Many homeowners prefer older homes to new for a variety of reasons: Often the craftsmanship is better, the wood trim and floors have the rich patina of age, architectural windows and other detailing give the home character, and the structure may just feel more solid and settled.

But when it comes time to restore or renovate, older houses can present new challenges for homeowners who haven't braced themselves for the costs ahead.

"Everything is more expensive than people think," says Jake Schloegel, president of Schloegel Design Remodel Inc. in Kansas City, Mo.

"It's not uncommon for people's ideas of cost to be about half of what it's really going to be."

There is a considerable price difference between a restoration, which attempts to restore part of a home with historical accuracy, and a renovation, which upgrades old with new.

"Working on older homes is more expensive if you're going to try to maintain the authenticity of the original construction," says Schloegel. "There is a big difference between restoration and renovation. Restoration is really expensive, matching things exactly. You may have to have molds made, blades made. It can be rather involved."

In addition, a restoration that alters the exterior of the house will likely require the approval of a historic-home or -landmark commission, a process that can add months to your project.

Whichever project you undertake (we'll deal primarily with renovations here), it's a good idea to interview several design-build companies in your area and choose one to work with before moving beyond the dream stage. Low-ball renovations, while tempting, rarely yield satisfactory results, and in a worst-case scenario can actually decrease the value of your home.

"Since we are a design-build company, we like to be involved from the date the idea was conceived through all the construction and complete project management," Schloegel says. "Not only is the idea and design important, but also a realistic budget. Many projects never get built because the design and the budget don't run together; they start running at right angles. A reality check can come fairly early in the project when it comes to budget."

Renovating an old home? That old house sure has character, but it's going to take more than character to overcome some of the special problems you're going to encounter.

7 renovating challenges 1. Water 2. Foundation cracks 3. Lead 4. Electricity 5. Asbestos 6. Windows 7. Tanks, wells and cesspools

Challenge 1: Water
David Tyson, of David Tyson and Associates Inc. in Charlotte, N.C., knows what he goes up against in most renovation projects.

"Water is the No. 1 enemy, in my opinion," he says. "Just moisture presence is the worst problem because it starts the mold and mildew effect, then bacteria, and eventually termites. Those are detrimental to a house anywhere, anytime."

Moisture behind wallboard can often lead a renovator on an expensive side trip to replace rotten or termite-infested studs with new ones in order to proceed with the remodel.

"I tell all of my clients to put 5 to 15 percent aside for contingencies, regardless of the size of the project," says Tyson. "I don't have X-ray vision."

Challenge 2: Foundation cracks
Old homes may have been built better from the ground up, but their foundations often don't withstand the test of time, says Dennis Gehman of Gehman Custom Builder in Harleysville, Pa.

"In cement block or cinder block, which was used from the mid-1960s on back, the cinder portion is not as structurally sound as the cement block, so you get cracks, and water penetrates," he says. "In homes 40 or 50 years ago, they typically didn't use foundation sealer on the outside, and now it wouldn't seem real prudent to dig up landscaping and sidewalks to do exterior sealing."

Cracked foundations also are a common source of radon, a naturally occurring radioactive gas that has been identified as the second leading cause of lung cancer in the United States.

Sealing the inside of the blocks (say in a basement) may rectify the problem, but you'll want to make sure you divert as much water as possible with drainpipes and grading outside, or the hydrostatic pressure may cause the sealant to peel.

Estimated cost: $600 to $750 to seal a basement floor; $1,200 to seal and vent a basement; $7,000-$10,000 for a new foundation and floor.