How big is your budget? For 20K, plus a car to start with, you can have exactly that! (Ask me why I know this.) If you have a good budget like this, then the possibilites are endless. The lighter you make the car, the less you'll have to get the motor to do.
There's a lot you can do with the right mix of parts. There are as many good combinations as there are opinions. If it has to run on pump gas, you may have some trouble making it down into the 12's without some very serious head/intake/exhaust work. If you can run higher compression, like 11:1 and over, it's not as tough. You'll have other problems to contend with instead of buying racing fuel and octane boost ... like broken axles and second gear intermediate clutches.
Also, having a car that turns 12's is usually a pretty crappy car to drive when it's cold or when you are just cruising to the office. I used to drive my Goat 35 miles to work. The first 10 miles was spent just getting it warmed up (in California - in the summer!), and it's not a fun car to drive when it's cold. The last 25 miles, however, is another matter.
Also, if you want it to handle good, do you also want a smooth ride? Those two don't always go hand in hand! In fact, a good handling car could be very, very bumpy.
Having a 12-second car means making a lot of sacrifices to 99% of the driving you're actually going to do. I'd make sure that it's what you really want to have. Otherwise, you'll probably be wasting money that's better spent elsewhere.
I sure hope you weren't looking for short answers!
