Thus at the end of the first six months the member has $3.50 to his credit, and is entitled to his share of the net earnings on that amount.

Thus his share of the earnings is steadily increased by compound interest, and if he keeps up his regular payments the shares mature in about sixteen years.

This means in most cases that a prudent tenant can become the owner of a house in sixteen years while paying no more than the rent would be.

As the active investor he becomes his own rent collector and uses the house with less need of repairs, thus dispensing with services and costs which are included in contractual rents.[13] These associations are properly made subject to supervision and examination by state officials, in the manner of that exercised over banks.

They have been favored by exempting the shares of members and the mortgages held by the associations from all state and municipal taxation.