Example of financial history of real estate. Land 89 feet by 99 feet on south corner of 16th and Laurence Streets, Denver, bought on tax title many years ago for $500. Leased 1890 for $14,000 ground rent net per annum for 99 years, or 5% on $280,000 = $3,150 per front foot. Nine-story and basement slow-burning building erected 1890, costing $325,000. Gross rents 1894, $35,200; net rents about $17,500, less ground rent $14,000, leaves $3,500, or 1% net on cost of building. Leasehold mortgaged for about $75,000; rents dropped, building surrendered to mortgagee and then to groundowner, who acquired thus a property now renting well and worth - land and building - about $300,000 (not $600,000, as at one time estimated), for an original outlay of $500.
That land, even of the highest type and in the largest cities, is a slow asset, is due to a number of causes, among them being the fact that land is not easily passed from hand to hand as are stocks and bonds, land involves personal or directly deputed management, where stocks and bonds do not, there is no Exchange with daily quotations giving the values of land, as with stocks and bonds; and finally the value of land is influenced by many complex changing factors, whose effects are differently estimated by different people. Because land is a slow asset, convertibility, or certainty and speed in selling it, produces a high premium for the best property by lowering its capitalization rate.