My $.02

I think that is a good choice. I went thru this a year ago.
I would suggest a relatively low mile (<140k mi) '04 - '06 automatic, although reliability and build quality is roughly the same throughout the model run. I just think newer is better.

Prefer a low-owner, dealer-serviced car in stock condition (hard to find)
I would avoid cars with DSP, the Panoramic sunroof, & air suspension
I would much prefer an X5 from a salt free state & would travel to get it.
I think black interior ages better than tan or gray
watch out for any signs of an overheat.
Plan on spending $1000-$1500 sorting it out and catching up on deferred maintenance (Cooling system)
Find somebody who will sell you a carfax for $7-$8 Get a PPI from a BMW-specific independent mechanic of not comfy yourself
- Find one on BIMRS.org