Each fixer-upper home renovation requires a unique set of skills including simple task such as cleaning and painting or light carpentry.  But many projects require more advanced skills such as plumbing, electrical work, concrete work or masonry work.  It is important to assess honestly what skills you can bring to the project and what skills have to be provided by outside contractors.

Picking the right property for a fixer-upper is an important element in such a project   This is where all comes together from the location, neighborhood and condition of the house to the skills of the owners and most important the potential value of the house after the renovation.

An ideal project should require mostly cosmetics. This can involve renewal of all surface and gardening work.  These things are not too expensive and do not require that many advanced skills.  Renovations that require more extensive work like plumbing, electrical or structural and foundation work must be carefully screened, priced out and should be surveyed carefully by experts in the field.

A thorough House Inspection is an absolute must when you buy a fixer-upper and the choice of inspector(s) is very important.  Not all inspectors are qualified to survey a property that needs extensive renovation.   You need to search for a home inspector that has construction experience and be prepared to hire specialists such as a plumber, electrician and construction firm to get get an idea about the cost of a renovation.

Juggle the Numbers

The basic financial propositions of a fixer-upper is simple.   The purchasing price of the house added to the cost of renovation should not grossly exceed the  market value of the renovated home.  So it is important that you do your homework as far as the cost of renovation and the market value of the finished house.  It is also important to leave some reserve funds because many projects come in over-budget or hidden costs show up during construction.
Another important factor is the market trend.  If the housing market is going up, renovations can be more feasible.  On the other hand, in a housing downturn renovation are often not cost-effective.

Financing

Financing of a fixer-upper renovation can be as simple as pay-as-you-go, particularly when a house is liveable upgrades can be done over time.  
If initial work is required to move into a property, money for renovation can often be added to the initial mortgage.   If renovation work is done in phases, a home equity loan or a refinanced mortgage may be the way to go, particularly when house has increased in value.   It is important to know that home equity loans have no tax benefits as mortgage loans do.

One of the most challenging part of a home renovation is the actual project management.  Lining up contractors, having them show up on time and managing your family's needs during renovation can be a huge challenge.  It is important to phase the project properly and not bite off too much at the time.  Many marriages have suffered by never-ending renovation projects that are over-budget and hopelessly delayed.