• Stick with cosmetic changes. If you have to gut a house, add rooms, blow out the kitchen, etc., it may be hard to get your money back, much less make a profit. Instead, focus on homes that require more cosmetic changes. Paint, flooring, updated appliances or fixtures - these are improvements that are relatively easy and don't cost a fortune.

• Be a DIY expert. The more improvements that you do yourself, the more you stand to make. If you have to hire professionals, obviously that cuts into your profits. If you are experienced doing home remodeling projects yourself, you can save some money on repair costs. You can also improve your skills by studying DIY books and enrolling in classes at the local home improvement store - whatever it takes to become an expert at DIY projects.

• Get educated. Not only do you want to learn all that you can about home improvements, but you also need to become an expert on the neighborhoods in your community. That way when a house goes on the market that looks like a good candidate to be flipped, you know if it is a bargain in an up and coming neighborhood or one that you should avoid.

• Be wary. In a slow real estate market, house flipping can be extremely risky. If housing prices are dropping in your area, be sure to do a careful assessment of how much the house you are thinking of buying could depreciate. Also consider what you'll do if the house ends up sitting on the market for longer than anticipated.

There's a lot of money to be made in house flipping. But, don't make the mistake of thinking it is an easy gig to get-rich-quick. House flipping requires good instincts, lots of hard work, and a significant degree of risk. But, for the DIY junkie, it can also be an attractive way to make some money.

What exactly does a home inspection involve?
With a home inspection, a certified home inspector evaluates the home. He (or she) meticulously walks through the house, checking out its physical condition, structure, the construction, and mechanical systems. He or she looks to identify any problems with the home. With a home inspection, you also find out the age and condition of your things like your home's heating system, central air conditioning system, plumbing, and electrical system, as well as structural components. You don't want to sweat out the first heat wave because you bought a house with a broken down air conditioning system. A home inspection can let you know if any of those systems are on their last legs.

Do I really need to pay for a home inspection?
Home inspections are not cheap. A typical inspection (depending on your geographic area) can cost upwards of a few hundred dollars. Money can be tight when purchasing a home and you may ask why you should spend even more on an inspection when you have already fallen in love with the home? There is nothing that can end a love affair quite like finding out that you bought a lemon. And that's where the home inspection helps. The inspector has no emotional attachment to the house, so he has no problem pointing out its faults. Home inspectors are paid to be objective. In addition, home inspectors are trained to understand home construction, maintenance, and safety.

But, what about your real estate agent? Surely you can save money by letting your agent point out potential problems. Well, real estate agents are trained to help you buy a home, but they are not experts in the structure and systems of a home. Your agent may be able to suggest cosmetic fixes, but no agent would want to be liable for evaluating the state of a home's plumbing or the lifespan of the roof.

When should you order a home inspection?
Once you have a signed purchase agreement or purchase contract on a house, you should line up an inspection. But before you sign a purchase offer be sure that it contains an inspection contingency. This will allow you flexibility to renegotiate the terms of the deal if the inspection turns up a lot of problems. Such contingencies generally state the inspection must take place within a certain time frame. Make sure you are aware of these time limits when setting up your home inspection.

On the day of inspection, the inspector spends a few hours carefully going through the house and then, usually within no more than 72 hours, provides you with an inspection report. Based on this report, you can request that the seller make all or some of the repairs; renegotiate the sales price based on the cost of repairs; or, if there are major problems with the property, you may be able to void the contract (depending on the terms of your contingency).

Advantages

The main advantage to buying into a condominium development before construction starts is that you often get a lower price than if you buy when construction is complete. The reason for this is that developers typically need pre-construction sales of 50 percent to 90 percent of the units in a development before they can borrow funds to begin construction.

Pre-construction condos can also get you in on the ground floor of an investment that will appreciate. The market value of pre-construction units generally increases during the one to three years it takes to build a development, so your unit may be worth more than you've paid for it before you set foot in the place. In addition, you can often choose from a variety of finishes and flooring options, allowing you to customize your home.

How the process works

There are several steps to buying a pre-construction condo. They can vary from developer to developer, but the basic components are:

1. Reservation agreement
You give a deposit (usually between $5,000 and $10,000) to reserve the unit and set the price (although the builder can reserve the right to change the price in the contract). The deposit is held in escrow and you can cancel the agreement at any time with a full refund.

2. Condominium documents
When a development is approved for construction, the developer submits condominium documents (including budgets, association rules, unit descriptions, materials and other important information) for approval by the state. Once the documents are approved, they are sent to you for review. Read them carefully to make sure that you will be comfortable living by the association rules.

3. Right of rescission
Once you receive the condominium documents, you have a 15-day period to decide whether you would like to proceed into a binding contract. If you don't, you can exercise your right of rescission and withdraw with a full refund.

4. Hard contract
If you don't withdraw, you'll provide the balance of the required down payment, usually 15 to 20 percent of the purchase price, and sign a binding contract agreeing to purchase the condominium. You generally have seven days after that to cancel. This is your last chance to walk away with no penalty.

5. Closing
When construction is nearly finished, the developer will issue you a Certificate of Occupancy. A closing date is set when you will hand over the balance of the purchase price and sign the final documents. If all goes according to plan, your closing will coincide with your move-in date, and you will be ready to enjoy your new home.

Getting a share loan

Share loans are available through banks and credit unions in much the same manner as standard mortgages. They are also known as co-op mortgages, co-op apartment loans, or end-unit financing, depending on where you live. In order to qualify for a share loan, lenders typically expect you to make a down payment of five to 10 percent of the purchase price. Like a mortgage, the loan is then amortized over a period of years, and each month you pay back the loan with interest.

Are there other fees?

Closing fees are lower for share loans than they are for mortgages. The sale is treated as the transfer of personal property (the stock certificate or cooperative ownership contract) rather than the transfer of land, so land transfer taxes do not apply. You should expect to pay additional monthly fees, however, for maintenance, similar to the way condominiums charge monthly fees. The fees vary according to the co-op, and may also include insurance premiums, utilities and real estate taxes. The good news is that even though you aren't paying the real estate taxes directly, you can usually still deduct your share of the tax payments and mortgage interest on your personal income tax return. (Consult a tax advisor about your situation.)

There are three types of housing co-ops, each with slightly different characteristics:

• Market-rate housing cooperatives: Buying into this type of housing co-op is the most similar to buying a condominium or single-family home. The share price is determined by fair market value. Accordingly, this type of co-op has the potential to allow you to build up the most equity.
• Limited-equity housing cooperatives: In a limited-equity housing co-op, there are restrictions on the amount sellers can get for their shares when they leave the co-op. The co-op housing corporation places these limits in order to ensure the housing remains more affordable. Members benefit by receiving below-market interest rates on loans, breaks on real estate taxes and other cost-saving measures. The co-op bylaws may also set a maximum income limit for new members as a method of ensuring the housing is accessible to families in need.
• Leasing (or zero-equity) cooperatives: In the case of a leasing co-op, the co-op housing corporation doesn't actually own any real estate, but rather, leases it from an outside investor. As a result, it doesn't build up any equity. In some case, if the property eventually comes up for sale, however, the corporation may buy the property from the investor and convert the co-op into one of the other two types of cooperatives.