What does 'sweat equity' refer to?

Sweat equity refers to the value that an owner adds to a property through their own physical labor and effort, rather than through financial investment. This can include activities such as renovating, repairing, or maintaining a property. By investing time and labor, an individual can enhance the property's market value, making it a form of equity that reflects their contributions beyond just monetary investment.

In contrast, options that involve strictly financial aspects, such as investment in financial capital, profit from resale of properties, or reduced tax liabilities, do not capture the concept of sweat equity. Sweat equity highlights the personal investment of effort and time, which distinguishes it from more traditional concepts of property value.