Motel/Hotel to Multi-Family

[Nave Brar]

Hi BiggerPockets Friends,

I'm new to the game, and looking for some wise words from this experienced community. 

The Deal:

A 22 unit Hotel/Motel in a town close to me listed for ~$200k and the owner is motivated to sell (City assessors office values it at more than double this as-is). This is a two story commercial property located downtown, and has approval for conversion into a 4-story complex. It has a very limited description, however I did some digging and found the following:

The Specs: 

1) It was built in 1918, and was remodeled in 2007 for hotel use. (all of downtown was remodeled at this time)

2) The first floor includes an office, full apartment, common laundry, and a kitchen area. The first and second floors have a lobby along with common bathroom/shower areas. 

3) It last sold in 2008 for a little over $1,000,000 and is currently owned by a small LLC (less than 5 people). Tax records are clean I checked with the assessors office.

4) The median income in this area is $60k, avg. age is 30, mostly blue-collar, very few college grads, 12% unemployment. Located 10 min. away from larger city of 210k people.

5) A little under 30% of residents in the area rent, the neighborhood vacancy rate is 14%.

6) Homes have appreciated ~30% over the past 3 years, and expected to continue (but that's just speculation).

7) Median sales price for a 3 BR SFR in this area is about 270k, and avg. rent is about 1.4k a month (if this matters)

8) I will be calling the few apartment complexes in the area to figure out avg. rental prices, vacancy rates, quality of tenants, etc. I'll keep you posted. 

The Plan:

1) Convert into a multifamily property, I know, Capex is going to be through the roof. What I don't know is by how much, + there isn't much parking.

2) Tear down some walls, make a few units larger, and split the common bathrooms into private bathrooms (maybe house-hack since this is my first purchase).

3) Buy & Hold (I personally hate this idea). 

4) Spruce it up and continue as a Hotel (in a town of 24k with little tourism...mmmmm maybe not).

What do y'all think, what should be considered? I'm eager to insert numbers into my financial model, but want to consider all aspects and worst case-scenarios. 

Any and all advice/thoughts/ideas/question/stories are welcome. :) If you're interested in this deal, let's talk.