SFR rehab in Commercial Zone?

[Rhett Kelton]

I am getting ready to buy a SFR that will likely need at least 40-50k in rehab costs. The sales price will be around 125k.
The house was originally built back around 1920.

This house is now in a commercial zone, therefore I can only legally put in (a max of) 45k in repairs if I was to keep it as a SFR. Also, I cannot convert it to any multifamily. I have only done SFR rehabs before, I am not particularly worried about the downside and am okay with a challenge if it is the right thing to do. I am not sure if I should:

1. Just knock the house down and rebuild some sort of commercial building

2. Rehab the house into some sort of small commercial office (lawyer office, small business, etc)

3. Rehab the house and keep it as a SFR.

Also, this is in an Opportunity Zone...