The sun. [volume] (New York [N.Y.]) 1916-1920, 1918-12-08
Owners Now Oh
a-
tain Fair Return
on Investments,
but Steadily Adj
vancing Mainte-
nance Oh ar G e s
Keep Pace With
Increased Income

Increased Income
has added an additional salary cost.
Besides these costs It is estimated that
supplies have risen anywhere from 100
por cent. 20 300 per cent Electrical
supplies, which are extensively used
in Offices, have made the greatest adj
vances.
Taking the downtown office build
ings generally, managers used to
figure that such structures could be
operated on the basis of 80 cents a
square foot in 1913. while to-day the
minimum Is placed at AN cents a
square foot. an increase of IL y cents.
To add to the troubles of the land
lord. realty values slumped and are
now perhaps at the lowest ebb they
will reach in many years. With this
reduction in values the percentage
| OF the mortgage loans on their prop
critics rose and as a consequence and
to assure them OF safe margin
| lending institutions began calling
mortgages. All the mortgages called,
and not met however. we're not fore
closed A system OF extending the
mortgages was evolved, with n pro-
vision that the principle was TO be
reduced, semiannuallY, annually or
within stated period by set amoants.
This new method. introduced by
the lending institutions, as explained
| by we'll posted man, seems to he a
benefit to the landlord, though it Is
likely that 1t will have to be in opera
ton for few years before the boz
| rover fully realizes the benefits to Be
derived III!
heretofore 1t Was the practice Of
lending institutions to make loans 10
the extent of two-thirds OF the value
or the property. This was found to
be a bad practice, for II was learned
that some owners when values adj
ranced would secure a new loan from
some other institution and pay of
the old ones thereby lessenng his
equity on an inflated valuation. In
the more recent past, when values
began to shrink II was found that
the percentage Of mortgages rose dan
Perously near 30 per cent and the
lenders began calling loans for the
purpose of increasing the margin of
SAFETY. II WAS found, however, that
IN the majority of cases owners had
gwen no thought to the probabilities
Of reduction in values and we're
! without funds. The plan was then
introduced to have them pay off part
OF the principal.
This arrangement, now in operation,
is GAINED to be merely n compulsorv
saving OH the part of landlords. The
cry that the action of the lending in
| sututions are adding to the expense of
! maintenance IL OF
dence. Instead it is claimed that land
lords are now merely forced to curtai
their expenses of pleasure and COM
| PEELED to put part of this money
Which, once gone, is unrecoverable. into
] their property. The plan rs explained
I Is to make il necessary for borrowers
to pay about per cent. of the prlnci-
pal each year, with the interest. This
operation steadily decreases the princl-
pal and the interest charges and in
creases the landlords equity in the
property. In time the principal will he
reduced to 60 per cent. at which level
arrangement might be made 10 let Il
stand unless values should decline
again when the same operation might
DE again introduced. The lending in
situations believe that when the plan
Is better understood there will be a
tendency OF owners to want to con-
tinue it, even TO the extent Of wiping
out the entire mortgage
The plan of paying off the mortgages
gradually, 1t will lie seen. will annu-
ally release great deal OF money,
and there is a likelihood that the funds
thus released will go into new con-
struction The continual operation OF
such policy will in time form a CON
troll over the production OF buildings
so that the probabilities Of am over
! production will be greatly iCsscned.
The number of new buildings will
under this plan depend upon the ability
or owners to pay off their mortgages,
new ones being extended as the oder
ones are reduced or wiped out
The whole renting situation seems
TO resolve itself into an economic prob
| lem. Food costs and lubor's wages
| are dependent upon one another. II
the labor supply is increased and
wages reoede there will not be tho
same buying power and food cost UNI
der the law of supply and demand
must of necessity also reCede. If the
cost Of living should drop back the
value OF the dollar would advance
and the demand OF labor luld not he
so great. But i'm either event It ap-
pears that the margin OF profit To labor
will remain about the same Wages
OF labor therefore fit in with the level
OF future rentals II labor is reduced
materials will cost less and the cost OF
constructing new buildings will natu-
rally be less, The cost of buildings
will control future rentals. therefore,
since the extent OF the increase in that
cost over the cost of existing build
inRs win determine the percentage OF
advance in rentals.
OsTEND HOTEL RENTED.