Imperial Valley press., 1930-08-04

BY the Architects SsrnaU House
Service Bureau of the United States,
Inc.
Suppose YOU want to build house
that costs. with the lot, $4,000 and
Won have ONLY 1000 to do it with.
A first mortgage will bring you $4,000
and still leaves you $4,000 short. If
YOU get a second mortgage for %
per cent of the value, that would
bring 81. coo more and you would still
bc lacking $1,000.
What can YOU do to get that $4,000
property? The usual way is to sign
a contract with some organization TO
buy the house on monthly payments
until a deed for the property can be
delivered to you. Let's examine this
plan and see its main features.
Pay Just Like Rent"
Usually this plan IS applied by a
real estate operator. or a contract
and.buildcr. or Il Speculative build
cr, who either sells you a lot with
an agreement that he will build
home for YOU on il, or else sells you
house already built on the lot. He
does not give YOU a deed at first, but
you sign a purchase contract. agreeing
10 pay Il certain principal sum. plus
6ia per cent, until the price is COM
plctcly paid in. He agrees to turn
the deed over TO you at that time,
and you must be absolutely sure of
the responsibility of the man you
deal with when YOU undertake TO ac-
uuire n home on this plan.
This plan has the great advantage
OF requiring little capital in your
hands to start with. You pay down
your sl000-or. II may be even less
IS rcquired-and move right in; you
pay the rest Just like rent"
But if the property cost the build.
or $4,000. and nc gets only $1,000
from you, he stll has $1,000 tied
up in it. He will get part OF this
back in the form Of Your monthly
instalmcnts and you viii pay him
per cent interest on the balance.
But where does he get his money!
Unless he is an exceptionally large
operator. he must borrow il.
So of course, he has to pass the
financing charges along to you. II
he doesn't add them 10 the price of
$4,000 ne must make them up by
cutting down on tho cost of erect.
Ing he house. In many cases. great
operators, with assets totalinG mil
lions OF dollars. who build scores or
hundreds OF houses every year. are
able to bOrrowNpn such good terms
that they do not need TO cut the
cost OF building to the point at
which IL means poor construction.
Somebody Pays the 'Discount'
This proposition isn't bad on he
contrary it is good-because the
builder is entitled TO a profit. If you
have ittlc or no capital for your
home owning enterprise YOU must be
prepared to pay for the easy terms
on which you buy
But If the builder is weak fnan.
Cially and is not able to borrow on
favorable tcrms. the financing cost
nc passes on to you may run con.
sidcrablv above $1,000 on the $1,000
deal. That means that. II he is to
get his 10 per cent profit also, he
must cut the cost OF construction
still further. And this You must
guard against. for "skinnin@ he job"
u carried far enough. is bound TO
result IN shoddy, jcrry.built con-
struction.
Tni plan has thc great advantage
of easy terms and convenience. In
tho hands Of q TopItabla operator. it
may result in satisfactory ownership
nF u fine home. In irrcS pons.blc
hands. IT means that the buyer must
pay an excessive price FOR y poor
prCpcrtY. - Copyright l92S. The
Architects Small House Service Bu.
rcau OF tho United States, Inc. Home
Builders Clinic.