8. What to Check Second

The second big test for you to apply to your prospective purchase is the requirement that the rents be mod­est. Here again we will have no difficulty with the extremes. Let us consider first what we mean by the word modest.

Various studies over the years have established from time to time the percentage of his income that an average workman pays for shelter. In the twenties and for some time prior to that, the percentage ranged between 22 and 25 per cent. That is, you might say that when a workman earned $40 a week, he generally paid $40 per month for housing. The economists have pointed out that the three essentials of life were vital to him and that he had an outlook on spending that was far different from what it is today.

He also had different values. To him, it was worth one-fourth of his paycheck to live in that flat, although he knew he could buy less desirable shelter for his family for perhaps half that. Owning an automobile was not as important to him as living in that flat, if he had to choose between the two. Also owning the auto had not been made as easy by way of installments. His neighbor did not own a car either and there seemed to be no such compulsion to live up to the Joneses as obtains now.

There were several other things that governed his spending. For one, his attitude toward what he considered the luxuries of living. Inconceivable as that may seem today, there were actually things which he felt he could not afford! And he cheer­fully got along without them. This attitude was partially en­gendered by another factor.

He had no assurance that the future would take care of itself, that he could never starve. In those years, the working man faced the grim reality that you enjoyed only that which you earned, and you had to provide for your own future and old age. Perhaps he would not have accepted an assurance of what he considered charity even if available. So he lived within what he felt were his means, and was content. Now all that has changed, and I include all of that.

Today's workingman sees his old age provided for, hence, the necessity to provide for it removed. He lives to the limit, and with a small percentage of exceptions, saves very little of his income. (We're getting close to the point that affects us now.) He values the essentials of life quite differently than he used to. His car is more important, and he trades it frequently for a newer model. He spends on recreation, hobbies, the children's education, and other things now that he used to feel he should do without.

As a result, with his limited paycheck, some things must be slashed. And there is just where we come in. We provide him with the class and location of shelter that he wants at the price he wants to pay. And today he wants to pay a far smaller por­tion of his income for shelter. Thus the workman of today only spends some 12 to 15 per cent of his paycheck for shelter as contrasted with 35 years ago; and we are the only ones who can supply it.

What's more, in the foreseeable future it is hard to see how there will be any change in our monopoly. If there is any way in which competition for that rent dollar is going to be created, it must come to pass by means we consider virtually impossible. That is, again, bricklayers and carpenters working for $6 a day instead of $40 and $50 per day. Yes, and then there's govern­ment housing, federal, state, and municipal.

Government housing has been a comparative failure. It was born and based on the premise that if you take people out of the slums and put them in nice housing, they will live up to the new environment. When many of these people lived in the slums, they used their bathtubs for coalbins, gin or what not. Now that they have been "elevated" and relocated they use the entire building for even worse purposes, and any observer can see the truth of this in thousands of places.

I have had dozens of tenants who came to live in my build­ings, disgusted after a few months of sampling what the gov­ernment was offering through public housing. It must be re­membered that our tenants are nice people—clean people and good-living Americans. They have no wish to destroy that which the government supplies free. They use soap on their children and, when necessary, a strap. Illegitimacy is still a dis­grace among them, not an envied means of getting more wel­fare allowance. So they come to us for the housing they want and we supply it.

If we wanted to set a norm for the amount a workman earns, we would have to leave a substantial range for the various parts of the country. But let us try to analyze a fairly standard aver­age. Say your tenant works on the assembly line in an auto plant. He makes some $2.50 per hour for 40 hours, or grosses $100 per week. Of course, there are deductions and withholdings, but there is also overtime pay. In addition there is usually some income being brought into the family either by the wife through part-time work or by a grown son or daughter.

Thus the family can usually plan on $110 or $120 per week clear. This makes the monthly income some $470 to $500 and if he spends 15 per cent of that for his rent, he is content. And so are we.

By these calculations, it becomes apparent why in my experi­ence in these times with present-day figures and habits (as well as those of past decades) the shelter that we had to offer had plenty of takers at the price. And it also explains why my va­cancy percentage was so infinitesimal a part of the picture. It has been my experience that there are 100 prospective tenants for a $75 flat to each tenant seeking $150 quarters. It boils down to this. Our American workman wants decent quarters (not lux) at about $75 per month and is willing to foot his own heat bill besides. Therefore we call that "modest rent." You will have no difficulty determining the range covered by the words "modest rent" in your area.

Are You Ready To Move Onto The Next Lesson? Click Here….