I considered the exact same question a couple of months ago, and decided on the former course of action. I could rustle together about £700, for which I could get a cracking hardtail, or scour ebay for the Orange 5 of my dreams.
I got an Orange 5 for £680 delivered, and I must admit it has been a lot, lot more work than just buying a new bike. However, I’ve learnt so much about my bike that I now feel really confident about servicing and maintaining it, and I feel so much more enamoured to this bike I’ve really had to work for, and on, than one I just buy and ride, and when it’s due for its service by the LBS a few months down the line they tell me how I’ve been riding with the headset loose and ruined it…
Rear brake still doesn’t work, and fitting clipless pedal this afternoon, well… I still cant get the non-drive side flattie off so I’ve got one clipless one flattie 😆
Can’t beat it tho, love ma bike to bits!
If I were to do it again, now I’d buy a frame off these classifieds and buy bits from CRC or the classifieds and make a real bike of my dreams. I certainly didn’t feel confident enough to do that two months ago!