Sweat Equity

Written by Sierra Rein
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For those who have never heard of the concept of sweat equity, read on. You'll gain a special insight into an option few future home owners consider. However, those who take the plunge into this exciting venture reap a lot of happy rewards!

Everyone enjoys having equity for their home. Sweat equity occurs when part ownership is given to one who puts their own hard work, usually manual labor, into the creation of the thing in question. This term can be found in business conversations and amongst re-furnishers of antiques in addition to home building companies.

Examples of Sweat Equity in Practical Terms

So, imagine someone has an old 1968 Mustang convertible that is old and in need of repair. As is, the car can be sold for $5,000. However, if the owner foregoes hiring an expensive body repairman and instead buys new paint, engine parts, and that one missing tire for $2,000 and does the repair work himself, he saves a lot of money. Combine that with the fact that he can now sell the car for $16,000, and he now has a "sweat equity" amounting to $9,000.

The same concept applies if you want to build your own home. Of course, other considerations such as land ownership, the choice of style and layout, and the legal certification of your plans also come into play. However, there are companies who can help you with owner builder construction opportunities and lead you in the right direction.


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