bank has TO go to more trouble
In the preparation of the loan itself /
than il does in the case Of a loan upon
e. A.
there is not that sense Of security that /
accompanies loan on the fee, for the
burden is constantly upon the bank to
watch this loan, to see that all the re-
qUirements of the lease are complied /
with, 10 the end that the safety of the
easeh0ld itself is not impaired: but, de-
spite this additional burden imposed,
and the constant watChfulness required
IN cases of leasehold loans, I believe that |
banks ought not TO condemn them alb
solutely.
7 believe that under certain eondi-
tons a bank or trust company can
make a loan upon a leasehOid with COM
parative safety. Briefly, these condi-
lions are as follows: The property
leased should be located in the heart Of
the retail district OF the downtown sec
ton Of the city. The lease itself should
provide for a straight rental for the
full period OF the lease. This rental
should be based on a fair valuation Of
The land at the time the lease is made,
ana at a rate not TO exceed 8 per cent
In any event.
Anticipated Values.
Il believe that whenever a lease is
made on a basis of anticipated values,
five or ten years hence, the lease be-
comes undesirable for lOaning purposes.
The building upon the property leased
Or to be erected thereon should be one
that could be adapted in case Of need
for more than one purpose, and its
earning power should be sufficient to
set aside a sinking fund to retire the
loan within a limited number of years.
In no event should the amount eX-
reed One-half the value OF the building
upon the property. and the lessee should
contribute a sum of money equal to
that desired to be borrowed. The lease
tself should be free from burdensome
restrictions. for while L know that the