Chapter 11

CHAPTER XI.

MONEY IN REAL ESTATE.

The Costliest Spot on the Western Hemisphere—A Mile and a Half of Millionaires—The Kings of the Earth—Why Some Rich Men Do Not Live in New York—The Country Fool and the Knowing Ones—How Coney Island Was Born—The Story of a Great Land Sale—Rents in Apartment Houses—The Fifty-story Office Building—The Man Who Gave a Carte Blanche Decoration Order, But Won’t Do it Again—The Western Land Bubble—Good Farms Going to Waste—The Jersey Flats.

No class of men have made greater or securer fortunes than dealers in real estate. W. C. Ralston, James Lick, and J. J. Astor, are examples of persons who have accumulated vast sums through investments in land. The points of real estate are: First, a sound title; second, a keen foresight of the wants and the roads of civilization; third, a careful inspection of the neighborhood where a contemplated purchase is located; fourth, a thorough knowledge of market values of this kind of property; fifth, non-professional advice, in the disinterested judgment of men thoroughly familiar with property and prices. Other considerations are the rate of taxes of various kinds, imposed or likely to be imposed upon the property. Tax methods in large cities are often ways that are dark. For this reason, George Gould, the multi-millionaire, and Mr. Rockefeller, the Standard Oil magnate, have disposed of their urban properties.

  1. City Property.—A mile and a half of millionaires! Midway between the East River and the Hudson there lay a few years ago a neglected tract of land which could have been bought for a few hundred thousand dollars. To-day it is the wealthiest mile and a half on the Western continent. One hundred million dollars would not purchase the ground alone. Forty years ago a piece of land which is now almost “down-town” was called “Eno’s Folly,” because he paid for it what was supposed to be an extravagant sum. It is now the site of the Fifth Avenue Hotel. The tide is still running up, but you must now go to the Bronx, or even further for cheap city property. It is, however, the most secure of all investments. Nothing is more certain than that the property in the annexed district of New York is bound to advance. So also with real estate in all city suburbs.
  2. Pleasure Resorts.—Less than forty years ago a man, simulating country simplicity, sauntered along Coney Island and astonished the owners by inquiring the price of what was supposed to be worthless land. They, thinking him crazy or a fool, named a thousand dollars, or five times what it was supposed to be worth. He accepted the offer on the spot. A million dollars would not buy the land to-day. The supposed countryman’s “folly” has been repeated many times since. The owner of Bergen Beach has made a fortune in this way during the last two or three years. As cities grow, pleasure resorts must be found. Buy a bit of seashore and make it into a Bergen Beach or a Bowery Bay. Or, purchase a grove within easy distance of the city, and make it into a pleasure park. In either case, railroads or trolley connection is indispensable, but with these and plenty of enterprise and money you cannot fail to reap a large harvest.
  3. New Town Sites.—Large fortunes have been made by men who had the sagacity to see a potential factor in the meeting of two rivers, or the projection of a railroad. The question for investors in real estate is, “Where is the population going?” Keen observers note the drift, get ahead of the tide, and are ready to sell lots when the people arrive. Whitestone and Morris Park on Long Island were built in this way. It is a good investment, not quite so safe as city property, but paying more handsomely where the projector is fortunate in his location.
  4. Western Lands.—Fortunes have been made and lost in Western lands. The facts are that some sharpers have been booming lands that are hardly worth the taxes. Persons who have bought “corner lots” in “promising” Western towns have been surprised to, learn that the towns were not built, or even surveyed, and that often the site was located in the midst of an impenetrable swamp where a town was impossible. However, lands along the line of railroads, or places which have harbor facilities on the banks of rivers are good investments.
  5. The Apartment House.—The apartment house, which is a kind of evolution of the flat, is becoming a feature of life in large cities. The question whether it is a paying property will receive light by the consideration of the rents received by the owners of a building of this kind in New York, the Knickerbocker at Fifth Avenue and Twenty-eighth Street. This is a typical apartment house, and the tenants may almost be said to buy their rooms, for there are several who give $100,000 for a ten-years’ lease, and even small bachelor apartments on the tenth floor command $1,000 a year.
  6. The Sky Scraper.—There is no limit to the extent of a building in height. Some are twenty stories, one is thirty, and it is reported that a sky-scraper fifty stories in height is projected. Do they pay? Here is the account of a modest one of only nine stories, the Mills Building on William Street, New York. The cost, with land, was $2,500,000. It is 175 × 150 feet. It contains 400 offices, has 1,200 tenants, and pays an annual net rental of $200,000, or eight per cent. It is related of Mr. D. O. Mills, the owner, that in completing his magnificent residence on upper Fifth Avenue, he gave a carte blanche order to a decorator, and departed with his family to California. On returning he was delighted to find the place transformed into an Aladdin’s Palace, but his joy was somewhat modified at the presentation of the bill which amounted to $450,000.
  7. The Jersey Flats.—Right over against property whose taxable value is $3,000,000,000 lies another property worth literally nothing. Step over from Manhattan Island, where every foot of land needs to be overlaid with silver round-moons for its purchase, to New Jersey, and you will find 27,000 acres of marsh lying under the very nose of the metropolis—land hardly worth a song. Why is this? Simply because capitalists have not been wise enough to improve this great waste. In Holland, by a system of diking, land in a similar condition is now covered by great warehouses and factories, and cannot be bought for hundreds of millions of dollars. Here is the opportunity for capitalists. Why invest money in far-off gold fields when you have a Klondike here at the very threshold of the metropolis? “The first step,” says the State geologist, “is to build an embankment and a pumping station. The cost will be about $1,000,000. The main ditches should be made, and the whole area laid out in twenty-acre farms, and sold on the express condition that each plot shall be immediately ditched and brought under cultivation.” If we put the cost of ditching, and of other incidental expenses at $500,000, we have a total cost of $1,500,000. Then, if we estimate the worth of the land at only one-fourth the average price of land on Manhattan Island—which is the average worth of land in Jersey City—we have a value for the total 27,000 acres of $50,000,000. Profits, $48,500,000.
  8. Abandoned Farms.—There are 4,300 abandoned farms in New England alone. These with a little expense could all be made profitable. Some are selling, buildings complete, as low as $700, and even $500. Many of these abandoned farms, costing $1,000, could, at the expense of another $1,000, be put in a highly thrifty condition and sold for $4,000. An Abandoned Farm Company will some time be organized with chances of good profit.

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