Some real estate purchasers buy homes with resale in mind. They'll look for the greatest deal in a neighborhood where a house may need some home improvements, and the sale price will come down as a result of it. Doing this is a smart investment, but only if the home improvements are worth making profit-wise after resale. Here are some things to keep in mind when buying that fixer-upper to sell down the line.

Buying in the right location is key when you're buying a home. It's a make or break deal right off the bat for most home buyers, so you want to look as attractive as possible when it comes time for resale. The other key though is not to buy the nicest home on the block. Doing this is a resale killer because the comparable homes in the area will always be less than yours, and this makes your higher sale price in the future less attractive.

Buying a home that needs a little bit of improvement is a better home buying strategy, but over-improving your home could be a detriment to this resale plan. If you buy a house in a neighborhood where homes normally go for $250,000, and you bought one for $220,000, you want to strategize so that you gain the $30,000 when you sell it (and hopefully more). But some people want to fix everything in the house, and this kind of strategy will not allow them to gain anything in the long run.

Say that right away you fix up the bathrooms with all new, well, everything. That'll set you back $10,000. And everyone desires a new kitchen, so they remodel that as well, another $15,000. Then you decide to cover the house in all new hardwood flooring, another $15,000. So right there, you've spent more than what you saved on buying a fixer upper. It's very hard to gain back a $10,000 net loss on resale when the homes in your area are going for less than yours.

Do yourself a favor and make a plan on what to fix and when to fix it before buying the house you plan to fix up. It'll help you keep your train of thought on maximizing your profits in the long run, and will allow you to not over price yourself out of your neighborhood's market come resale.