Show Economist Dec DecI lare res s Heavy Tax Tai T ax Burden Is Hampering Building Industry In U. U S. S Babson Says Say Training Tr ining Necessary N to Be Successful S Con Con- Contractor Contractor tractor Discusses Construction of Houses for Sale Materials Declining i t nj- nj r ROGER w. w Special S Dispatch DI f i BABSON PARK Fla April 1 1 i r-Boger Roger W. W liabson Babson Ul gon today toda eon con continues his series series' erles ar of Interviews on ou the 10 leading Industries These Interviews are arc as a n. help both hoth to the young man and to the investor The general series 1 mown known mown as III Your Boys Boy's Business i PRESENT PRES eXT l l 1 A realtor who ho was endeavoring endeavoring- to fa o sell homes recently recent received u a age from a a. woman oman prospect somewhat somewhat as follows follow i You ask ak mo no to buy bu a home but why should I want Ant a n. homo home I 1 Iwas was was 33 born In a 0 hospital amused inas In as- as a. a kindergarten educated at r a boarding school courted In Iii If ai all an automobile married in a church now now noVo live in an apartment get my at a cafeteria go to the th movies rno for entertainment when hen ill T I am om taken to a I hospital and when I die I will be bc burled bUlled from Crom froman an n undertakers Really what use bave have I for tor a I home homet What hat 1 l want cant Is Isa a garage with a a. bedroom be room and a a. bath a 1 The above letter nay may be an cx- cx but It brings out in a way the growing desire desiro of host people for Cor smaller houses ll Is f's s not only that th t people p ople are re t today dl economizing on living quarters but also that with the automobile Ul they are arc able to move mo mo e In a wider I not so 60 area area and hence nee do place much importance In the size of the tho house they live Jive in It is l' I. most impossible to sell a II large single residence for what it cost apartment houses with only large apartments have many man vacancies The Tho demand today Cor Small mall six or seven lIeven roomed houses bad and apart apart- apartments apartments apartments ments of 0 three rooms bath and kitchenette BUILDING G I There is a great deal of ot dif dif- difference difference difference ference between building one self a home in which to live Jive and andin andIn andin in building a home to sell or rent It Is always a g od timeto T eto build a ahome ahome ahome home for tor ones one's self s lC The birds do donot donot donot not consider commodity prices or w when hen d to build a I IMst nest Mst and raise r lle a a family The birds could well be followed by our young oung people today in this custom as in some seme of or the tho other virtues possessed by birds The building of oC hotels apartment houses office buildings s or even homes for the purpose of ot selling or renting at a profit Is another matter Rents Rents' most centers are declining h he house shortage has been pretty prell much overcome and the real estate estale market is quieting down rj ry rapidly These conditions explain why t many of or orthe the keenest Investors are not now no undertaking the construction of more hotels office buildings b etc etc- BUILDING G COSTS COST In 1913 before the war the Babson building materials Index stood at This index Is made up of or the following Brick ce co cement ment glass glas lime lath lumber nails and structural steel After ACler the war this index rose r to toa toa a maximum of or it it touch touch- touched ed in April 1920 1310 Since then there has there has heen been a general decline and the index now stands approximately approxImate approximately at This index how how- however however ever does Joes hot hM tell the whole story stor For instance although the price of labor Jn in many section t is higher 1 yet et yet carpenters ers era and masons are arc doing more mort work In less hours discipline is la much better belter and tho the cost of ot build building ing ID Is to fo be reduced There are practically no delays today toda- In the delivery of Q goods which Is an Im Important Im- Im Important Important factor r in the cost of build build- ing In Florida where I am now building can probably be done for tor 20 per cent less Jess than was the ease case IS 18 months ago Leading L economists economists mists believe that building costs like other prices will bo be lower during the next few Cew years This means that a period of or sharp com com- competition competition competition petition is ahead and It is not a good time for one to start into the building build In business The titles cities and towns however can do as all much as any anyone one to help this condition by cutting cut Un down taxes The tax situation has become a a. heavy drag on the Indus indus- try tr Taxes have havo been so Increased In most Ost sections during the tho past 10 1 0 years car that the tax lax collector is getting about all tho the net Income from fron rented property rl ls is very discouraging to building and es especially es- es especially I to Investment building My father tAther felt this situation com coming coni Ins ing for tor some timo time and told me just t before his death last mon i that either cither real estate taxes must be reduced or the tho building build ins ins- Indus indus- Industry industry try will bo seriously hampered Recently I have e been engaged In Jn making an Inventory of ot his estate and to my m surprise I find that It does do s not Include one inch of real re 1 estate except his home and his hla holdings h of mortgages are greatly reduced My father Cather personal personally made most careful analytical studies of investments In fact to him hint I owe my statistical training Moreover his vision was wal very vcr keen and thus far Car was always as al cor cor- correct It Jt Is quite evident in many cities that real estate taxation Is 3 harming the time building building- and real cal ce- ce c tate late business and unless it is cor cor- corrected corrected redell will iii be responsible for tor a areal areal real estate depression yin In n ml many sections TRAINING G Many of oC the most successful contractors today have he h e worked up lP from tho ranks They The started In n as carpenters masons or In some om other trade and by b economy om and niI hard work became b camo boss boS boSc c tors lors- These men have picked