Investment financing– Calculating the “Internal Price of Return”

By John Sage Developer

Let’s discuss how we work out the internal rate of return.

Presume:

  • we earn $1,000 monthly in rent.
  • we pay prices for rental management,prices and taxes of $100 monthly.
  • these costs are uniformly topped the one year of our financial investment.
  • we need a minimal return of 6% from our investments

We for that reason receive a net $900 monthly. The first $900,which is gotten at the end of the first month,is much more useful to us than the last $900,gotten at the end of the year.

We can determine $895.52 is today Value of the first $900 settlement,gotten after one month.

This is called the “net existing worth” because it is “net” of business prices.

The figure of $900 discounted by our minimum return of 6% per year,paid monthly,amounts to $895.52 if paid after one month.The $900 gotten in one month,is thought about the comparable to receiving $895.52 today,based upon a minimum called for return of 6%.

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After one year,when we receive our twelfth settlement of $900 at the end of one year,at 6% the Internet Present Value is $847.71.

With 6% the benchmark price of return,the financier will be neutral about receiving either $847.71 today or waiting a year to receive $900.

If we build up all the settlements of $900 monthly,for one year but discount each settlement according to when the month-to-month settlement is gotten,the present worth of all the 12 month-to-month settlements add to $10,457.03. This amount represents what we are happy to accept today as opposed to waiting to receive $900 every month for one year,assuming a price cut price of 6% on our loan.

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The Issues Affecting Licensed Plumbers and Plumbing Contractors

We had pending legislation back in 2013 in Washington State that would have stopped false advertising of plumbing services to the consumer by those that were not licensed but… we never got it passed. The reason it failed was that nobody but the cheaters had any interest in the bill.

Lack of effective plumber license enforcement in Washington State is transforming a skilled licensed trade into a commercial con game costing consumers and skilled craftsmen dearly.

The Issues Affecting Licensed Plumbers and Plumbing Contractors:

1. Unlicensed Plumbers – ineffective enforcement of plumber licensing

2. Fake Plumbing Companies – General Contractors Advertising Plumbing Services

3. The Cost of Advertising – Is incredibly high due to unfair competition from the unlicensed

4. Lack of Consumer Awareness – They don’t know that real plumbers are a licensed trade. (Drain cleaners are not plumbers)

5. Other trades wishing to perform plumbing services – i.e. Builders,General Contractors and the HVAC trades

The plumbing trade is a regulated industry in Washington State. All plumbing work must be performed by those with a certificate of experience; in other words – a license. Over the years there can been a concerted effort by those not in the plumbing trade to violate the law that restricts who may engage in the trade. The attack on the plumber and the plumbing contractor has come from multiple directions.

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There is not one enemy of the licensed plumber,but many. The most significant root cause of the plumber license losing credibility and value over the years is the passivity and inattention of the licensed plumber. As a rule,once we have the license in our hand we don’t think much about it other than to complain about the renewal fees or the imposition of the continuing education requirement.

A plumber license represents years of study,certified training and official permission to engage in a regulated profession. The dictionary defines license as “a permission granted by competent authority to engage in a business or occupation or in an activity otherwise unlawful”. A license excludes others by law.

If enforcement of a law is weak or ineffective – nobody will obey the law.

Today the plumbing industry is under attack from those that wish to be engaged in the business of plumbing without a license. The sad fact is that there hasn’t been much resistance from those of us that are most affected i.e. licensed plumbers,plumbing contractors and homeowners. The plumbing industry has been invaded by anybody that wants to represent themselves as plumbers without the license because nobody has had a keen interest in the enforcement of plumber licensing.

