What link sources should you avoid all together or be extremely cautious with? If you're new to the art and science of SEO that can be difficult to determine. Let's look at a few sources now that won't provide much value or might cause a ranking penalty:
Link Farms: You've probably been told this a hundred times to be careful of link farms. The problem is not all link farms are easily recognizable and they have evolved to try and hide from Google. Even if they look on the up and up avoid them. If it looks like a directory examine it very carefully before you submit. In general, if the index page has a Google Page rank of zero, don't waste your time. If you're asked to host a copy of the directory on your website, this is a clear sign that something is fishy and you don't want to be a part of it. Also see if the pages are being indexed in Google by running the query "site:SiteInQuestionHere.com" and see if the pages are being indexed. If no pages are being index then that site may have incurred a penalty.
Mini-Net Links: A mini-net is typically a collection of your own network of sites that are all inter-linked together. While this worked ages ago. Google has gotten smarter at back checking Whois information and looking to see if groups of links are on the same Class C blocks. While it's ok to inter link your own websites especially if they are related be careful that this does not make up a large percentage of you link portfolio.
Reciprocal Links: I'm sure you have received dozens of these email. "I've placed a link to your website HERE so please place a link to my website from your website HERE." and clearly saw this as spam. Not all reciprocal links are bad just make sure it doesn't make a larger percentage of you link portfolio and make sure you really check out the site in question before you even consider exchanging links.
Paid Links: Similar to reciprocal links not all Paid links are the devil. First make sure you need paid links. If you have any doubt whatsoever then paid links are probably not for you. If you are considering paid links they can't seem obvious. Also nothing is wrong with a paid link if it has the Nofollow attribute, just consider it a traffic source and not a factor in you link building. Tell tale sign a link is paid is when it is placed on a sidebar or sponsored section, is a "run of site" link that is placed the footer section of every page of a website, or a paid link from a link broker. Google isn't dumb they are actively tracking link brokers. If you are going to resort to paid links do it privately.
Hidden Links: Best advice? Don't hide links! It's not worth it and it's easily detectable by the Search Engines.
Off Topic Links: Off topic links are just not worth the time and effort because they don't provide much in the way of link juice and they also generate un-interested and low converting traffic. If you get off topic links naturally that's great but you don't need to target them. Identical Anchor Text Links: It just looks unnatural when all of you links have the same identical anchor text. You should strive to have no more than 50% of your links to have the same anchor text.