I would choose LOCATION! LOCATION! LOCATION! As others stated, you can change almost everything about a house except where it's located. A better location would help with resale and would make life easier in the long run.

Remodeling is a pain but it's a temporary pain. We did a whole house remodel (8 months where I had to live with my in-laws. Practically got divorced) and while it was a long, stressful and expensive process, it was well worth it in the end. We love our house, and we customized it for us so it has exactly what we wanted. Good Luck with your search.