If it were me, I would drywall the whole thing but leave a 1/4" gap (at whatever height you prefer) between the upper and lower pieces.  

The upper level is occupied at $750 a month and the lower level is vacant.I still have to see how the numbers play out but first was curious if it was a safe area?

However, you have no cabinet uppers.  

In poor neighborhoods you will likely have more problems collecting from market tenants.In general think you are better off buying fixer uppers and gaining sweat equity by renovating.

Homes in this market might rent from $1,200 - $3,500 per month, and often your tenant will be an upper middle management, white collar professional.

You've got the upper hand, play to that advantage

I refused to receive $85 per day with no benefits to teach upper level math in one of the worst districts so I sold a few pieces of furniture and old things to move out West.

I at the moment have so many things to learn and so much growing needed to be done before I can even look to gaze upon the beauty of the upper echelon type investment strategies that have been posted in this thread as possible scenarios.I most unfortunately do not have anything to offer in the way of a solution to this scenario.

It's an unconditioned stairway connecting two upper floor units.

How do I specifically find local houses that need work done on them (re-hab; fixing up)?