Am I wrong to tell my parents were upset?

My parents said they would rent us their rental house. $1000/month. The renters in there before us literally got out February 1st so yesterday. My parents didn’t even go look at the house, they just told us the house is ours and to go pick up our keys. We get there and well…. Holes in the walls, we found a cigarette on the floor in a room, things look terrible. I have attached photos.

Anyways, I told my parents I didn’t wanna pay rent or even start moving in until this shit was taken care of. They were not happy with that! Their response was “then we will have to pay the mortgage this month on the house, and pay a handyman to fix the walls, and pay for it to get cleaned. That really puts us in the hole”

And I was like seriously? We can’t even paint the walls before these holes are patched, the house stinks like smoke so I’d rather not put my furniture and clothes in there.. etc.

Who is wrong here? Should me and my husband just fix everything and rent it? Or make them fix everything before we move in? They were trying to act like since were family I shouldn’t be doing this but if an apartment company gave me an apartment that looked like this my parents would flip out saying to get my money back!!! Idk what to do.