I also take a small equity stake in the house in exchange for the sweat equity of running the rehab.

Another local investor I worked with took two 2-bed, 1.5-bath units in a Raytown duplex from $1,100 market rent to $1,500 each after investing $25,000 (and sweat equity) in updates, resulting in an annual income increase of $9,600.

@Scott McMahan $15k and a whole lotta sweat ;) I did all the electrical, flooring, painting, finish work and the cabinet installation myself.

No sweat Carlos.

And, for those people who have more time than money, they can put in sweat equity into directly owned real estate.

Yes, as a newbie, dialing and driving for dollars, it helps keeping me inspired to put in more sweat equity.

Only a suggestion:~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Maybe have mentees work for you 40 to 80 hours within a year ( for free )Help with demo or cleaning things up before actual rehab takes place ( non skill work -> A little sweat equity for your training )Successful mentees maybe agree to pay forward to other biggerpockets members within 5 years( paying forward training / newly obtain knowledge )Required reading materials Successful mentees agree to donate 1 – 2 % of their profits to biggerpocket or your charity for the next 2 two yearsMaybe successful mentees to run wholesale or other deals past there mentor 1st before contacting other investors ( 2 – 3 year agreement )Again only a few suggestions versus being negative toward the ideal

Either they get cold feet and don't get the first, or have bad enough experience on the first that they never want to deal with the 2nd.So, my advice is not to sweat the small stuff.

For my situation and market, I knew I'd have to build sweat equity to cash flow and make any money, considering that my investment is 100% bank financed.

The credit belongs to the man who is actually in the arena, whose face in marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming…; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.”Theodore Roosevelt (From speech titled: The Man in the Arena: Citizenship in a Republic)