If you are in California or some other state with strict emissions laws, part of the deal should be that the owner takes the car and has it emissions tested. If it passes, you buy the car and pay for the emissions test cost, if any. If it does not pass, walk away from the deal. For a mechanically inexperienced owner, emissions related problems can be difficult and expensive to fix. Avoid any car that was originally EFI and has been converted to carb like the plague. That's often a clue to the fact the previous owner had problems and the resulting hack job has MORE problems.
Keep in mind that states with strict emissions laws may make the go faster goals more difficult to reach. Some parts are OK to replace with aftermarket parts and others aren't. Check carefully before you get out your wallet and buy something you can't use in the area where you live.
If you want to do the fix up & power up thing, make sure that you have some other form of reliable daily driver. That way the stang can sit while your wallet and hands take a rest from the last project that didn't quite get finished on that 3 day weekend. Things always cost more and take longer the first time you do them. Having some other working vehicle makes life easier since it isn't the big crush to get it running for the Monday morning drive to work or class.
Plan on spending some money on tools it you don't already have them. The stang has both metric and American fasteners, so you really need two sets of wrenches. A timing light, digital voltmeter, vacuum gauge, compression tester, fuel pressure test gauge and fuel line coupler tools are some of the test & tuning tools you'll need. Visit the pawn shops and sometimes you can find a deal on tools & test equipment if you stick to well known name brands.
A sheltered work area is almost a must, someplace that you can leave the car in pieces without upsetting anyone. Some guys here have changed a transmission in the parking lot of their apartment in a rainstorm, but they will tell you it wasn't fun. Depending on where you live, a warm dry garage is a nice place to do the winter projects that stangs tend to become.
EFI (Electronic Fuel Injection) Computer - every stang after 85 has or had one: don't let it intimidate you. The computer based EFI systems are not hard to fix and most of the time they tell you what's wrong with the engine. Here's a book that will get you started with how the Ford electronic engine control or "computer" works.
Ford Fuel Injection & Electronic Engine Control 1988-1993 by James Probst: ISBN 0-8376-0301-3.
It's about $35-$45 from Borders.com see http://www.amazon.com/ . Select books and then select search. Use the ISBN number (without dashes or spaces) to do a search
Use the ISBN number and your local library can get you a loaner copy for free. Only thing is you are limited to keeping the book for two weeks. It is very good, and I found it to be very helpful.
For lots of great ideas and tech notes on upgrades and repairs, be sure to check
out http://forums.stangnet.com/showthread.php?t=643651 “Useful Technical Thread Index” sticky at the top of the 5.0 Tech forum.
Things that break often:
T5 5 speed manual transmission (syncros go bad, mostly 3rd gear)
TFI Module (Thin Film Ignition module - mounts on the distributor)
Electric door locks (see the link in my sig for a cheap & easy fix)
O2 sensors(oxygen sensors) They are good for about 60,000 miles and start to go down hill after that.
TPS Sensor (Throttle Position Sensor) causes flaky problems with idle & acceleration.
Fog lights They overheat the wiring and cause the headlights to flicker. The fix is cheap and simple if you can do electrical stuff.
Harmonic Balancer – they separate between the hub and outer ring. A harmonic balancer puller is a must have to change it. You can rent or borrow a puller from most of the larger auto parts stores.
Things that are very durable: Engine - as long as it hasn't been abused, it will run good for 150,000-200,000 miles without an overhaul
Rear axle - other than an occasional case of worn clutches in the traction lock, they almost never have problems.
Computer - believe it or not, the computers seldom have problems of their own. Most of the problems are with the sensors and the wiring.
Suspension – the front and rear suspension has very few problems if the car hasn’t been wrecked or seen a lot of drag strip runs. The drag strip runs tend to distort and tear the mount points for the rear axle control arms. Revving the engine up to 4000 RPM and dumping the clutch with slicks or drag radials tends to break things.
Things that don’t break often but are hard to fix:
Water pump mount bolts – they corrode and shear off when you try to change the water pump.
Rear oil seal on the engine – lots of parts to remove to get to a $20 seal.
Power steering pump – the pumps are noisy and the pulley requires some special tools to remove and install. If you have the tools, they are easy to do. Again, the larger auto parts stores will rent or loan the tools for the pulley.
Power Steering rack - it is hard to get the toe in set so that you can drive the car to the shop to get it properly aligned.
Starter – the top bolt is hard to get a socket on if you don’t have the right combination of socket, universal joint and extensions.
Everything considered, 5.0 Mustangs are not hard to work on. They just require some patience and though before you get started.
Provided no significan't rust or underlying damage, it's probably worth $2K. Cleaned up, tint removed, fender trim removed, bra removed, with a good wash, buff and wax and interior detail, it's probably worth a bit more.
I'd take a peek under the fender trim that was added on and see if there is any rust forming there. Those flares were a thing about 10-15 years ago and many used them to hide rusting fender lips.
$ 2K sounds like fun for V8 power. Looks like the windows seat up well on passenger side & the top must work. Looks like Midwest car? Might be some rust behind those fender wells with those beauty salt catcher fender skirts if they drove it on the Winter? Rack & pinion might need some Lucas to slow down seeping.
check for rust in the shock towers, torque boxes, and truink area. You didnt provide any pictures of the engine or front of the car. $2000 is a decent price as long as nothing major wrong with it, but know that its a 30 year old car and you will be fixing things regularly.
"Fixing things regularly" words to live by on my 1990. Living outside for 27 years in Indiana takes it's toll on the fox body. Parts are plenteous & fix's are a lot easier with the internet as long as it's not your daily driver they are a blast to own.
Get a look under the car, look for cracks in the floor pan at the rear seat bolts, floor rust in the foot wells. Open the doors and look at the door hinges where they bolt to the body and at the base of the windshield posts. Another place to look for rust is where the cowel and the firewall come together and around the hood hinges.