Of course, the tearing down option is twice the price. 

(Cheap vinyl punctures and tears to easily). 

You may make less money but the quality of tenant, ease of management and less wear and tear on the property may make it worth while.

I figured worst case scenario, the bank says the loan is contingent upon me tearing down the wall between the 1/1 and the 2/1.

Now they have to tear out some parts of the new walls & tiled backsplash.

I think you have to tell your tenants, “This is a very, very durable floor that has a 15 year warranty covering normal domestic activity and most liquid spills without damage, but drag a metal or a heavy piece of furniture or a chair with a nail or a piece of gravel stuck in the foot and it will scratch and that is preventable, not normal wear and tear.

The return seems to be great also.On the smokers, tear out wall or seal surface with primer.

I know it has been on a tear and is probably a great area to switch a residential to commercial use but... you can run into a buzzsaw of local opposition especially in older, cooler neighborhoods where they tend to be just against change. 

When I do call them my first idea is to call and assume they got my postcard (use this as a temperature gauge if they did/care), see if they have seen the property lately if they're not owner occupied, if they are ask how they've liked lately and then transition into seeing if they're open to selling it, what they expect for pricing and if it's within 10-15% of the price I'm willing to buy at then put in an offer, inspect it, tear it apart and then renegotiate at the number I'm comfortable at. 

They will also work to clean up the property remove/tear down the existing shed structures that are unsafe.