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.

Learn from a mentor and see if you can provide sweat equity in the area of your choice at first to learn in the field training.

@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.