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Sweat Equity: What It Is and Why You Should Care

by KIMBERLY KELLY 04/08/2024

When you start talking about what you can do to improve your property value, you may start seeing dollar signs. As the old saying goes, it takes money to make money. However, it doesn't have to be this way regarding your home.

Did you know you can boost your home's value simply by putting in some hard work and sweat equity?

What is Sweat Equity?

Sweat equity is defined as the work that a homeowner or investor puts into their property that will ultimately increase the home's value. You can calculate the sweat equity of any project by determining how much you can sell your property for now versus how much it would have sold for with those improvements.

How Can Sweat Equity Improve Your Property Value?

Sweat equity helps you improve your property value in several ways:

  • Pouring sweat equity into a chosen project — such as a kitchen renovation or a basement refinishing — makes your home more appealing to prospective buyers. 
  • Sweat equity reduces the overall cost of your project because you are not paying for additional labor. Ultimately, that allows you to enjoy a bigger return on your investment.

Should You DIY Your Next Project or Hire it Out?

Earning some sweat equity probably sounds pretty appealing, and it may make sense for you to take on the job yourself depending on the project. When deciding whether you should DIY your next home improvement project or hire a contractor, consider the following:

  • Your experience and skills. You will want to be adequately prepared to get the job done right.
  • Your current availability. You will need the time to complete the project.
  • Your budget. The amount of money that you have allocated for the project will determine whether you should DIY or not.

When you have the time, inclination and skill set, it's better to save your cash and attempt to complete your next home improvement project on your own. Not only will this lower the total cost of the project because you will not be paying for labor, but it also will increase the return on your investment. Sweat equity tends to pay off in big ways, so give it a try next time!

About the Author
Author

KIMBERLY KELLY

Kimberly Kelly decided to get her real estate license when she moved to South Orange with her family and fell in love with the classic, period homes of the area. Having worked in the city for many years for LexisNexis, Kim understands the appeal of an easy commute to NYC. That’s why she specializes in towns along the Mid-Town Direct train line, offering welcoming communities, good schools, and space to grow.

Very active in her children’s school PTA, Kim knows firsthand how important a school system is to parents looking to make the move to the ‘burbs. She volunteers with fairs, fundraising, and other activities that bolster support for education. Kim also believes involvement in the greater community enriches us all and has sat on various boards & associations throughout the years.  

Kim Kelly has lived many places throughout her life, from Pennsylvania to Oregon, but has found New Jersey to be the ideal place to raise her family and put down roots. She loves nothing more than helping others discover their special place as well. Kim’s extensive knowledge of the area, combined with her sense of community, offers clients a personalized guide to finding the right house - and town - to call home.