I would not start over. I would fix the holes, maybe add a new board around the bottom where it may be rotting. Definitely cut some ventilation holes near the top of the walls (not on the north side). You could find an old window at a salvage yard and install that for light, or even plexiglass. Maybe put another latch of some sort at the bottom of the door. I have seen some coops with window holes cut, hardware cloth over the holes, then plexiglass or plastic sheeting over the hole to block wind, but let in light. In summer just take down the plastic/plexiglass. Cut a pop door and add a run, or let them free range in your yard. Inside...fix a roost with 2x4 turned with 4" side up, maybe a poop board underneath the roost, 3 or 4 nest boxes (milk crates, cat litter boxes, etc) throw some shavings down and you have a hen house! You could make a space near the front for your feed and supplies. Later you could make a chicken wire partition for the front 1/3 of the building and put your rabbits there. 8 hens will need a minimum of 32 square feet in the coop (4 sq feet per bird) but more is better. Less pecking and squabbling since you wont have a rooster to keep order. What are the dimensions of the shed? I would try to jack the building up and put it on pavers or bricks to keep the bottom from rotting any more (if it isnt too late). Go to salvage place or Habitat for Humanity store, Big Lots, etc to find some cheap linoleum to put on the floor, then put the shavings, 3-5 inches deep (read up about deep litter method). Of course if the roof leaks that will have to be fixed. I definitely think this shed is salvagable!
