If he was making decent money and there are no negative influences aside of COVID, chances are pretty good that it will recover and keep making money.If it was a marginal business prior to COVID, then closing the business and selling the building may be a better way to go for him.If he sells the business and real estate to a new operator, he needs to be prepared to continue operating for a year or so because even the best marketing programs take time. 

We won't really recover much in the way of cash but we can have some interesting projects, and fires.

The location may take years to recover, or it may never recover.

Rest due at closing) You can look at it anyway you want, but while you're looking, don't miss these financial facts:1- Cost to you = $63,6802 - Profit = $20,0003 - Remaining Cost not recovered = $43,680 (you don't make a profit until you recover all your costs, so the $20k "profit" in Item #1 isn't a profit...unless you think going to Vegas with $10k in cash, increasing your cash to $15k, then losing $30k is somehow winning $5k)4 - If, as mentioned above, you can get $350/month ($4200/yr) in rent...which if you were breaking even before, you would now be cash flowing $4300/year.5 - Unfortunately, that means it will still take you 10+ years (all being perfect) to recover the rest of your cost.6 - Still not a good deal...at all.

We are planning to charge 25-35 dollars per unit to recover the 6-7k a year we pay for water.

The other thing to consider after you renovate, is that you can do a cash-out refinance and recover funds.   

Anything I can do at this point to recover rent?

Another aspect that made the deal interesting was that it came with an extra lot, which I can parcel off at any time and recover the whole initial downpayment.

If insurance won't cover the issue and you experience a setback, you can recover.

Should I send a demand letter for payment to evicted tenants? They were evicted September 30th and owe more then what the security deposit covers. I will send a breakdown of what the security deposit was used for and ...