If you're interested in doing rehab, be sure you are making appropriate updates and renovations that are in line with other updated like-kind properties in the area. If you choose to over-improve, make sure you are making the decision based upon your lifestyle and not necessarily because you intend to recoup your investment when/if you resell.
If you are not planning to do the work yourself and you've not done a renovation project before, hire a licenced and bonded contractor with references. To Eric and Tom's points - budgets tend to grow - but you want a reputable contractor that has experience doing the work. I suggest getting as many bids as possible. Check their references.
Best of luck in your search!
I agree with Tom. In order to look out for my client's best interest I discuss with them what they might expect to incur for costs and time if everything goes perfectly. Then I tell them to multiply that number by 1.5 or 2 because it much of it probably will not go perfectly - especially in an older home. There are just too many question marks about plumbing, electrical, etc. that you can't see that can end up costing you a lot of money. If my client has not had experience redoing something small like a bathroom before or something larger like a kitchen and they tell me they want to rehab a whole home, I might counsel them away from it.
Do you have any experience with rehabbing homes? If you do, then great! There are plenty of opportunities for you out there. You will definitely get the most bang for your buck if you can keep your costs down and keep mistakes to a minimum. If you don't have the experience, beware!
A good agent should be able to help you determine what is a project that is worth taking on and what is not. If you suspect your agent is only thinking about his/her bottom line then you should probably find another agent. Make sure to check references before you decide to sign on with any agent. I am shocked by the number of people that I have asked how they decided on their agent and they said it was someone they met at an open house that seemed nice without knowing their experience level or checking references. Many of them wonder why they had a bad real estate experience!
Best of luck to you.
Your Real Friend in Chicago Real Estate
There's nothing wrong with initiating a search for a property to rehab so long as you go into the project with your eyes wide open. Rehabs take a lot of work that may or may not involve an architect, permits, finances and/or financing, contractors, logistical ability, and patience. Sorry if you feel some realtors might steer you away from undertaking a rehab because you sense they want you spend more. Many real estate professionals with whom I work will seek to help you find the best house specific to your search parameters. By the same token I know of realtors, myself included, who will seek to counsel consumers interested in rehabbing a home or who want to build new to take a hard-eyed approach so as to diminish the romantic notion and replace it with a pragmatic one. Simply stated, it's not an easy process. It will take longer and cost more than you plan. But if you go into it with your eyes wide open you have the opportunity to build to your tastes and wishes.
Best of luck with this endeavor.
The Real Estate Lounge Chicago with @properties chicago
NO realtor should be steering you in any way whatsoever!!!! It's against the law!!!!!
If you think you are being steered in a wrong direction, get a new realtor.
Also, if commission is your realtor's number one priority, they are not looking out for you. Get an agent you feel comfortable with.
Another suggestion: if you do proceed get some input from one or more Realtors on the sort of rehab that makes sense, both financially and liveability-wise. Some of them (I'm a Realtor, but that honestly isn't my strength) are great at making suggestions about, for instance, which walls to remove or resizing rooms or moving doorways. Of course, you need to make sure that, structurally, the house can tolerate what you want to do (for instance, you probably don't want to remove a load-bearing wall). But it'll be useful advice to consider.
Finally, to attempt to explain the comment from one Realtor: "I don't "steer" my clients anywhere. I always do what my client asks me to do. If they want a rehab, we look at rehabs. If they want a move in ready home, we look for move in ready homes. NO realtor should be steering you in any way whatsoever!!!! It's against the law!!!!!" You inadvertently used a code word--steer--that's a no-no when it comes to equal housing. Just showing someone of race" x" properties in which most residents are of the same race is steering. Or if someone says, "I only want to live with people of "y" religion," and the Realtor complies, that's steering. Like I say, it's a loaded word. But, no, there's absolutely nothing wrong with you asking how we "steer" our clients who say they want to rehab. The response from most Realtors should be: "I'll tell you the pros and cons. Then you decide." Hint: You can sometimes get more of a response on questions like that if you ask: "How would you advice your brother if he asked you about rehabs?"
Hope that helps.