Man, you can do anything if you put enough money and time into it. I have no idea what your level of mechanical experience is, so I can't say how difficult it might be for you. For $50, I say go for it, at the very least you'll learn some new stuff. Plus, you might find that you really enjoy restoring bikes. Get the VIN number to properly identify the bike (it doesn't look like a Katana to me, but I could be wrong) and then get the manual. Learn all the bits of the bike first.
New motor is the easiest, most expensive route in that department. Probably want to search for a used or rebuilt one. You might have trouble finding replacement parts if the Katana 650 didn't sell a lot in your area, but I'm sure you can find stuff.
Plan on a frame-off restoration. Remove EVERYTHING, clean, sandblast, and inspect the frame. Find out how much repair it's going to need. I'd say get someone local to assess the frame condition first, if it's been pranged hard it might be able to be straightened, but it might not.
If the frame's good, prime it and paint it. You'll learn a lot about keeping paint out of threaded holes, lol. This guy looks like a good candidate to be a rat bike, so don't worry about cosmetic shite. Get the frame and motor situation sorted, then get the wheels checked to see if they're true. Find tires, shocks and springs, get the brake components checked and refurbed or just replace them. The electrics may be a bitch, but depending on your legal requirements, you may not need blinkers. That would be one less thing. Starter, ignition, headlight, brake lights. I had a KZ650 rat bike with a GPz750 motor in it when I lived in Florida. Had a lot of fun getting it running, somewhat less keeping it that way. I hate carburetors.
Anyways, have fun and post project pix.
Fag.
