I rent a 400 square foot 2 room bachelor type place, it's okay. I don't have people over there very often for the sole reason that it's a little cramped when you have people over, but that's not a huge deal for me since It's just me. My place consists of a kitchen/eating/hanging out area and a bedroom/den of around the same size as well as a decent sized bathroom.
I don't find it's too bad; it was renovated recently and finished nicely with tile floors throughout, new appliances etc. My landlord is a finishing carpenter so the windows, doors and cabinets are all nice wood. I don't think I'd be able to live in a small space like that if it was a dive, but since it's finished quite nicely it's not a big deal. I find the biggest issue is bike storage.
Your mortgage on a 50k house is going to be minimal, probably only around $250/month after all is said and done with taxes (if that). I'd snap that up in a second, live in it for a while and do a few small reno's like new paint, new wood trim to make the windows stand out and maybe throw down some new tile. In a small space it's going to be pretty cheap to do said reno's, and you shouldn't have a hard time renting it for a hundred or two more than your mortgage when your done with some work.