Would Small Town Commercial Property in Oklahoma Work as Multifamily Housing?

[Richard C]

Hello. I'm new to BP, but I see a wealth of knowledge in this community, so I'm here to seek your advice.

I own two properties in eastern Oklahoma. I lived there a few years back and tried to be an entrepreneur. I bought an old closed movie theater in the downtown area with lots of free on-street parking. It was a distressed property and I got it for a good price. It ended up costing me a lot more than expected to renovate the building. I turned the old single screen into a more modern two screen theater. I thought I had been careful and conservative when creating my business plan, but after a short time it was better for my family if I would go back to work elsewhere for better pay and much better benefits. So, I did.

Now, I have moved away and I'm left holding two properties in that small town. I've tried to sell them, but no takers. One property was the small house where I resided. After lingering on the market, I finally decided to rent it out. That is working pretty well. I talked to someone at the chamber of commerce there who told me that what that town needs is more rental property. He says he often gets people asking what kind of places are for rent. I guess that makes sense as this town is mostly a bedroom community for Muskogee these days. It is only about 20 or 30 minutes from there.

So, over time, I've started looking at my theater building in a new light. Could it be turned into multifamily housing? It was recently renovated about 5 years ago, and I just put a new metal roof on it last week. The renovation included all new plumbing, all new electrical (600 amp service), all new heat and air (three 5 ton central air systems using natural gas heat and one 2.5 ton electric heat pump system). It also included a fire sprinkler system, insulation in the attic and walls, a new stucco facade on the front, metal exterior elsewhere, structural repairs, and more.

The building shares one common wall with the business next door, but the front, back, and one long side are in the clear, even if only the front faces a street and the others are on a clean and sunny alley and parking lot . The building is only currently about 4,050 square feet, but the auditoriums have about 18 foot high ceilings which would allow to increase the total square footage of the building to about 6,000.

I've checked with the code enforcement official and he says it is zoned C1. I asked what other uses are allowed besides commercial and he said that it can be just about anything... residential, multi-family, hotel, retail, etc. I also wondered about parking. He said that as far as he knew, there isn't any reason why people couldn't continue to use the free public parking in the area. There is a small city lot near the back of the building, and lots of on-street parking in the downtown area.

Would it be worth it for someone to convert this building to multi-family housing? I already have about $250K in the property, so the cost will only go up from there.

If you made it all the way through, thanks for taking the time to read this long post.