I am the queen of renovate/use what you have/be creative. With that said, if you're truly getting the property as cheap as you say, knock that sucker down and start fresh. Get what you want without having to work around whatever challenges the existing place will present. Hardwood floors are nice. They make 'em every day. Likely not worth salvaging unless they are just something completely spectacular.....they won't easily match where you add on anyway. Start with a clean slate and in a few months' time, you're have a beautiful home that's all yours. And fewer headaches.