If it doesn't make death-throes noises, starts easily, and runs OK w/o smoking, then it's probably good. Unfortunately these bikes often were thrashed hard, and received minimal maintenance. Still, if it passes muster, you can expect it to serve as a good bike until his skills level improves, and he decides to buy more bike.
I had KZ 550/750/1000's along the way and they each had something endearing about them to enjoy. The 550 is a great town bike, very maneuverable, plenty quick, and easy to maintain. Yet it can still go faster than any H-D Big Twin if you really want to. They sound busy as speeds climb, but keep the oil changed and you should be able to get good use out of it.
If he has another $500 to throw at it, he should be able to fix things like leaking fork seals (assuming the fork tubes aren't pitted), a battery, tires, brake pads, new brake fluid, fork oil, they typical stuff you need to do to a neglected bike. I would pay special attention to the cables, checking them for routing, chafing, pinched casings, frayed ends, lubrication (you have a clamp-on cable oiler attachment, yes?), electrical harness wear or crappy repairs, function of all lights and switches, and adjusting the controls to fit the new owner.