The Pensacola journal., 1922-12-23

to get ] and Ia per cent with COM
plete safety,
Mortgages were popular as in
vestments long before corporation
tocks and bonds were heard OF.
ihe intrinsic soundness of the Sc
curity was early established, and to-
day mortgages are bought and held
by people who would not think OF
touching anything else. Their rules
for testing the investment are SIM
pie. The security must be hrst
mortgage--that is, it must be trss
claim on the property, rather than. .
second mortgage, which would only
be paid (in case OF foreclosure) after
the existing first mortgage had been
paid. And the loan or mortgage
must not exceed GO to 20 per cent OF
the actual value of the property, so
that ample protection would be as
surcd in case a forced sale became
necessary. Needless to say, until
comparatively recent years investing
in mortgages by individuals was
pretty much restricted to local op-
erations, as each investor would
want to be personally familiar with
the property involved. He would
usually lend in his own community,
though now and then when he took
a trip" to another section he would
come across a particularly attractive
proposition and would make a loan,
based on his personal observation.
Investing Away From Home
The writer, when he started in the
mortgage business in Miami, Florida,
good many years ago, had good
opportunity to observe the habits OF
mortgage buyers. They would come
to Miami as tourists or visitors,
would be impressed with the posi-
bilities of'the place, and would take
a Miami first mortgage back home
with them The interesting part OF
it was that they would immediately
become missionaries in their home
communities, preaching the merits
of Miami mortgages, until a little
colony Of local investors in Miami
securities would be formed. Many
of these people are still buying
Miami mortgages and first mortgage
bonds.
Mortgages, considered with re-
gard to the kind of property secur-
ing them, fall into two main classes;
farm mortgages and city real estate
mortgages. In the present series
of articles we will not have an op-
portunity to discuss the former class.
Mortgages on city real estate range
in amount from the $1,000 loan on a
small residence property to the loan
of hundreds of thousands or even
millions on large apartment build
ings, hotels and other commercial
structures. Mortgages on the latter
class, of course, are too large for
any individual investor to consider,
so plan was evolved of splitting
these large loans into smaller parts
for distribution to individuals in con-
venient amounts. This plan will be
in detail later on.
The mortgage of moderate
amount on an individual piece of
property usually runs from five to
ten years. Bankers who sell these
to individuals usually
make it their business to look after
all legal and technical details, such
as appraisal of the property, pay
nent of taxes and insurance, super
vision to prevent deterioration. col
lection and remitting of interest and
principal etc. In this way the field
Of mortgage investment has been
widened until the investor in Cali
Sornia can buy a mortgage on South
ern property, three thousand miles
away, and be perfectly sure OF what
le is getting, provided he deals with
he right sort of banker.
Copyright. 1922, by c. l. Miler)