Many homes for sale need some work to look their best, but some need a full-fledged overhaul. If you're willing to take on this challenge, you may be able to convert a decrepit old property into a beautiful residence, reaping the rewards of its updated design and vastly increased value.

Of course, you could also make such a purchase and discover that you've bought a complete money pit. Before you commit to a fixer-upper, you'll want to make sure the property will complement your budget and lifestyle.

Buyers may hope to turn the home into their primary residence, or they may want to purchase it as an investment. If you are looking for a home to live in, make sure it can meet the criteria in your home search. The home design site Freshome says you should be willing to live in an older home, or at least an old home that has been updated with newer features.

You'll also want to decide how much of the repair work you want to do on your own. G.M. Filisko, writing for the National Association of Realtors' home improvement site HouseLogic, says it is better to leave major projects such as plumbing and electrical upgrades to the professionals unless you are skilled in these areas. However, you can still do a great deal of other work, such as ripping out old wallpaper and choosing supplies for the job.

If you want to do many of the renovations on your own, you should expect to commit a lot of time to the project. It will take much longer to complete a job on your own than it would to hire a professional. During that time, you'll have to stay with friends or relatives, get a hotel room, or deal with the inconvenience of living in a home that isn't move-in ready.

Set a budget for yourself. A fixer-upper won't cost nearly as much as a turnkey home, but you'll have to be prepared to pony up the money for repairs. Make sure you can finance the down payment, closing costs, and repairs while leaving a comfortable cushion in your savings account. The Federal Housing Administration's 203(k) program may make the purchase easier, since it will combine the purchase and repair costs in your mortgage. Jeffrey Rothfeder, writing for This Old House, says financing the repairs with credit cards can be a good option for homes that only require modest renovations.

Calculate the home's anticipated value as well as the estimated cost of repairs. Find a few comparable properties in good condition and determine their average value. By subtracting the anticipated repair expenses from the fair market value, you can determine the maximum amount you should be willing to offer for the property.

Fixer-uppers often come with unforeseen problems, so you should budget more for these potential issues. Filisko recommends adding 10 to 20 percent to your expected budget and determining whether it is still affordable.

Determine the scope of the repairs you'll need to complete. Fraser Sherman, writing for SFGate, says older homes tend to carry a greater risk of substantial problems than younger properties. Hiring a home inspector can let you know what repairs are needed, while getting estimates from contractors will help you determine the amount of money you'll need to fix up the home.

Some of the required work, such as repairing a foundation or replacing outdated wiring, will help bring the home up to its fair market value. Rothfeder says it isn't worth it to purchase such a property if the cost of the repairs is more than the difference between the purchase price and the fair market value.

Work such as replacing drywall or refinishing a floor is comparatively inexpensive and has a good return on investment. You can often complete this work as part of a larger upgrade.

Be careful about raising the value of the home too much. If your new home becomes the most expensive one in the neighborhood, it can be much more difficult to sell it in the future.

Repairs often come with a number of unexpected costs and delays, so you should be prepared for these expenses. Filisko says some projects will require you to get a permit, and that you should make sure you have secured one before starting work. Ilona Bray, writing for the legal site Nolo, says other extra costs include dining out during a kitchen renovation and paying interest on credit cards you are charging for improvements.

Freshome recommends using quality materials and services rather than cutting corners, which can come back to haunt you at a later date. You should also be willing to work closely with any designers or other professionals you hire.