The first thing to remember is that: you’re in this business for investment—I.E. to make money—not loose it. The quickest way to disaster is to let emotion get involved. Buying a property because “it looks exactly like the home you grew up in" or any other similar emotional reason is an easy but big mistake. When it comes to choosing a property, let your wallet choose. If you only have a modest budget to work with, don’t try to rehab a $400,000 property with foundation issues—you’ll eat through your budget too quickly. Choose your first project carefully—it should be easy enough to get your feet wet and relatively low risk. You might not make as much as a high-risk project yields but you’ll be learning as you go and in this business, knowledge and experience mean money.

The first step is getting your finances in order. This usually starts by contacting a loan officer or other mortgage professional and talking about what type of financing you have available. If you have a pool of savings to tap or can liquidate some assets to be able to pay cash for a home, that’s the best financing situation you can be in. Otherwise, talk with a mortgage professional about how much you can afford and get a letter of pre-qualification or pre-approval for that amount.

At the same time, you will need a budget for your rehab project. This should include projected expenses for selling the home once it’s rehabbed. Once you work out your budget, subtract 10% and that’s the amount you should use as your realistic budget with a 10% cushion.

The next question is how do you go about finding your first property to rehab? Well, your top resource is your local real estate expert. Being a local REALTOR, I see many properties come up every week that would make great rehab projects for first-time rehabbers. Just remember: as a buyer, you won’t have to pay your REALTOR for their assistance. When I work with buyers, my fees are paid by the sellers of the home you will eventually purchase with my help.

Once you have your budget and financing in place, contact your local real estate professional and give them the numbers—the more information you can give them about what your budget is and what types of homes you are looking for, the better they will be able to aid you. It won’t be long before your REALTOR starts sending you information about homes that meet your requirements.

You should always seek to establish trust with your REALTOR—your bottom line depends on them finding you a great project. Always be upfront and forthcoming about what you’re looking for and what you’re not. Once you find a few properties that meet your price range and budget constraints, have your REALTOR set up private showings for those homes. That’s where the real business of finding a good rehab project happens.

When preparing to go see a potential project, you should bring a few important things. These include a pen and notebook for taking notes, a measuring tape, trundle wheel or sonic tape measure, a small tool kit with basic tools and a flashlight. Remember, many of the homes you might be looking at are going to be in poor condition and likely be without power, water and gas service. Always dress for the occasion—in long pants/sleeves and work boots if you have them. A good pair of work gloves is also vital.

When you set foot on the property, you have to act like a detective. Look for hints of past and recent leaks, foundation issues, structural issues and other major defects that can kill your project. At the same time, you should be adding up the estimate costs of the rehab work that is needed. If you did your homework and have an idea of what things cost, you should be able to estimate some values. Make sure you take room measurements so you can better estimate expenses for carpet, tile and similar items.

After you’re done, it’s time to crunch the numbers. Go over your notes and start adding up estimated costs. Your goal should be to do this quickly. Often, good rehab projects sell quickly, so you may not have a day or two to think it over. Pay attention to big-ticket items that add up fast like a roof tear-off or foundation repair. These are the expenses that can quickly put a rehab project in the red.

At the end of the day, you should have an estimate of what the rehab work should cost. That will give you a good idea of what your bottom line is for purchasing the property. If the investment seems sound and you decide to go forward with the purchase, the next step is to make an offer.