By all means look for bargain permanent transfers, just don't get your hopes up. I took Dresden from the third tier to the Bundesliga and I was surprised by the players who turned their noses up at joining my team. The thing is, we all know that, as the human player, you are a pretty good bet to stay up, but as far as all the NPCs are concerned, you're booking an express ticket straight back to the second tier. Put simply, no one, probably not even your own board, will have even the slightest bit of faith in you.
It will take a while for your reputation to catch up with your performance and in the meantime you should, in my opinion, focus heavily on high quality loanees. It does cause a little chaos and uncertainty in your squad and the knowledge that your best players, the ones you rely on, aren't really your players and never will be can hurt a bit, but it is the surest path to long term stability.
In my Dresden save I was wary of relying on loanees, I was tired of being bled dry by the big clubs, tired of developing players for them to sell for big fees, but looking back I should have relied more on loans. I made some excellent permanent signings, but I made bad ones too and I didn't have the resources to correct my mistakes. One season, I spent big on upgrading my defense, only for my expensive new signings to flop horribly. Let's just say that in my current save I plan to take things a little slower and take full advantage of the flexibility the loan market can offer.
Scouting players who are currently out on loan at other clubs is a good strategy. More generally you should look for talented players over the age of 19 who are making few or no appearances for their club. If the player is based in a foreign club it might be a good idea to make sure they have good adaptability as they won't have time to settle.
Signing cheap players can be good, but just try to exercise a little restraint otherwise you can end up with a lot of deadwood .
Don't be seduced by expensive signings with (allegedly) high potential ability either, you don't have the luxury of buying lottery tickets. Don't sign anyone permanently unless they are a clear upgrade on a player in your squad.