What is Sweat Equity?
Sweat equity isn’t only limited to homeowners engaging in DIY projects to improve their properties. Any business or enterprise that improves a building’s value generates sweat equity. However, residential real estate is where the term “sweat equity” is commonly applied. Simple low-cost but high-effort home improvement projects can often create a great deal of sweat equity that can actually be quantified.
According to SparkRental:
“Adding value directly to the property will immediately build equity in a home. According to the research by Remodeling Magazine, cosmetic updating, rather than renovating, usually offers the highest rate of return. Rather than gutting an entire kitchen, which only adds an average of 51% of its cost to the value of a home, simply updating fixtures and appliances brings an 81% return.”
Equity real estate investing earns a return through rental income paid by tenants or capital gains from selling the property.
In most traditional real estate scenarios, the investor is responsible for the home’s repairs and upkeep, leaving you, as the investor, responsible for footing the bill for the necessary repairs, not to mention the cost of your time and physical effort.
One of the main advantages of Equity & Help is that the family is responsible for putting in the sweat equity.
That being said, there are several methods that property managers typically implement to help raise the equity on their rental units. Still, the most common is to improve the condition of the home through TLC or sweat equity.
Here are the top four fixes that our families make, that will garner you the best return: