Depends on your budget
What is your over all budget. Can you afford to shell out $2-5000 now? If so do that and get a really nice solid boat and be done with it. At least for now, there will be plenty more work and money to spend down the road. I grew up in the bay area and look at latitude 38 every so often and see lots of boats in the under $5000 range with new paint, good sails, good motor. There was a Ranger 23 for $1000 a while back nicely rigged but had been on the hard for a while, and another one for around $3000 ready to sail away.
I agree with dvideohd that there are probably more problems hidden and it could be a long expensive project, costing more than a $2k to get the boat in good shape. You might be able to get the bottom fairly clean by diving yourself but do you want to do it once a week or every other week. Repairing the transom could be a major chore, that might need the boat hauled. Check to see the cost of hauling the boat, and yard time while you paint and repair the transom and whatever else is wrong. Add a grand or 2 for new sails if the ones on the boat are tired. I imagine a C22 in good shape ready to sail going for $2-3K. You could spend many grand and lots of sweat equity over the years for a boat that is only worth $2k in the end. If you are going to pay eventually, I'd rather pay now and go sailing.
If you only have $500 to spend now, have someone check the boat out now and make sure its not going to fail right away and get out on the water.
Also if money is that tight, what does it cost to put a boat in a marina there? Think about the Cal (Berkley) Sailing Club. I remember it being dirt cheap with a fleet of Lidos and Ensigns to sail, 22 dingys 6 keel boats and 80 windsurfers for $200 a year plus a few hours of service each quarter.
West Wight Potter 14 "Lemon Drop"
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