Evening star., 1915-02-06
DECLARES MORTGAGES
ARE GOOD INVESTMENTS
Should Be Investigated Carefully
Before Purchase. Says
Writer.

Ten government bonds depend upon
real estate for their security 80 10
state county and municipal bonds All
rest upon the taxing power OF pollticai
subdivision, and this taxing power IS eA-
ercised largely, almost wholly. upon reai
estate saws a writer in the Columous
Dispatch.
Mortgages return a larger revenue thafi
bonds and smaller revenue than an III
yestment in real estate itself-a larger
revenue than bonds because of the avail
ability of bonds as collateral for certain
kinds of loans and because of the addi-
tionaI guarantee of the governing power
upon the bonds, and a smaller revenue
tban an investment in real estate itself
because mortgages involve less trouoie.
less risk and are more saleable than real
estate.
Ordinarily the individual investor in
mortgages does not place his own funds.
but buys the security from company
which invests its own money with siea'
care or through an agent or known repu-
tation Thus the mortgage has the aool-
tionaI security OF the name OF the lnoors-
er and if placed through an agent, tne
benefit of the agents experience anu
reputation.
Recently coupon mortgages similar IN
form to bonds have become common anu
are very convenient form FOR the. IN :
as low as $50. If the mortgage Is sold Dy
n responsible company the coupons may
be deposited at the investors bank When
due in the same way as bond coupons
For those who desire the security OF
mortgage investment, but who nave not
enough money to buy arSe mortgage
in other words, for those who desire Sc
curity for their savings plan some
what like this has been devised. The
loan aning company deposits number OF
mortgages with a trustee. say $l0o.0oo
worth. 1t then issues certificates with
these mortgages for direct security up 10
the value of 100000. in whatever de-
nomination the depositor may require.
This plan makes the safety and conVe-
nience of mortgage investment avan, r,
able to those who wish to deposit small
monthly savings. This plan is ldenucai
with the French method; the certihcate
OF mortgage ownership is called "rentes-
These mortgage certificates are the IA
vorite investment for the masses OF the
French people.
= An Investment in mortgage tseh
or in these certificates gives the oe-
positor the satisfaction of holding ms
own security Some companies "nlch
sell mortgages and certificates casn
them at any time on demand OF the
investor.
/ Mortgages should be bought in much
the same way and with the same de-
gree of care as real estate itself. Ihe
investor should, first, examine the
property to determine that the mort
gage is not for more than oHe-hdA VI
the value of the property; second, see
that the property is not one whlcn can
be used only for a specific purpose, 1or
the reason that a property which can
only be used for one purpose has smaH
value, and the value depends upon the
success of the management Of the per-
son using the property: third, see that
st has a present earning capacity COM
mensurate with its value. That Is, the
earning of the property should De
double the amount of interest on the
amount loaned and taxes. Fourth, see
that in a general way the property Is
satisfactory to the investor.
The property should be covered by
fire insurance policy in an amount
equal to the amount of the mortgage
unless the value of the land covered by
the mortgage is twice the amount OF
the mortgage loan.
With these considerations in mind, 1t
Is apparent that good real estate mort
cages possess a combination Of two
qualities not found in any other invest
ment-absolute safety and high return.
Their convenience and heXibility make
mortgages attractive to those who do
not want to bother with forms OF in
vestment that require personal atten-
ffon while small denominations and
trust certificates render this form Of
investment available to all.