groups of C and carry tin on n successful and honorable busi busl nesses A young oung man planning to 10 enter en cr the building Industry today toola however howe should get a 1 technical training preferably either in en- en engineering engineering or architecture lie also should have ha a a. course In the fundamentals of ot business purchasing ing commodities and general fi fi- fi finance nance The building industry Is U keenly competitive e at this time and hasU has It very Iy largo large labor problem pr which Ja Jl destined t to r be Increasing increasing- Increasingly ly i Difficult The building Indus Industry try is a a. aery very ery honorable and useful line Jf dt work for tor a a young man to enter It should Interest the b best st young men n because se the best young men naturally nat rallY want to do some some- something something something thing constructive e To succeed however in n the building industry one must be well trained very ver in industrious tn- tn be able to control sufficient dent clent capital and know how to In Inspire In- In Inspire spire labor Any Art young man who Vho tails falls to have these lour four tour assets should take up some sonie other line or of work The finest kind of oC a a. building business to develop clop is one on time trie basis of ot cot cost plus' plus a II fixed amount for tor superintendence I dont don't be be- believe believe lieve lIe In the cost plus pl s 10 per cent basis as then the contractors contractor's profit Increases with the amount t. hb spends Such a basis is wrong In principle and there thero is great op op- opposition op- op opposition position to extending it In con con- contracting The cost plus a II fixed amount however Is a sound souna basis Consumers probably get Bet better jobs on such a basis provid- provid provided ed the contractor Is honest honc t and andaU attends aU nd to his business Certain Certain- Certainly ly if i I entered d the building Indus Indus- Industry Industry Industry try I would bid on no work but slowly lowb and gradually build up a 0 business on the basis of cost plus a fixed amount Young men desiring to t enter the building building- Indue Indu Y should sho ld endeavor to get employ employ- employment employment ment with concerns working on this basis rather than those who simply bid against a L lot of capi capi- capitalists Contractors should not mix up contracting with Investments Some Sonic contractors when business is dull build buildings to keep their men at work worle This has us us- usually usually usually been a a. mistake The The con con- trading trl business that la is II tho the tree tree- erection erection tion lion of or bulI buildings ga Is la an entirely different business from the sale MJe of buildings It usually Is-usually Is much better bet bet- better better ter for tor a II contractor to shut shutdown down d wn than to go Into Inlo the business of oC building hl houses for tor sale Let the theother theother other fellow do do- this Moreover Mo my suggestion stion to those lhote build to sell is as follows Confine ConCina your houses to small smAil houses of six or seven cn rooms room Confine ConCino your apartments to small apartments of ot two t or three rooms with kitchen kitchen- kitchenette kitchenette ette and ond bath dont don't build any an ho ho- hotels hotels hotels unless they bo be with rooms and baths only on with one small recep recep- reception reception tion room and a II cafeteria in time basement which can be rented These are not offhand suggestions but are aro made mado after atter a careful study who build to sell should carefully keep in mind the letter at the beginning of c this s Interview I Ionly ete from o the lady I who says s. s she I wants only a 0 garage a 0 bedroom and bath GENERAL TJ BUSINESS nt Sl E S Probably no one of or the great greal Industries with the exception of oC oCle the Ume le railroad l industry is so Inti Intimately connected c with wills general business as lIS the tho building Industry People do clo not build because they need but because they havo hl additional funds Pc pie build most when business is best beat and an wages are high Consequent Consequent- Consequently Cons ly Ir the tine most building takes tales place during the periods of oC prosperity This building adds to the pros pros- prosperity perky and makes the snowball bigger Present easy cas money mone con con- conditions conditions cons are arc a great grell factor In ing the building Industry at ot the present time There is IK now a great sin surplus plus of investment funds runs In Inthis Inthis inthis this country This monetary sit sit- situation situation situation should help to stimulate the tho building Industry and prevent the tho decline being as severe as It Il otherwise would be When hel pros pros- prosperity prosperity falls Calls off or money becomes tight the people naturally slop building The smallest amount of oC building takes place when com com- commodity commodity commodity prices are lowest and ana building c ts are at a minimum Tho The building Industry however is b not only very vel dependent on prosperity but prosperity Is very vcr dependent t. on the building Indus try tr Y When hen a 0 building Is erected it helps helps' all ali kinds ot or labor tabor an and every ery other other-of other or of the tho nine nine- great grent In In- In The real estate man wan the foundation people pe the makers maken o of all nil kinds of material hardware dealers denIers furniture dealers s. anco and agents ns and all nil groups r ups o or of people are In some way ay benefited b by building Hence everyone has ha haa hasa a fI direct Interest In helping to keep tho the building industry normally ac- ac active tive live Although the 1 Is made up as an Index ot or business s yet it ery very well portrays tho the alt alt- in the tho building Industry to to- to today day The peak of tho the present area ara Of ot the tho was waa reached last December when It stood at 13 1 per P cent above normal n a It J boJ then then en declined to t 7 per cent above normal In February and ond now has hIlS to 12 per cent e nt above normal The Tho building Industry has had a D. smaller decline from Its ita peak but taking the country as a a. whole J J. J still above normal Copyright 1927 Publishers' Publishers Fi FI- Financial FInancial Bureau Duren |