Inspect the surface area for holes, cracks or other problems and apply acrylic caulk to fill them in. Use a putty knife to smooth out the caulk and remove any excess to prevent bumps. For particularly thin or narrow crevices, you may have to use your finger to smooth out the caulk. Caulk contracts and shrinks, so apply a second layer once it's dried.
Oh, where to begin? Let me start with 'watered down paint'. 25-50% before the material gets to the site? Impossible. You would basically be painting with water at that point. It would be less of a hassle, and cost, to simply use proper material. You would be forced to apply three coats instead of two, as the coverage would be horrible. Whatever cost you think might be saved in materials would be lost in labor.