First off, I am assuming that you really don't want the job.
I'd nicely point out that there are a lot of issues with the existing conditions, that I could certainly deal with all of them, but it would cost a lot and take a lot of time.
I couldn't, in good consience (or legally) deal with just some of them; I'd need to bring everything up to the proper standards in order for the final job to be safe.
Then you start with rough estimates that keep getting more stuff added to them until they get the idea that it might be cheaper to tear down and rebuild...or that it would take them out of commission for quite a while.
If they still insist on starting the job, try giving them a duration; including the fact that you can't possibly commit 100% of your efforts on this task to the exclusion of all else.
If you're stuck doing it, start with small-ish items and see if you get paid. If there is an issue with payment, you might be best to cite that as the problem and walk away.
If I don't want to do the work, but not have this guy badmouth me to his friends; I'd stack the deck while talking to him about the job so that HE'S the one who decides against proceeding.
That way, I'm still the good guy...and I don't have to get involved with a can of worms.
