I found my bike on craigslist and took my friend who rides a vstrom to look it over.  It was in good shape and had been really lightly dropped on both sides as the fairings were lightly scratched.  I was already planning on repainting it before purchase and knew i would be modifying it so i wasn't concerned about cosmetics and assumed i would drop it as well since i had never been on a motorcycle before.  I did drop it once on each side stopped in a parking lot.  I paid $3000 for an 04 last year with 7500 miles on it.

Honestly, I wouldn't think of spending more than $1500 on a first bike. On second thought... that number is really arbitrary and I guess it has more to do with your discretionary income, but I'm not in the privileged position to think there isn't a huge difference between $1500 and $3000. I got a 1990 three years ago for $1100 with about 22,000 mi. on it. Sure I had to do some work (brake pads, speedo cable, new chain and sprockets), but if you're willing to read this forum and the wiki carefully, you can do all that stuff yourself and save yourself some coin, learn more about your bike and feel more comfortable about the work being done the right way. Plus, my bike has been dropped twice (gale force winds will do that) and although none of the damage was serious (bent brake lever, scratched mirror), I would have been much more pissed if I didn't think of my bike as a "beater" and was okay with the fact that it wasn't a beauty to begin with.