The most likely scenario is that his renters will eventually do something that costs him a significant loss, despite cutting them a major break for so long. 

But if you've got one or more day zero tenants to occupy all or part of the space, that could blunt the unknown in a big way.

Any suggestions on how to cut to the chase with the bank?

No qualified commercial loans based on current interest rate and cap rate offered.To solve the problem, either the rate has to come down significantly (probably not going to happen in a few years), or the cap rate has to go up to 10s, which means the price has to be cut by almost half.For those folks that has a maturing commercial mortgage, they can not refinance based on today’s rate.

I also closed on another Class C home in Dec. 2023 -  not rented out yet, trying to figure out whether to rent it out or sell and cut my losses. 

Due to the income earned in the landlord account that goes to the benefit of the client, you should cut the check directly from the account through the bank and do as the law says, hand-deliver or certified mail.

At face value, it sounds like you believe that some of the operators of MFH that have purchased in the last 18-24 months may have to cut losses next year providing new investors a much better deal.No.....

You're better off to just keep the deposit and cut your losses. 

I've kicked the can down the road, and it ain't good.If you don't think a higher paying tenant will not show up, I would consider cutting my losses and trying to sell.

Supply seems to have dwindled a bit as PPR has moved to mostly 1st liens and cut their rate to 10%.