You know the saying “pouring blood, sweat and tears” into a project? Well, this type of non-financial effort and toil someone puts into a venture is called sweat equity. In a real-estate context, sweat equity refers to the time you spend sprucing up the property you may be selling to maximise profits from scrubbing kitchen floors to dusting cobwebs and fixing loose screws.
For example…
Let’s say Arnie and Ally started a civil engineering consultancy that provides services like independent finite element analysis for their clients. Instead of paying money to advertise their services, they rely on spreading the word about their business through family and friends and encouraging client referrals. If they build their client base and therefore their business this way, Arnie and Ally have invested sweat equity into their business.
