Cohousing-L Mailing List: Re: Sweat Equity

[Rob Sandelin (robsan]

One caution about sweat equity.  Many lending institutions are very 
fussy about who does what.  If you are planning to do sweat equity on 
something the bank has a stake in, be sure to consult with them before 
you base any financial plans on using sweat equity to save money.

Some contractors are amenable to having people do work on their own 
places, as long as it doesn't screw up the schedule.  In this situation 
the contractor takes the "draw" a payment the bank gives him or her at 
regular intervals to do stages of work, and then kicks back cash to you 
for the work you do.  Obviously this requires a fairly high level of 
trust and cooperation with the contractor.  My neighbor did this and 
built his own deck, did all the trim and flooring work in his house. He 
then used the cash the contractor paid him (which actually was the 
owners construction loan) and used it to buy down his mortgage when the 
construction loan converted into a mortgage.

Sharingwood is planning on building a fair amount of our commonhouse, 
which is internally financed, by using sweat equity for doing the roof, 
sheet rock, siding, flooring, trim and cabinetry work.