The New York herald., 1922-03-26
by VINCENT c. PEPE.

have been asked on several occa.
eions why cold water tenements do not
sell as rapidly as they did years ago.
i have come to the following conclu-
sion. which l have observed from my
experience:
The cold water tenements are gen.
orally purchased by thrifty investors
who are mechanics. laborers. small
business men, &c. In general these
parties accumulate from 5000 to $4,000
and purchase a tenement from $4,000
to $4,000. They usually occupy one OF
the apartments or a store themselves.
do the janitor work and make most OF
make from Is to 20 per cent. on their
investment. From this investment they
accumulate enough to pay the INSTALL
ments on the second mortgage so that
after paying same for five years their
equity on the property goes up to Is
TO 40 per cent. and the property is ther
only subject TO a first mortgage.
In 1907 this class of property was in
great demand and there were many
small investors. Rents were as good
as they are to-day and quite often a
house would change ownership two or
three times a year and every owner
would make a profit on the resale.
Many would buy them on shoestring
by paying as low as 10 per cent. of
the price and taking the property SUBJ
Ject to a first, second and third mort
gage. all of which were payable in in
stallments with the exception of the
first. AS long as the rentals remained
at high level everything went well
and owners were able to keep going,
but as soon as the rents dropped then
the trouble began. The lower rents
were only able to support the carrying
charge of the first mortgage and pos
sibly the interest of the second. but
when II came to the installments OF
the second mortgage and sometimes
the third 1t was impossible to make
ends meet. Then the second and third
mortgagee began to worry and insist
upon payment AS the owner could
not meet the demands foreclosures be-
gan and many of the shoestring owners
began losing their property. Others
that purchased their property at a
fair market value and paying 25 to IS
per cent. of the value were able to
take care OF their obligations and hold
on to the property until the tide was
over and suffered no losses.
The reason why these purchasers have
not come back into the market is as
follows: The majority of this class of
purchasers are foreigners who come TO
this country as immigrants. They are
very saving. economical and easily
frightened by financial conditions. Some
of them save from 5000 to $4,000. which
takes the best part OF their life and
labor. To sell them tenement takes
a lot of time. good judgment and per-
suasion. Just as soon as the panic OF
1907 was forgotten the world war be-
gan to be felt here In financial way.
Demands from relatives were made and
the thrifty foreign born investors be-
gan sending money to them. Then
more demands came and Il began 10
effect their pocketbooks. The condi-
tions took such an effect that you could
not make them purchase tenement
rvuse. no matter what inducement you
would make to them. Many of them
we're losing their relatives i'm the. war
and sorrow after sorrow began TO pile
UP on them.
Then we got into the war. This was
the hardest blow. Conditions kept get
ting worse. Many had to send their sons
to the war. the breaking of families be-
gan. many sorrows came to them. as
we'll as more demands on their bank ac-
counts. Then the Liberty bonds began
TO disturb the banking accounts. Then