This will need permit for sure

-It could take quite some time to get the permit - you may not get it before you come back. So you probably don't want to do the changes while you are away.

-Permit is related to scope of work, has nothing to do with who works on it.

-However, if there is building code inspection requirement, the work done by unlicensed contractor will be harder to pass inspection or will not pass at all.

-I would always use licensed contractor for plumbing and electrial work. You can not save money there. Call around to get the best offer.  Yes, unlicensed contractors are cheaper (cheaper for a reason - why they couldn't qualify for the license?).

However, for non-essential work, such as painting...., feel free to use even handyman, as long as you check out their previous work samples and like what they've done.

Yes, to hire someone is not to hands off completely. You still have to manage the entire process and the quality yourself.

Lastly, unless you are in huge demand of space, I would keep the 2-story living as it makes the property so much nicer.