Those cars are not rare yet and can easily be found with less issues, better shape, in other locations.
Nice ones are rare. My first tdi I paid $3100 for it with a TB break. $2000 worth of work later I had a wonderful car. (still have it)
Sure you can buy some piece of junk off craigslist that hasn't been maintained, armrest broke, glove box broke, Cam worn out, door pull broke, AC inop, oil leaks at every orifice, interior filthy and worn, rust aross the tops of the fenders, door dings on every panel, clear coat on paint peeling, dash lit up like a Christmas tree, ect for $1500 to $2500, but a nice one is getting harder to come by (RARE!).
$3500 is a steal for a manual trans mk5 with that amount of work done to it. Main thing you need to worry about is cam wear. Have someone do a cam inspection 1st or just plan on doing a cam job.
Also headliner is very difficult on that car, but can be done. Make sure if you get an estimate that they know the difficulties there,as you dont want them to start then call you back and up the price because they didn't realize it wasn't as easy as other cars. Headliner requires one of 3 things.
1. Front or rear glass to be removed. (I've never done this just heard it said).
2. Fold the headliner "card" in half (damaging it) to remove it. Headliner "card" is a hard material like a cross between card board and particle board (maybe fiberglass) and folding it makes cracking and breaking noises with associated damage. Folding it again after new material to reinstall it in the car makes "damage" that is noticeable unless they steam it out after install. I think this is how most upholstery folks deal with this.
3. Removing seats and console (console is time eating B!TCH on mk5!) Even then the headliner just barely comes out. This is how we did it.