It's a "Handyman's dream!" It has "a lot of potential!" It's thousands less than you're ready to spend and has all the room you need! Should you buy a "fixer-upper"? Only if you know exactly what you’re getting into.

Some see fixer-upper properties as easy money, ripe for the flipping - that is, you buy it, do a little work on it in your spare time, and then resell quickly for a large profit. Usually, this just isn't the case.

Now, by planning ahead and sticking to your plan, profits can be had buying "distressed" properties at less than market value, making some improvements and repairs, and then reselling. And many first time buyers who intend to live in the house they're fixing up find this the best option for them. It’s less risky buying a fixer-upper when you can live in the house while fixing it. Nothing makes a new house seem more like home than putting a lot of work into making it just the kind of home you want. And by the way, if you live in the house for at least 24 months you may be able to avoid paying regular income taxes on your profits.

The most important thing to know before making the decision to buy a distressed property is what needs to be fixed. (What you want to be different - kitchen islands, brass fixtures, crown molding, put these on a spearate list. Go into a decision to buy knowing what needs to be done.)

If you're spending money improving a home with the idea of selling it later, try spending your money on things buyers will easily be able to see. A new paint job and removing overgrown landscaping cost little but have an instant impact on your curb appeal.

In general, houses that have only cosmetic problems like peeling paint, a trashy yard, bad carpet or wallpaper are the best bet. These kinds of things bring the price way down, as you'll find to your delight -- and help bring it way up when you've fixed them. And you'll be even more delighted.

Cosmetic repairs and cleaning are fairly easy and inexpensive. It virtually always gives gives a good return on investment, particularly when you can do the work yourself. Going beyond the surface stuff, kitchen and bathroom remodeling usually pays a nice return. Don’t be afraid of buying a fixer-upper in need of this kind of repair. But draw the line at properties with structural damage, or a floor plan that requires major work. These aren't quick "fixer uppers" or houses you want to live in while you're trying to repair them.  

Always have an inspection for hidden damage performed by a home inspector or construction professional before buying a fixer-upper. Make satisfactory repairs a condition of purchase in any contract you sign. Then always try to get the seller to pay for all or part of the cost of needed repairs uncovered by the inspection. Often, sellers will be willing to lower the sales price to sell the home "as is" instead of paying for the repairs.

Don’t overpay. Especially if you plan to resell quickly, paying too much up front can scuttle your plans for quick profit. Research the market for reselling, and have an exit strategy for reselling the house in place before you even make the first offer.