Sure -- it can be done. But how successfully has more to do with the person (you) than with the model or condition of the proposed noble craft/rough diamond/listing hulk. How much time you got, and how much do you value that time? Can you sort out wiring, repair fiberglass, sew sails, splice line, fix engines, apply difficult paints? Got a space to do all this in?
I'd say forget about the notion of saving money, when all is said and done; the reason to buy a project boat is so it is set up to your priorities & you know it inside and out -- and because you really really love restoring boats. We got our SJ21 for $2k; I've already put that much more into it, plus hundreds of hours, and it still
needs a deck recore. I could have bought one with newish sails, a solid deck, and fresh paint for $3500, so the 'savings' is false economy. (We had very few to choose from w/in 800 miles, tho. So we bought the beater with eyes open.)
What concerns me most is actually your user name: MikeWannaSailSoon. That's
where the red flags go up. If you buy a serious project boat, MikeAin'tGonnaSailForThreeYears.
Sorry. That's how the story inevitably goes. The input-to-reward is so skewed, it can beat you down. Most 'project boats' were projects when the seller got them, and they ran out of steam -- often never even sailed them. Don't be that guy.
I strongly agree with Chuck: buy a boat that is at the minimum
in sailable condition right now. If the sails are skanky & blown out, fine; they are wear items anyhow. (Make sure you get the full suite, however.) Needs new running OR standing rigging pretty soon, fine. Engine work, that's a harder issue: as you note, a pro replacement will double the cost of many older boats. Aesthetics are, of course, not on the table. If a boat has good mechanicals and fits my needs, I don't care if it's banana yellow with scuffed decks and gouged gelcoat. Oh hey -- that's MY boat!