cooperation of a number of men of very different talents, some in the direct employ of the corporation and others as specialists called in for specific pieces of work.

First, there is the engineering construction, involving the draining, grading, and improving of tracts of land for living purposes. Next, comes the building construction with its problems of engineering and architecture, design, and construction, the purchase of materials on a great scale, and the manufacture of a complicated article-the modern building. Lastly, there is the maintenance of properties of great value and the operating of large and often complicated machinery, in connection with these buildings, requiring constant care and attention. Coupled with this are the delicate and difficult problems of dealing with the tenants and the owners of the buildings, managed by the construction department.

It will be seen, therefore, that practically the entire business of the real estate development corporation, except sales, falls within the province of the construction department, and even though not directly concerned with sales, if the construction department is going to render the very best service to the corporation, it must watch the question of sales almost as closely as does the sales department, in order to follow the public taste so as to improve the land and erect buildings which will be sought after by tenants or by purchasers.

The collection of rent is one of the most important problems in the management of real estate, because there is always at stake an actual income which is needed to pay the many obligations entailed in the ownership of property.

It is also one of the most difficult problems, for most people have never been educated to pay their rent with the same promptness as they meet their other obligations. The housekeeper will pay her grocer and butcher, the telephone and gas companies, and then if her funds hold out she will pay her landlord. The merchant will generally pay his rent only after he has met his miscellaneous bills.

The Obligation of a Lease Similar to That of a Note.A lease is an agreement to pay a given sum of money for a term of years upon the instalment plan, on a specified day of each and every month. It is as real an obligation as a note held by a bank, also calling for instalments on specified dates. Yet the average merchant meets these two obligations with a different frame of mind. He shows great anxiety toward the payment of a promise to a bank, but indifference toward the same kind of promise to the landlord.

There is a reason for this indifference toward the rental obligation. Tenants are always careful to pay bills for merchandise, where there is a clearing house for trade credits, because mercantile agencies of this sort inquire as to the promptness with which trade bills are met and advantage taken of trade discounts. They do not inquire as to delin

1 Maurice R. Spear, 1261 Broadway, New York, N. Y., Treasurer of Spear & Company, Inc., is identified with commercial property, in New York City. He is a member of the Board of Managers of the New York Building Managers and Owners Association.

quencies in the matter of rents. Banks also will withhold credit unless notes are settled promptly. But only in extreme cases does the landlord resort to disposses proceedings.

This aversion to the payment of rent may also be explained, perhaps, as a holdover from the days of the Feudal System. With most people there is an inborn dislike for the landlord, which is shown in the sentiment so frequently expressed, "I don't like that man; he is my landlord."

And yet the landlord, who is so much abused, is, in nearly every instance, a man's greatest creditor and in the position to be a valuable friend. Leases aggregating many millions are closed with business firms which cannot establish a credit rating in excess of one million dollars. With most firms rent is the greatest single item of expense.

Know Your Tenants.-The first essential for any owner is knowledge of his tenants, their business, and their standing, both financial and moral. He must then educate them to use all diligence in the payment of their rent, because he, in turn, has a definite obligation to pay his operating expenses, his taxes, and his interest.

TYPES OF TENANTS

Those Who Pay Promptly. There are, of course, many persons who pay rent with promptness, just as they settle all bills when received. With them the question of rent takes care of itself. When a man of this type holds up payment of his rent, some grievance exists which should be promptly and intelligently handled. In this class is found the majority of corporations, who delegate the payment of their bills to some one person who safeguards the credit of the house.

The Man Who Hates to Part with His Money.-The second type of tenant is found in the man who has money but who hates to pay it out for the debts which he has incurred. This man must be taught immediately that rent is an obligation to be paid promptly. If this cannot be done by moral suasion, quick legal redress should be taken.

The Fault Finder.-The next type is the man who hasn't the money. As a rule he is the chronic "kicker"; he makes complaint about the elevator service, the steam, or the general

appearance of the building-a pretext for putting off the collector. Immediate action, after the minimum preliminary warning, should be taken with such a tenant or he will become your poorest and slowest payer of rent. The sooner he can understand that rent must be paid, the greater respect he will have for the landlord, and the more likely the latter will be to get his rent, for once he begins to lag, he remains always in arrears.

Seasonal Tenants.-Then we have the seasonal tenant, with a seasonal business. In certain months of the year he pays his rent promptly; at other times he is not a good payer. But he is honest and would pay regularly if he did not have his feasts and his famines-his busy seasons and dull seasons. If you have such a tenant, you will probably be obliged to take notes, in lieu of rent, payable during the next good season. In return for this courtesy, you can probably arrange for an equal amount of advance rent during the good times, thereby educating this man to provide for dull periods and thus doing him a real service. Such a tenant rarely moves. Problems of this seasonal character may appear in any class of tenants. The "Dead Beat."-Another type of tenant is the "dead beat." He is the one who issues checks without funds, who makes partial payments on account, and who is resourceful in finding excuses for non-payment, such as illness in the family and other accidents. Be careful with this tenant, for when he begins to give you part payments with a "sob-story," he is likely to move at any time, owing you many months' rent. The quicker you get rid of him the less your loss will be, and a vacancy is better than such a tenant.

The Bookkeeper.-Another very subtle and interesting case is where a bookkeeper dislikes to pay out his firm's money for rent. He feels that payment can perfectly well be held off. One cause for this delay is found in large buildings, where there are always incidental charges, such as for services like water, electricity, sprinkler, alarm, and watchmen. These small items the bookkeeper always hold for the employer to check, so the tendency is to pay the rent alone; then when these incidental charges for several months are in arrears, he does not have the courage to bring them to the

employer for approval. Such cases are very annoying to a rent-collecting agency.

COLLECTIONS DURING BUSINESS DEPRESSION

The collector of rents must be abreast of the times, because when great periods of general depression come, or when there is a local depression affecting certain lines of business, he will be faced with some very definite problems. It is in these crises that the knowledge of his tenants, acquired through intelligent personal contact during previous years, becomes of valuable assistance in keeping tenants and in the collection of rent that is in arrears. The landlord is inclined to be lenient with tenants who are behind on their rents at such times, because he knows that conditions are bad almost to the point of desperation. But unless the landlord, who is the largest creditor, keeps in close touch with his tenants, he stands a chance of losing both the back rent and his tenant as well. Also, because of poor renting conditions he may be obliged to carry a long vacancy which will further increase his loss.

Situations of this sort call for unusual remedies. In August of 1914, for instance, when the Stock Exchange closed, a large realty concern in the city of New York, in order to keep its tenants, gave free rent to all Stock Exchange brokers, who were its tenants, until the Stock Exchange reopened. In several cases free rent was given on condition that the lease would be renewed for an additional year in return for every month of free rent allowed. This plan for keeping tenants met with a great deal of success.

Saving both the Rent and the Tenant.-During the clothing strike of 1920, which lasted 18 months, spongers who sponge and shrink woolens found themselves with expensive plants and equipment to maintain, but without work. Another realty concern met the situation with a tenant of long standing, who had heretofore been reliable and prompt in paying rent, in a similar manner. After an examination of the books, which showed the tenant to be otherwise solvent, this agency accepted notes, instead of six months' rent, for one delinquent month and the next five months in advance. The payment