Keep as Restaurant or Convert to another use?
Hi all. I currently have a contract and am in due diligence on a foreclosed commercial property that was a popular deli/sandwich restaurant. It still has almost all of the equipment as it looks like the owner cleaned up and closed the doors. I do not have a desire to be an operator of a restaurant and my plan is to lease the space. To do a cosmetic rehab it will cost around $30k. But in order to get it back to restaurant ready it will require several other fixes and upgrades to meet health inspection requirements. I do not know yet exactly how much this would cost but my thoughts are $10-$25k.
My question for everyone is do I repair and update and lease as a restaurant? Or do I sell the used equipment, rehab and target a broader type of tenant? The building is capable of being split into 2-3 units and would obviously cost above $30k to rehab because of the framing, wiring, plumbing etc of the separate units.
The reason I am having some trouble with this decision is the dynamics of the market the property is located in. It is a very small town. Most of the residents are low-middle class(20k-45k income) or they are 2nd home owners and retirees. It is a tough market for a restaurant as well as most types of non professional business. Another concern is that the property is set up as a deli style establishment so other restaurant concepts may not work without changing the layout. For example, a Japanese steakhouse most likely would require some different features and/or layout.
Maybe I am jumping the gun and overthinking all of this but any advice or input would be greatly appreciated.