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Who is violating licensing laws? Answer: Anybody who wants to…

The following trades and businesses all advertise plumbing services today – effectively violation of existing law:

1. Rooter companies with no licensed plumbers or only a token plumber

2. General contractors advertising plumbing services

3. Plumber trainees that abandon their training and advertise as contractors

4. Handymen with or without contractor registration

5. Fraudulent website plumbing companies with fake registrations

6. HVAC companies advertising water heater sales and installations

7. Water heater companies advertising installation of water heaters

8. Hardware stores offering water heater installations

9. Building maintenance service companies providing plumbing repairs.

10. Retail Stores – Home Depot,Lowe’s

11. Marketing Companies with fake websites selling leads

12. Third Party Referral Services that promote plumbing businesses with no licenses

13. Website re-sellers

14. Amazon is now selling plumbing services on their website (2016)

It is a long list…

As a licensed plumber for over thirty five years,I have to admit that I had no idea how easily my license could become a worthless piece of paper until I saw my phone traffic drop off and customers demanding that we match quotes from unlicensed competitors. I didn’t realize that the value of a license is based solely upon what others think it to be. It’s like money. Money is just a piece of paper with ink on it. It only has value if you and I agree that it has some representative value. A couple of hundred years ago a dollar was a day’s wages. Today a dollar might buy you a day-old doughnut. That dollar bill is only worth what we are willing to trade it for. My father described Italians during the Second World War hauling lira in wheelbarrows to exchange at the bank for a few US dollars.

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My fear today is that our plumber licenses will be worthless soon and we won’t even notice until it is too late. The homeowners don’t know that plumbers need licenses so the license is worth nothing to them. The rooter companies advertise plumbing with a contractor registration as cover (anybody can get a contractor registration) – the public assumes a contractor registration is a license. They don’t know the difference because the rooter companies,and others,have aggressively been substituting “plumbing technicians” instead of plumbers for years.

So what is the solution?

Well,I don’t know. It would help if the consumer knew that any plumber they hired needed to have a license in their pocket. It would also be helpful if there was a local business directory that wasn’t full of unlicensed plumbing advertisements.

Reasons Why Homeowners Need To Call In Emergency Plumbers

When owning a house,there are numerous maintenance tasks to be accomplished to ensure its safety. However,there are cases when these issues may be experienced during unexpected times. So,the best way is to have access with emergency services such as a 24-hour emergency plumber. Some homeowners state some of the reasons why you need such experts.

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Water leaks

One of the main reasons why homeowners need to opt for the services of a 24-hour emergency plumber is to get rid of water leaks. Of course,this issue can be an easy task to deal with. However,the dripping sound can definitely wake you up in the middle of the night which can affect your rest and cause irritation and anxiety. Apart from these issues,water leaks can also cause expensive problems. For one,it can increase your water bills. Next,in case these leaks are not prevented it can destroy some of your fixtures most especially wooden items. And,leaks can also cause accidents when neglected.

Drainage problems

The next reason why homeowners need to call a 24-hour emergency plumber is to eliminate drainage problems. Like water leaks,clogged drainage can cause serious damages in your house. Not to mention,clogged drainage can be a good breeding ground for viruses and bacteria which can cause dreadful diseases. Apart from that,clogged drainage can also affect cleanliness of your homes.

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Busted pipes

Another reason homeowners need to call in emergency plumbers is to prevent busted pipes. Most pipes are installed during the construction of the house since it is placed between walls. Therefore,busted pipes can affect the credibility of your house. So,mush as possible,this problem must be accommodated immediately and properly.

Damaged water heater

Damaged water heater is also a common problem homeowners may experience. Fortunately,24-hour emergency plumbers can deal with this issue easily. This can be achieved since these experts have the right tools. Plus,they have vast experience in dealing with such issues to ensure that homeowners have functional fixtures in their homes.

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Gas leaks

Finally,homeowners also need to call in emergency plumbers in case they encounter unexpected gas leaks. Other than causing serious damages to your health,gas leaks can also cause huge fires which may burn your house and other nearby structures.

Knowing all these reasons can help homeowners make sure that their houses are safe and reliable which can provide them with safety and comfort.