Mrs. Reno and I are all about buying fixer-uppers for a couple reasons: they're still somewhat affordable by NYC standards, and there are some real gems out there. Before the subprime mess, the easiest part of buying a fixer-upper was getting the financing and closing.
But fixer-uppers are a challenge. After you close, the house is in your hands with all its defects--known and unknown. Most people imagine that they're going to hit the ground running and begin renovating ASAP. But, typically, it's not so easy. Usually you'll find that there are plumbing, heating, and roofing issues that your engineer and inspector conveniently missed. You'll also find that the seller didn't leave enough money in escrow to cover the problems you've discovered.
Resolving these problems will eat up your time and a whole lot of your money. If you're trying to renovate quickly for rental income, prepare yourself to pay your mortgage for a couple months before you can take a break. For example, when Mrs. Reno and I brought our brownstone we discovered that the roof, which the seller agreed to fix, was leaking because they used large nails to fasten the asphalt roof. Never assume that what you agree to at closing will actually be done as you asked. Our assumption about our roof cost us about $1500.
When unexpected issues pop up, don't panic. Take your time to resolve them even with the threat of months of mortgage looming over your head. In the long run, it'll pay off.