How do I make a Isometric "building" system

So, this is how my game currently looks

This is the default room that is there when you start the game, but is it possible to be able to add objects freely on a grid, expand walls, change floor and wall textures, etc?

Use an array for your "Grid".

Check this out:

https://www.scirra.com/tutorials/360/ge ... m-tile-map

So when you edit the map, set the array values, then refresh the tilesset. it will reflect the changes.

For Z order: what I used for a tower def game was the floor tiles had an instance variable starting from 1 on the top left and whenever the user placed something it was ordering the z order of the tiles based on the instance variable.