Know your own limitations

Some homes that look like diamonds in the rough aren't, because the cost of updating them would be enormous. A leaky basement or a big crack in a structural wall should send you running unless you're prepared to spend $20,000 or more on repairs. Floors that are severely uneven should also sound alarms. They could be a $15,000-plus disaster if they indicate a shifting foundation. And how about those signs of water damage to the beams in the attic? They should cross the home off your list unless you're prepared to spend $10,000 to replace the roof and beams.

In general, anything you have to hire a pro to do is likely to blow up your budget. Completely redoing an old kitchen, for example, is a quick way to blast through $15,000 or more. An old bathroom will cost $10,000 or more to bring up to date if you're putting in new plumbing and fixtures.