The single best way to stretch your budget and find the home of your dreams is to find the right home in the right neighborhood that needs a little work.
Fixer uppers allow you to access a better neighborhood than you may otherwise be able to afford. In my experience as one of the top producing brokers in the LA area, I find that many times the best course of action is buying the worst home in the best neighborhood possible.
The First Step
The key for the buyer is to determine the appropriate level of fixer. In general, the more of a fixer, the more potential upside that you can unlock. But this has to be balanced with your budget for repairs, and your appetite for sweat equity. Do you want to manage a whole house remodel? It has the potential to be very lucrative, but can also be very taxing.
Its important to also be aware of the degrees of fixing. Remodeling a kitchen costs the same if it is brand new, or 50 years old - you still need new cabinets, countertops, floors and appliances. So, when evaluating, no matter how bad the kitchen, the cost to remodel it is the same. But - you will probably pay more for a house with a "kind of old kitchen" compared to an "extremely old kitchen." Bottom line: Dont be afraid of a really bad kitchen (or bathroom).
High Return Items
Certain things are very inexpensive and produce a high return; paint, refinishing wood floors, and landscaping produce the easiest and best return on investment. Other items like system repairs (heating and cooling, electrical, roof and plumbing) produce almost no investment return. Bathrooms, also, generally produce a small return. There are also programs available that can help you install solar panels at a low net cost of ownership.
One last caution, people typically overspend to get what they want, and that is totally fine. Just realize it goes past investment and into personal valuation. For example, a neighborhood may support a $25,000 kitchen, but you may really want the $40,000 kitchen. That's fine, but when you re-sell, you may lose some of that value. Just make sure you enjoy it along the way.
If you have any questions about fixer uppers in the Los Angeles area, let me know!