Best wishes on your search to find and buy a home for family with small children and friendly place to live.
Harrison K. Long, Coldwell Banker Previews.
Jacqueline below has some great points....and I completely agree with planning to buy a home with at least 2 bathrooms, or adding one.
As far as cash to fix things up.....Your price range would allow you to use FHA financing which only requires a 3.5% down payment, they also have a FHA 203 loan which gives you the ability to finance some of the rehab as well.
Dollar for dollar, you will always make more money on a single family home than a condo and the taxes will be less since older homes in Tustin won't have Mello Roos or association dues.
If you don't have a lender you like...I have a great one who can help you with your FHA options..let me know!
Let me know if you need help, I can set you up on a web-based service that will enable you to search the mls just like I do. It will also enable you to look at market activity in specific neighborhoods, map open houses and schedule appointments.