Could buying a fixer-upper be the right choice for you? Here are some tips on finding a great fixer-upper and making it your dream home.

Find the right fixer-upper.
Not always an easy task, as most “fixer-uppers” are beyond fixing up. One common resource for finding valuable fixer-uppers is the foreclosure market. Check your local paper and the Web sites of banks or government agencies. You might, however, find that it is easiest to hire a real estate agent to help you avoid homes that need major repairs or are poor home buys.

Get a Home inspection.
Home inspections are always important, but they are especially critical if you are purchasing a fixer-upper home. Before deciding whether or not to make an offer, hire an inspector and make sure he or she thoroughly inspects the ceilings, roof, electrical system, foundation and walls. For many people, this can be a turning point. If there are major structural problems, you are in for hugely expensive repairs. If, however, the house needs work but there are no structural problems, it is a good bet.

Draw up a budget.
Another step that is important before you make an offer is budgeting. Interview potential contractors and ask them to give you renovation estimates in writing. You will need to add 10% to 40% to your budget to account for unforeseen bumps in the road and last-minute realizations. For instance, once you renovate the master bathroom, it may become clear how dire the guest bathroom is.

Make an offer.
A good way to do this is to obtain the sale prices of three homes in the area that are of similar style and size and that sold in the last 90 days. Figure in the cost of your renovations, including your time and actual costs, and also the popularity of the neighborhood. This will give you a good idea of what your potential home might be worth after renovations. From here, you can decide what it is worth to you before renovations.

Plan ahead.
At some point after you make an offer and it is accepted, you will need to decide who is going to do what on your list of renovations. Do you have the time and expertise to knock down walls or lay tile? It’s possible that you and your family can do smaller jobs, like removing carpeting or wallpaper, but you decide you need experts to do bigger items. In the end, if you decide to perform the work yourself, make sure you obtain the necessary permits.

Above all, remember that a fixer-upper is a lot of work. But, you may find that it is more than worth it when you are left with the home of your dreams.