Paint is the easiest and cheapest fix. I would look for a house in your ideal/close to ideal location and see if you can be happy with it by just giving everything a new paint job (and possibly refinishing floors - we've done that first before moving into our last two old homes). If you can do that, you can likely live in the house until you can afford to do larger renovations like kitchen and baths.
Expensive money pit problems in my experience are going to come from structural issues, lead paint/asbestos abatement, needing to change lay out in a significant way, wall paper covering crumbling plaster walls in an old home.

We're shooting for newer homes now, but many of those are distressed properties and might be in worse shape than older homes! To make matters worse, most of the houses have synthetic stucco facades which are a huge risk... Especially when they haven't been maintained. I'm thinking that paint and flooring are the easiest fixes too. Oh, and since I'm a gardener I have the curb appeal covered!

And thank you! The lead paint and asbestos factor is a bit scary.

Look for a house that has a good feel and solid quality construction in a desirable location. You can always fix cosmetics but a house which has obviously been remodeled several times and is mixture of materials and work from several different owners is going to be hard to fix. The best houses are older homes which have been lived in by the same owner for many years. They are often outdated, but not a mish-mash of styles and materials.

You are better off with a smaller house than a larger one with poor quality additions. Small houses are easy to clean, cheaper to fix, cheaper to maintain and have smaller utility bills. Plus, you can afford to use better quality materials as you don't need so much.

I'm leaning towards a smaller house for those reasons. We've lived in a 1000 square foot apartment for years and only really only utilize about 700 feet, but if and when we have a kid all we need is another room. You're right... It is a lot easier and cheaper to fix or renovate a small house!