I brought myself a 106 GTi this time last year with the intention of using it over winter and then preping it as a road legal track car over the summer.
It cost me £1100 but insurance pushed that up quite a bit. It looked clean, no major MOT problems and despite having been fitted with the definition of all chavy exhausts (seriously you could fit like two maybe three 350Z exhaust tips in the end of this thing!) drove pretty well. (I took this off pretty quick by the way )
A few weeks later when the rain came, so did the first major problem, an epic leak. Having decided driving around in a swimming pool to not be a great idea I set about stripping the carpet and sound proofing (which was going mouldy and stunk, how the carpet kept this smell out of the car I do not know). Eventually tracked down the leak, got it sorted and to be fair, the car severed me very well over winter.
Would I buy a car that cheap again, even as a beater? No.
So my two pennies worth would be to increase your budget if you can, you are after all going to be spending a lot of time in it as a daily.
The cars I looked at were all £1000 +/- £200/300 and for 8/10 of them you could tell! Up the budget a bit to nearer £2k and you could find some obviously loved cars from owners who just needed to get their cars gone for what ever reason.