While most people are looking for turnkey homes, many buyers are seeking a space they can renovate and make their own. This is due to customization, and it provides a better opportunity to increase property value when you are ready to sell.

That being said, not every fixer-upper is worth buying, regardless of how appealing it appears. If you’re not careful, what could have been your dream home could turn into an endless money pit. Here are a few crucial things to keep in mind if you’re considering buying a fixer-upper home

1. Have a floor plan in mind

Know the type of floor plan you want. If you prefer a closed floor plan, an older home is a great, affordable option given its popularity before the open-concept boom in the 1990s. If you want to renovate the space into an open concept, ensure you can structurally remove the walls. During inspection, if you notice that those walls aren’t load-bearing, it will cost a lot of money to try to support the roof. Enter the attic and inspect the direction of the ceiling joists. If the joists run perpendicular to the wall, it’s likely load-bearing. If you’re unsure, it’s a good idea to contact a contractor for a professional assessment.

2. Check for foundation issues

Cracks in a house’s foundation can lead to significant issues, including structural instability, water damage, mold growth, and even pest infestations. It’s also costly to fix. Extensive repairs can easily exceed $20,000. When inspecting the house, look for cracks running up the wall. This could lead to a foundation crack. Additionally, if there’s a crack in the slab, that’s a major red flag that could be a structural issue. This can lead to water damage and mold growth, as well as problems affecting the entire structure, such as misaligned doors or even the house tilting completely.

3. Inquire about the roof

One of the first things you should ask about is the roof. If the house is 25 years old and has no history of roof repairs or replacements, that’s a red flag. Some sellers hide ceiling leaks stemming from roof issues by painting over them. Check for staining on the plywood under the roof. If there is, there’s most likely a potential roof leak.

4. Check for termite/pest damage

If there is severe termite or pest damage, there’s a good chance you will have to replace entire sections of the structure, which can add up in cost depending on how bad the damage is.

Signs to look out for include maze-like patterns in furniture, surface damage such as holes in drywall, piles of insect wings, or swollen floors and ceilings.

5. Check for mold/asbestos

Asbestos is prevalent in older homes built before the 1980s. If your home contains asbestos, it can cause numerous health issues for those living there. Removal requires a professional, whose cost can vary depending on how much of it they’re able to locate throughout the house. Check for popcorn ceilings, insulation throughout the house, and vinyl floor tiles, as these materials can harbor asbestos.

Similarly, mold can also cause health issues and is expensive to remove, especially if it’s widespread and tied to leaks. If the house has an earthy, musty, or damp smell, this is a good indication that it may have a mold issue. When you’re touring the house, feel the walls, floors, and cabinetry for dampness. High humidity can create an environment where mold thrives; therefore, it’s essential to check for dampness.

6. Buy in an area with growth potential

It’s a good idea to prioritize undervalued properties in neighborhoods showing signs of growth. This is easier said than done. You have to do your market research and study the neighborhood’s growth trends and upcoming developments. New infrastructure, such as shopping centers and parks, can significantly increase property values.

A growing population is also a strong sign that the neighborhood is becoming more popular. Research the school district your property is in. Even if you don’t have kids, a home in a good district is good for property values. It also lets you spend less money on finding a key-turn home in a decent area and put more money into the house.

7. Estimate renovation costs before purchasing

After you’ve narrowed down a few homes or have one in mind, sit down and map out what you want to do and how much it will cost. If you want to buy a house with three bathrooms and plan to update all of them, you’re probably going to spend $10,000-$70,000 each, depending on what you want. Estimating prices is difficult, and unexpected expenses can arise after moving in, so it’s a good idea to budget $15,000 on top of your original estimate. You should also consider what the family unit will look like. If you’re planning on growing into it, you can always take on cosmetic projects as you go. For example, if you plan to have a couple of kids, they can utilize a shared off-suite bathroom until you’re ready to add one. Just make sure you don’t close out a purchase before researching what projects you want to do and approximately when you would like them done.

Buying a fixer-upper can be stressful, but remember it’s a long-term investment. If you have any doubts about the house, it’s a good idea to consider a pre-offer home inspection. At the end of the day, as long as the house is in decent condition, things like outdated kitchens and bathrooms, floors, rooms, and windows provide a great opportunity to create your dream home over time.

Mike Smyth is the owner of Smyth Design & Remodeling in Gilbert, Arizona. The family-owned remodeling company specializes in transforming older houses into dream homes.