As a general rule stay away from new bikes with new paint.
If the bike was simply “laid down” (negligible speed or standing drop) then one wouldn’t expect it would need a new full paint job – just the small area that hit ground would need repainting (the gas tank on a Naked, the panel that hit the gorund on a S model).
While it is possible that this bike is just fine, the risk that there are bigger hidden issues (frame being the big one, but other possible issues including engine exist) are just too great for your first bike. Your first bike should be something that just works, so you can concentrate on riding and having fun, not dropping loads of cash on it and wondering what is going to break next.
For the money I’m sure you can get a smaller displacement bike in much better shape. And if the guy is asking less for it than a 250, then just walk away – that’s a sign he’s just trying to dump the bike on someone else.
Don’t worry about “out growing” a smaller bike. They are plenty fun, and you’ll learn on them faster than you would on a bigger bike. Plus if it is in good shape, a 250cc bike will sell so fast it won’t be a problem (I sold my 250 in two days in the middle of winter).
The 500s (Ninja and GS) are a lot more bike than people give them credit for. They are definitely worth your consideration.
Remeber: If the deal seems to good to be true, then it is.