Beware of renovations

Be cautious of homes that have already gone through major renovations. You have no assurance that the jobs were done properly. And even if they were, you'll probably wind up paying top dollar for the property.

Instead, focus on homes that don't need major work but can be dramatically improved with cosmetic touches. A true diamond in the rough needs only fresh paint, new doors and tasteful landscaping to make its exterior look substantially better. When it comes to kitchens or bathrooms, the ideal diamond in the rough needs only new tiling, a new countertop, new cupboard handles and a tasteful paint job, not structural work.