Jim,
My car has rust.
I bought it in 2004 for $19,000 and it had rust then - most of which I knew about and was prepared to deal with or live with. It is appraised for insurance purposes today for $32,000 so obviously the appraiser didn't regard the rust as significant to the value of the car. I don't "show" the car and am more interested in it mechanically than cosmetically. The car was rebuilt, cleaned up and repainted 2000 and since I bought it is now chipped and scratched from 10 years of Canada but it is also rock solid and fun to drive which is what I value most.
The only significant rust was found under the asphalt sound mat on the driver side where the divider that separates the engine compartment from the wiper motor/HVAC fan box sits on the strut tower. This will get fixed when my welding skills are up to the task. I encourage any and all to have a look under their sound mats if original - a classic water trap from Karman/BMW.
The car had a sunroof - the result of a butcher job in the mid 80's - that I have sealed in place after removing the rear mounted motor and all the running gear. The drains from the sunroof opening are another classic f****up from Karman/BMW. I have a replacement skin that will finish the job when my welding skills.....
At some point, the car will get a DIY (bare metal where necessary) to deal with any/all rust I find. The roof skin will go on, all my alterations will get finished and it will get a decent respray. If it ends up as a solid 5-10 footer visually I will be content but it will be.... nearly rust free.
So there you go. It ultimately comes down to what you want the car for.
If it's an investment you want then triple (at least) your budget and stick it in a bubble. If you want a car to drive on the sunny days to Car's and Caffine and drive to occasionally experience what an eyeopener this car was when it came out, then double (at least) your budget. If you want a car to drive anytime and anywhere that will give 99% of the public whiplash as you drive by and that you can maintain, modify and obsess over than somewhere between $15 and $25,000 might get you there if you Take Your Time and look at everything. You'll know the right one when you see it. You might be lucky and find near perfect - I can think of two in the last 5 years in that price range.
Don't be afraid of rust as long as you know where it is.
DC
ps
I recommend you look at Vrand and Sven's DIY resto sites so you know what to look for.
http://www.larsenarchitect.com/BMW/Restoration.html
http://www.vranedom.com/
pps
If we learn from our mistakes, does that mean I have to make all of them?