Sweet Sweat Equity

When I first learned, from my mentor and friend Larry Rosenberg, how I could actually make a 50%, 60%, 70% and even 100% return on my money, I was blown away because I knew exactly what those kind of returns could do to a small amount of money over time. And believe me back then, a small amount of money was all I had.

I remember vividly the first dirt bag property I bought.  It was a little house that was ugly on the outside and a mess on the inside. But this little ugly and messy house didn’t really need anything more than a major clean up, new carpet and a fresh coat of paint inside and out. The problem was I used almost all of my cash for the down payment.  So, I knew I couldn’t afford what contractors wanted to charge for the work and the materials that were needed to turn this dirt bag property into a beautiful cottage.

So what did that leave me? Sure, I probably could have borrowed enough to cover the contractor’s bids from relatives, friends or a bank but that would cut into my overall profits on the deal. So what did I do?  I just rolled up my sleeves and went to work.  Yes, it was some dirty, hard work but wow did it ever pay off!

I’m not a professional painter and I really didn’t have experience laying carpet but I quickly figured it out.  I can’t say that it was fun but when the project was done and I looked at that dolled up house it gave me quite a bit of satisfaction and a huge a sense of accomplishment.  But I also must say that my satisfaction soared to new heights when I sold the doll house for a big fat return on my investment and that, my friends, is what your own sweat efforts, or ‘sweat equity’, is all about. Wow. Can it ever pay some very handsome returns! And don’t ever forget how those returns of 50, 60 and even 100% can turn a small amount of money into millions over time.

I will admit that a bit later in my investing career, as things were speeding up, I finally got to the point when I figured that my time spent doing all that physical work was robbing me of time that could be much better spent with much larger rewards.  What I mean is that I realized at that point I could make more money by spending more time finding good deals and getting others to do the physical work, than doing the work myself. I could put in more time to make more offers, negotiate more deals and do the paper work needed to figure out what deals to buy and how to finance them. I traded sweat effort for brain effort.

This mental part really is also sweat equity. It’s actually the brain sweat that will give you the biggest returns on your money.  Both physical and mental sweat equity are critical and necessary and you can do both. You need to get to the right point in your growth so you can delegate the physical jobs to speed up your efforts and really grow those returns!