The contractor will resist as that is the first indication of a knowledgeable client .

The returns are often stronger and they are as (or more) recession-resistant than multifamily. 

Drywall everything above that with a no mold ,water resistant sheetrock and paint it with a couple good coats or three of good enamel paint to keep moisture away.Best part of a demo to the studs is you can replace wiring,drain plumbing ect as well as upgrade to a modern light/vent that is ducted all the way outside and insulated to prevent condense inside.

Once you get into framing, there's a lot of things to know about vapor barriers, ground contact lumber, mold-resistant materials, etc.In my opinion, this isn't a DIY type of project unless you're a licensed contractor.

If it's short term I would choose a dark carpet that is stain resistant. 

A well placed dollar store is literally one of the safest retail investments period and notoriously more resistant against economic decline.

Berber carpet is tough as nails, is fade resistant, it wears down very slowly compared to cut pile.

It's diversified by geography, asset class (the target recession resistant industries and Amazon resistant).

If they resist I'd just let them know Whether it was listed in the listing or not it's the reality of the situation and if you take them I will be filing a police report and will go to small claims court and include all associated costs I incur in the claim.

If so the floor could be a water resistance wood, like teak, or something like TREX decking.