Sweat Equity

I come from a family who built their worth from real estate.  My grandparents started out poor, and they bought a run-down house for a song.  Before their first child was born, they poured blood, sweat and tears into renovating the house.  Then, they sold that house to move up the real estate chain, purchasing a new home across town.  This house was also renovated and sold, while two more children were added to the mix. 

By the time they bought the nicest home in the chain ten years and three houses later, there were seven children under one roof.  By then, my grandmother wished to stay awhile, and they waited to move to their next sweat equity property until my youngest aunt was out the door.  Even then, though, my sixty-year old grandparents went on to purchase and renovate four more properties over the course of a decade. 

My mother has a similar story, owning four sweat equity homes over the course of her lifetime, with another move on the horizon.  Both my grandparents and my mother were able to build their net worth by laddering their properties (among other savvy investments).  So, it's no surprise that I am willing to pour money and sweat into my own home to increase my home’s value and my net worth.

Bought the Farm

My husband Mike and I have already owned two homes, and we have completely renovated both.  Our first home was an early 20th Century farmhouse with solid bones and horrible decor.  When we walked into our nightmare of a farmhouse, the avocado green and Pepto Bismol pink rooms were more garish than I had ever thought possible.  Thankfully, I think, they were matched with orange carpeting and 1970's-issued brown and gold geometric linoleum, both of which toned down the luminous walls. 

Mike and I ripped the interior of the house to the studs, tore up the carpets and linoleum to reveal oak and pine floors, and refinished everything.  We added lighting, updated electrical, built kitchen cabinets, and etched out a new bathroom, all while retaining the charm of the early 1900’s farmhouse era.  I would like to say we stayed in this gorgeous house forever once the renovations were complete, but we moved on quickly, netting enough from sweat equity to make a down payment on a 1950’s ranch in town.

City Life

This ranch was also in desperate need of a facelift, although not as severe as the farmhouse.  We were able to buy the house cheap in a really nice neighborhood only because the bathroom, kitchen, and basement needed some modern touches.  So, Mike and I broke out the tile saw, paint, hammers, and nails once again, and we poured months and thousands of dollars into our new home.    

We recently received great news:  All of our renovations paid off!  When we refinanced to a 15-year mortgage, we had our home appraised, and our home value increased quite a bit, netting us much more than a few thousand from sweat equity.  For this reason, if I have the time, knowledge, and two working arms, I will always prefer to sweat over my own renovations.

Sweat equity can work in everyone’s favor.  Whether you are “simply” painting (it’s really not so simple, huh?) or you are demolishing and rebuilding an entire kitchen, completing some or all of the work without a contractor can save you thousands of dollars in labor. 

Of course, you should always follow local codes, hire a plumber or electrician to move anything, and ask if you are not sure how to complete any remodeling task – remember, the guys at the DIY stores love to answer questions, and they can save you a lot of headaches (and cash).

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Anonymous's picture

MoneyCone wrote:

Thu, 12/30/2010 - 17:17 Comment #: 1

The best part about sweat equity, more than the savings, are the memories! Make it into a fun project, save money, get your kids involved and create memories!

Loved the post, Christa!

Anonymous's picture

retirebyforty wrote:

Thu, 12/30/2010 - 18:15 Comment #: 2

I love your sweat equity story. I am terrible at being a handy man though. Once I have more time, I will definitely work on that. We've done painting and other simple job, but nothing complicated like ripping out flooring.
Happy New Year!!!

Christa Palm's picture

Christa Palm wrote:

Thu, 12/30/2010 - 23:57 Comment #: 3

MoneyCone, I will always have fond memories of (and fun horror stories about) renovating both houses. Even though some of my renovations aren't picture perfect, I can always share the story about the fun and horror of the project -- my favorite story is about how refinishing a pink tub turned into demolishing and re-doing the full bathroom -- that'll have to be another post later :) Have a great New Year!

Retirebyforty, no project is too difficult with a little education -- my favorite place to go for DIY knowhow is Google -- I just Google until I find instructions (that usually include video!). Good luck on your projects, and Happy New Year to you, too!

Anonymous's picture

2011 Predictions – You Will Keep All Your Resoluti wrote:

Fri, 12/31/2010 - 09:00 Comment #: 4

[...] MomVesting shares some sweat equity. [...]

Anonymous's picture

Happy New Year! | Invest It Wisely wrote:

Sun, 01/02/2011 - 01:59 Comment #: 5

[...] Sweat Equity (MomVesting) [...]

Anonymous's picture

Insurance Advisor wrote:

Mon, 01/03/2011 - 20:28 Comment #: 6

Christa, how has the declining real estate market impacted your investments and renovation projects? Maybe a topic for another post in itself...haha

Christa Palm's picture

Christa Palm wrote:

Mon, 01/03/2011 - 22:23 Comment #: 7

Insurance advisor -- thankfully, my area did not experience a huge hit in the real estate market: Small town Iowa home prices have increased at a stable rate, and the improvements we made to our homes have increased the values significantly. I should expand that into another post -- Great idea!

Anonymous's picture

Carnival of Money Stories #89 wrote:

Tue, 01/25/2011 - 00:11 Comment #: 8

[...] shares the story of how her family built its wealth with Sweat Equity posted at [...]

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