Be careful of collecting receipts that don't reflect sales tax being paid - bad for you come audit time.

Definitely don't want to get audited or anything of that nature.Thank you all for your comments

BY ALL MEANS, if you do this, write the checks and make the payments (you might get an audit  and escape the problem with truth)

You're gonna be screwed in audit. 

Also spoke with 3 or 4 commercial loan officers and sent over the lease and audited financials of the tenant.

I just got a call from my insurer to schedule an audit.

The upside is reduced audit risk.

You should have audited that account.I suggest you have your attorney advise you, not your PM or others on the internet, when you need legal advice see an attorney.....maybe one of our resident attorneys will chime in and tell you the same thing. :) 

You need to Dig into the vacancy and find out what's going on there as well as auditing current rent roll to ensure everyone is paying.For a distressed asset like this the lender will be looking more at you than the property so you will need experience, track record, a larger down payment, good financials and cash reserves to carry the property during turn around.You will also need to show the lenders the reason for the vacancy and prove to them you can fix it with a solid plan to increase occupancy. 

I mostly work in financial statement audits but am very familiar with the tax treatment of various real estate investments.