A boarding house where only the meals fill the rooms and the kitchen is not a licensed commercial kitchen.

Here is one worth working through. Small mill town, population under 4,000, two hours from anything. A former nurses' residence, 8 rooms, one shared bath per floor, a big commercial-ish kitchen from the 1970s that has not been used for service in maybe twenty years. Asking 165k. It is the cheapest per door building in that market and there is a reason. Market room rent there is 425 to 475 all in. Eight rooms at 450 is 3,600 a month, 43,200 gross. Taxes 3,100, insurance is the ugly one at 4,800 quoted because of the room count and the shared cooking, heating oil runs 7,000 in a bad winter, water and sewer 2,400, and a prudent buyer carries 6,000 for maintenance on a 1948 building. That is 23,300 before any management or vacancy or the roof due in year six. Call it 19,900 net at full occupancy, which never happens. The operator before last ran board with the room. Two meals a day, 675 a month instead of 450. Same eight rooms, that is 5,400 a month, 64,800 gross. Food cost plus one cook at part time hours is maybe 30k a year, so the meals add roughly 21,600 of gross and cost 30k. It loses money as a standalone. But it fills the house, because the demand in a town like that is older single men on fixed incomes who cannot or do not cook, and the three other places within an hour do not feed anyone. So the real question is whether the meals are the occupancy, and that cannot be read from the outside. What is genuinely unknown: serving food to residents almost certainly pulls in a food service license and a health inspection on that kitchen, and food service licensing and what counts as a boarding house meal exemption vary by state, so that is a question for someone licensed locally before anything is signed. The old hood has no suppression system. If bringing that kitchen to current code is 60k, the meals question answers itself and the buyer is paying 165k for a building with 20k of net at best. The right ask of the seller is the last three years of the previous operator's occupancy by month, room counts rather than tax returns. A seller in this position usually says he will look, and usually does not have them. Where this stands: if nobody can say what the kitchen costs to reopen, there is no way to price the only thing that makes the building work. How would the room get to that number?