By Heather Morse and Karen Sherman, Contributors

Pinch those pennies! File photo.

As a realtor, I encounter more and more buyers wanting to flip or renovate houses, and I’d like to thank Home and Garden Television for that. I’m a huge advocate of buyers who want to renovate a home. Personally and professionally I think you have the potential to gain major equity, the home of your dreams and some amazing memories along the way. But what you don’t see in all those beautiful before and after pictures is the amount of upfront cash needed to make those dreams come true. This is especially hard for today’s average home buyer. Many banks require 5–20 percent cash down of the overall cost of the project, which includes the purchase price plus the estimated cost of repairs. This means for a home listed at $100,000 that needs $100,000 worth of work, the buyer needs to bring $10,000–$40,000 to closing, not including closing costs.

Money aside, those interested in a fixer upper may encounter another challenge, depending on what kind of loan they qualify for. While a buyer can be preapproved for a $200,000 loan, this might be a Rural Development, Veterans Administration or Federal Housing Administration loan. These programs can be very advantageous, but homes that need a lot of work are not eligible for those types of programs. Make sure when talking to your lender you know what you can purchase with your loan.

That being said, if you are able to purchase a fixer upper I would like to offer you some advice.

First of all—and most important, when estimating your costs, double it. You will never be sorry that you spent less than you planned for, but you will always spend more than your initial estimation. There is always more to a project than meets the eye, and when (not if) you hit a costly speed bump you’ll be glad to have that overestimation to protect you.

Know when to get a professional. Doing the work yourself can be an easy way to cut construction costs, but there are certain times or areas of expertise that even getting just the opinion of a professional can count for an awful lot, especially where safety is concerned. While the cost of a professional can be a bit overwhelming, in the end you’ll sleep better knowing your house is safe.

High quality products lead to high quality homes. Can you get windows for $200 a piece? Sure! Will they keep the cold out? No. Can you put in pink foam insulation, quick and cheap? Yup! Is it as energy efficient as spray foam? Nope. My husband and I learned pretty quickly that quality is key. Not only will you save time and money by not having to replace inferior products, but you will add value to your home in the long run. Quality over speed or price, every single time.

Make sure you have a lot of support. This is especially important if you plan to live in the house while it’s under construction. Without notice you can find yourself without plumbing, heat, electricity or even a roof. I learned first-hand just how indispensable a grill can be when your kitchen doesn’t currently exist.

But the most important part of any home renovation is to know, financially, what you’ll walk away with in the end. Before purchasing a property, you need to know that you could turn around and sell the house for as much as, if not more than, the total price you paid, including any updates. You never want to spend more on the home than you could get back should you decide to sell down the road. This is where your realtor comes in handy. Ask for a pricing analysis after you receive your contractor quotes. If you are not making a profit on the home in the long run you might want to reconsider your offer or continue your search.

I hope this helped some of you start your home buying process. If you ever have any questions, don’t hesitate to ask! Send an email.