One starts with a budget. What can you afford? This will include how much sweat equity can you contribute to lower the cost? Don't attempt unless you have the total reno cost in savings and just need to finance the purchase of the existing home.

Then one looks for the least expensive, least improved, most neglected house on a nice street in a nice neighbourhood. Preferably one with few or no foundation issues. Assume all the electrical and plumbing will have to be replaced and budget for that...what can stay is a bonus to help pay for other cost overruns.

Architect and designer first. Bank trip asap.....as I GUARANTEE you need more money than you plan or are contemplating, and it will mostly need to be cash, as banks don't lend on future value, they lend on the current.......: ) Unless you have a ton of resources UP FRONT. And the house is in a great location with schools if that is appropriate .

Run down to Town Hall or look it up on-line and find out the assessments of the other homes in the neighborhood. Your buying low…add to it the amount of money you are willing to invest in it. Where are you now in relation to the other homes?

If you like what you are discovering, make an appointment to see the house and bring your contractor with you. My guy can usually figure the sq ft price pretty quickly to give me a ball park figure of the renovation cost. (This figure is aways tempered by the unexpected surprises).

If it seems to make sense to you, make sure it makes sense to your lender. The bank may expect a good chunk for a downpayment for you to qualify for a mortgage on a house in disrepair.

If it all works, make your offer, with contingencies necessary to protect you should the inspection fail.

My husband and I have done what you want to do three or four times and it has worked out to our advantage. Just be careful to get your ducks in a row..

Have fun!

Well if you are going to live in the house, it is generally less expensive to pay for a home that is already fixed up.

There is lots of good advice so far. When you are doing a project like this there will be a multitude of opinions on what should be done to the house for renovations. Have a good idea in your head as to how you will use the home as everyone has different needs and wants. the comments about not over improving for the area are important especially if you are not planning on this being your forever home. As a contractor it is important for me to know what you want before I can price it out for you. I can see potential options for a home while others may just be able to price things out after they have plans submitted by someone else. It is important to find a pro who can help you realize your dream by giving you some options and looking past the current state of the home. Budget is key because you can easily spend a lot more money that you may have anticipated. Communication, communication, communication with all people involved from realtor to contractor to designer.

A good target house, to do a "complete overhaul", doesn't require research on the neighborhood or a passed inspection. It will look pitiful compared to the other houses in the neighborhood and, actually, a failed inspection is wonderful; a "condemned" house is even better than "wonderful". The goal is to get the house for as little as possible, fix it up, and then refinance it based on its new value.

We've done this a few times and traded up each time; going from a $65K home to a $700K one in 12 yrs. (and during a housing market crash). Our current home was 90% financed for $365 and doubled in size using $200+K in cash (& approx. $50K in sweat); now with a bank appraisal of $675K (market value approx. $700K). We're at the top 10% of homes in the area (not a preferred placing to be) but it's the most attractive so selling (in another 5-7 yrs.) shouldn't be a problem.

Right now, in CA, you can't get financing on a condemned house and you can't get a construction loan. To do what acroteria is talking about you need cash and lots of it Also you generally can't get insurance on an uninhabitable house.

With an investment property, purchased with cash, you can still almost flip them, but they need to be cosmetic fixers that are purchased as rentals. Then you can usually get insurance if they will be ready to rent in less than 60 days, That means you need to be ready to roll from the day escrow closes and you can't do anything that requires major permits.

Also, you will be competing to purchase and remodel the property, with professional remodelers and handymen, who have their subs lined up and who can do it for less than you can.

So might be an expensive and steep learning curve depending on your market conditions.

Forgot to mention, that while an experienced real estate agent can show you some distressed properties with potential in targeted areas, you have to have the vision and knowledge of the area and values to even get started. Also, an on-tap designer and remodeler.

@suzyq53

I think you're confusing diff. ideas that have been stated. There's buying a house, with bank financing, and buying a condemned house, without bank financing, for a complete reno.

My first comment, which referenced financing, was re: the former; my second comment, which referenced "condemned" was for the latter.

When a home is bought with bank financing, and reno'd with cash, the bank will entertain refinancing when the project is completed.

When a condemned home is bought without financing, banks will let the owner take out a first mortgage, that's a fraction of the appraised value, after the reno is completed.

Edit:
" it is generally less expensive to pay for a home that is already fixed up" I've never known this to be true so, maybe, the comment should be qualified by certain circumstances that might make it true.

If you are planning to do a complete overhaul on a house that you are purchasing as your primary residence, and if you need a loan to purchase the new property, and you need to rent during the remodel, and you have had to sell your prior home in order to qualify for the new mortgage and to extract cash to pay for the remodel, you might end up spending quite a bit more overall, than if you had purchased a home that was fixed up that you could occupy immediately and remodel to your taste over time.

Someone that has to ask how to flip a house doesn't have the background to do it and make money. Real life ain't TV. If you can't DIY the design, and a lot of the minor work yourself, you will lose money.

I am not interested in flipping a house

Just buy an already renovated home if you can't DIY the remodels. Skilled labor from a reputable licensed and insured contractor is the lion's share of any remodel. Which is why hiring work done will always be a money loser if you're hiring the right guys to not rip you off, and who will do quality work.

My homes were not flips. Each has been a primary residence. We move a lot.

Someone who brings design skills and previous industry relationships to the table has a significant cost advantage over someone who has to pay for design, and build, and project management. The two results may be similar, and the enjoyment of the result the same, but the financial outlays will be vastly different between a pro and an amateur.

Thank you everyone for your insightful comments. However, the question wasn't if I should do this Reno or if I shouldn't or if I should go in a different direction all together. The question was If I decide to, who my first point of contact should be after any bank or realtor.

Find a good designer with the right contractor contacts. You will undoubtedly end up spending more than market value on the end result, but if you design it well, at least you will be able to have a functional and beautiful home that reflects you.

A design-build firm is a great place to start if you don't know how to find a designer. The design-build firms have the advantage of everything "in house" and only ONE chain of command to deal with. You write a cheque to ONE company and they do it all from there. No finger point about who was supposed to do what, when and for how much.

They often have access to architects (either in-house or firms they like to work with when needed) that can be brought in if the job requires some extra mojo.

To follow up on what cancork said about a design build firm, when the inevitable surprises come up, because everyone is in one office they can nimbly come up with solutions that look good and fit your budget. We are often remodeling houses over a hundred years old and even with years of experience (decades) you still get surprises but with the contractor, designers, and project managers all under new roof solutions can be found quickly with little client hassle.

Good luck getting a design-build firm to come look at properties you haven't purchased yet. I would find a realtor who is also a designer. Then hopefully when you find a property with potential, they will know of a contractor that will meet you at the property and give you some ballpark estimates and options.

Look into a 203K rehab mortgage. Like any special loan program, there are pluses and minuses but you can get a loan for the house and renovation expenses at one time.

I would start with the realtor. If you don't find a realtor that understands that market, finding and purchasing a house for rehab will be difficult. My favorite type of house for renovation is an elderly person's house which has had the same owner for decades. Those are often solid properties without recent updates to increase the price.