It'll be better than a $5 VPS for three main reasons:
1) VPS = virtual private server. You are on shared hardware with a throttle cap
2) Since the Pi ins on-prem network latency is nearly no-existent.
3) $30 hardware > $5 rented virtual.
I run a Pi w/ Pi-hole as my DNS / ad-blocker on my home network; pref. test before and after show nearly no measurable difference in throughput speeds.
One bad thing I have noticed about the pi is with external storage. The USB ports and ethernet port share the same bus, so your speed will be pretty bad if you are downloading something large . I used to use mine to seed linux distros and I only got 1-2mb down max. Things may be different if you use wifi.
That one bad thing could actually be a pretty major one, I believe. Having a bunch of PIs for private projects is cool, I've got several myself. Once you start sharing with other people and having the PIs do lots of I/O, things get somewhat sluggish.
With the extremely cheap costs of microSD cards...this should be a none issue. 256GB cards are nearing $30. There's always an upfront cost with having on-site hardware. Using DO you're also paying for convenience. Also if you decide you're done using the pi for a server.....use it for other side projects. I think for teams this would be a bad idea but for a one/two person show....this is easily cheapest option.
$30 - Rpi 3 with wifi built in
$40 - 256GB microSD
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