The Washington herald., 1920-08-15

are sold and the rest are rented, !
and (2) where every apartment is
sold. Both plans have their advan-
tages. Where only a part OF the |
apartments are sold it is intended .
that the remaining apartments. and 4
usually the stores as well, will yield
a profit of enough to pay all the
expenses of the property and give
free rent, more or less. to the ten
ant owners. Under this plan the
investment is necessarily substan-
tial, as the price of the property
over and above the mortgage, II
any. must be contributed by the few
tenant buyers. usually about one
third or less of the total number OF
tenants. Some speculation is in
volved as to what the rented apart
ments will bring in the future and
the chance of vacancies.
Under the plan of selling all the
apartments in building the two
big items of loss in apartment
| house operation--i G. VaCa uCies
and wasteful decorations-are COM
{ a.
items amount in ordinary times TO
as high as 25 per cent or more Of
| the total rent each year, ana TINS
sum is saved. When the apartments
are all sold the cost on the property
per tenaTt is, of course, substantial
| ly less than when only third are
! sold. 1t is also possible for one
tenant to purchase several apart
ments and sublet them at a profit
which will pay the rent of his own
apartment, in that way accomplish
| ing the same result as is contem-
| plated by the former plan.
In purchasing cooperative apart
! ments, however. nothing compares
in Importance, so far as the ordi
nary purchaser is concerned. with
the reputation, reliability and re-
! sponsibility Of the agents or otRer
| persons promoting the sale, upon
whose statements. facts and figures
the tenants decision to purchase
| must largely be based. The pro-
speCtive purchaser having satisfied
himself on this score the next query
should be: In how many years will
the saving in rent between the CO.
| operative rent and the rent the ten
ant would have been ordinarily
willing to pay for the apartment
meet the cooperative investment"
How long this should take depends
upon such a variety of elements,
different in each case that no gem
eral rule can be laid down for it.
There might even be cases where
there would be no annual saving
IN rental cost, but where the CO.
operative rental paid would be ap-
piled IN large part to reduce the
mortgage Indebtedness against the
property. in that way constantly
increasing the tenants equity in
the property, and finally when ihe
mortgage was fully paid result In
a large cut in the cooperative rent
The purchasers income tax is
large item of consideration to
many.
Some of the more important of
the differences between the Coop
eratiVe plans in use are the fol-
lowing:
Il. The purchase price of apart
ments and also the annual expenses
pro rated by the room or by the
apartment, and making no differ
ence between the price and cost of
operation of large top floor front
room and small first floor back
room.
"2. Where the co-operative an
nual rent goes in part to reduce the
mortgage debt, If any. and cases
where the mortgage is fixed and by
Its terms stands for a number of
years without reduction, the for
mer plan may be likened to an en-
dowment insurance policy and the
latter to straight life insurance
without the saving feature.
3. Leases running with the
stock under what is called a pro-
prietary' lease. whereby only a pro-
prletor or cooperative owner
may occupy tthe apartment. Leases
separate from the stock so that
the stock may be sold without the
lease. Leases for one year with
perpetual renewal privileges at
rentals to be adjusted each year to
equal the expenses. Leases for |
ninety-nine years at nominal rent
ais, the expenses being paid through
assessment on the stock. Leases