Cash flowing at 5% down was possible about 3 years ago—but that ship may have since sailed.Now, you’re left with two options: you can either pony up more cash per deal, or you can potentially look out of state for markets with more favorable rent-to-price ratios.Or…you can wait for rates to decline, but I don’t know how much a 100 or 150 basis point rate cut in the next year will really move the needle.That said, some firms (usually new construction companies, turnkey providers, etc.) will enter into forward commitments with lenders at institutional rates and then pass cost interest rate savings onto end buyers to entice them to purchase a property.

Borrower Types: The Professional - HM Lender will cut sweet-heart deals to keep these borrowers around Experienced real estate investors Regularly engage in property transactions Typically have a track record of successful projects The Newbie - Charge Higher everything as the risk is higher as no experience Novice investors or first-time borrowers Limited experience in real estate Seeking to build their investment portfolio The Deadbeat - Only lend if the deal is so SWEET, they can't lose if they take the property from the Borrower Borrowers with poor credit history or financial difficulties High-risk borrowers May struggle to secure traditional financingThe lender will do an application on the deal/borrower and some standard docs they require are:Hard Money Application / ExperiencePurchase contractARV report – COMPS – See * Redfin*Pictures of Property – most people use Dropbox to shareProof of Funds – Down / Reserves (Bank Statements)Personal identification (ID or passport)But usually if the deal is sweet enough, they will do it anyway because if the deal goes south, there is so much equity/value in the property that the HM lender can't lose.

I'm not sure if typical property managers would take on the role, if they did they would want a larger cut.

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. 

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. 

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

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.....

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.