If I had only $500.00 I would consider a Used Breedlove (Atlas Models) Seagull guitar or a Blueridge. If you can find one on craigslist or used somewhere might be able to buy an all solid model like a Blueridge. I recently purchased a Blueridge BR-160 with the hardcase case off of craigslist. It is in mint condition and plays beautifully. As far as what to avoid.. that is hard to say. I would have to play them first as each one plays differently. I would avoid guitars that don't play easy (or have no room for adjustments). I would also avoid guitars with problem necks or bridges.