The Washington times., 1910-03-26
PROBLEM SOLVED
BY REALTY FIRM
Local Agents Say Pay
mentS Are Less
Than Rents.
HOUSES LOCATED
ON OSBORN TRACT
Plan Said TO Have Been Attempted
Here for the First
Time.
BY John MARTIN.

The problem Of whether it IS cheaper
to rent homes than 20 buy them has
been much mOoted among hOuseholders
ever since the plan Of buying homes on
the monthly installment plan was first
devised.
There have been arguments galore on
both sides Of the question, some assert
ing that the interest charges cat up as
much as the principal and that by the
fnstaIIment method one never gets a
home finally paid for
others can be found who point with
pride TO their coy dwellings on property
which has constantly increased in value.
and they do not hesitate 10 say that Il
was the monthly payment plan and that
alone which enabled them to make tho
purchase originally
One Washington firm, which has been
selling homes on the monthly payment
plan for years, has just shown its great
confidence in the scheme in general and
in their property in particular by ar
ranging a system Of monthly payments
which are less than the average rentals
Of such homes in the neIghborhood.
Briefly this firms solution is this.
The First TryOut.
The particular locality where Il IS TO
be given its tryOUt> is in the northwest
section. and the particular houses
which are to be employed first in the
experiment are eiSht-rOom structures.
The houses are TO be sold for $500,
the terms requiring a cash payment OF
s750 and the rest in instaIments Of
$3.50 a month.
Rents brought IN by houses OF this
.4T, HHr.uH %
city range from so to S4A5g per month
Taking the maximum estimate, which
not infoeQUently is realized. IL is seen
at a glance that the difference between
the amount paid for the property and
that secured in rents IS $40 month IN
favor Of the purchaser
This difference amounts 20 50 within
q wear. or in other words. constitutes
q dividend Of exactly per cent on the
investment of 800 made at the outset
The payment OF $3.50 monthly m
Cludes taxes and all maintenance eN-
penses, including the amount required
Tor diminishing the principal so that u
represents the entire cost which the
purchaser has 10 meet
Figures Estimated
The following figures in connection
with the transaction indicate exactly
how the estimates are made:
Original cost Of house, $3.50; cash
deposit, $50. Balance, $3.50. Interest on
balance at ~ per cent, SS16.25.
One-half OF S31625 10 compute average
interest equals S15S-I2- Taxes, 80; water,
s.: insurance. SO Total maintenance
per month. $l8O5. Balance of S2l.G9 20 be
applied monthly Oh payment Of princi-
PAL. making total monthly payment
Interest Small
While Oh per cent interest is required
TO be paid on the principal annually,
the interest returns decrease as the
amount OF the principal approaches zero.
so that the average interest is esti-
mated to be only half of that nomi-
nally charged.
Of course. there can be but one rea-
son for the offering Of an investment
of this sort and that is the one that
already has been named-the confidence
which IS felt In the stability of the
market.
decrease, and that would mean de-
crease in rental returns, the invest 4
nent might become q burden upon the
shoulders Of certain buyers In the
case OF buyers, who figured upon close
margins, il might mean that they would
have TO forfeit the property after par
TALLY paying for It.
But whether foreclosures resulted in /
thA builders again acquiring the prop
edJiIty-hoIders Obtaining possession Of
81. the result, in either case, would /
have a harmful effect upon the mar
ket-
Claim Justification.
Thus, the originators Of the plan claim
that they decided 10 put II into execu- |
ton only after careful consideration !
and, the reaching Of the conclusion tha: !
the condition Of the market justifes It
Much has been written and said dur
ing the past few months about the /
confidence felt in the values OF local |
real estate. and this decision to extend /
the time on property payments IS con- |
.eidered TO be as strong proof Of It as /.
possibly could be offered.