I need to refinance in two months. The property is 14 suites, 5 of them are unoccupied. Those empty suites are really going to make finding a good loan difficult. Are we better off getting those leased out at a very low rate before a refinance?
I got too caught up in trying to get market value. The market value is 18.00 a square foot. Now that I have no time left, and I have 5 empty suites, it's difficult for me to find a loan I'm happy with.

I know leasing suites out below market rate will devalue my property, but I wonder if it's more important to get them filled before the refinance, or of if I should just take a shit loan with five empty suites, and then really take the time to negotiate the best rates.
[{"id": "fjynvqz", "text": "No, that would backfire. They\u2019ll ask for the rent roll when sizing your potential refi and if all goes well, they\u2019ll apply market rates and market vacancy rather than your actual vacancy. If you sign on a couple of low rate leases, you\u2019re locking in poor financial performance for the next year.", "replies": [{"id": "fjyyi6v", "text": "This. All valuations take into account market rates for vacancies and can act as a benefit when dealing with occupancy issues.", "replies": [{"id": "fka6ji0", "text": "Thanks I appreciate it! I'm still new to commercial real estate and I feel like I know nothing.\n\nJust so I get a clear understanding, they will value the space around market rate even if if it's unoccupied without a signed lease? \n\nHow can it be a benefit?  If I'm understanding correctly, if I'm having trouble leasing out near market rate, an appraiser may value the empty spaces near market rate,  (assuming the spaces are average) and then I can use the appraisal when negotiating?\n\nI haven't refinanced before and assumed the empty spaces could immensely hurt the value, and possibly destroy my chances at refinancing.", "replies": [], "depth": 3}], "depth": 2}, {"id": "fka281y", "text": "Thank you I appreciate it! I have little expirience and my head has been spinning, I got so caught up between the pros and cons of the two choices.\n\nJust to vent real quick, my mom spent the last of her life In a run down piece of crap nursing home, with less than a thousand in the bank.\nWhen she died I was informed about a \"property\". You can imagine how far my jaw dropped when I learned what that \"property\" actually was. She never talked about it, and I thought she was broke.\nInvestigating the records, I learned she filed for bankruptcy, yet somehow clung to the property by a thread. But it wasn't adding up.\n\nThe management team had a complex system going to illegally funnel money to themselves behind my moms back. I only figured this out because the numbers weren't adding up. Years later, we are still trying to \"fix what they broke\". On one hand, they fucked us. On the other, their willingness to break the law and keep the property afloat for their own interest is what saved the property.\n\nThe banker who \"bought the loan note\" claimed I owed over $50,000 immediately after my mom died. Apparently there was some complex stipulation in the agreement he was referring to. His lawyer threatened court and foreclosure if I didn't pay up. The most baller individual ever tracked the loan note history back 10 years and was able to prove the amount was paid years ago. His lawyer of 15 years literally quit his job the same day we sent an email exposing his bullshit. The banker still bullied me into sending him $5000 before he would sign my \"leave me alone about that bullshit and other potential bullshit\" agreement.\n\n\nOver a year goes by, my team and I worked real hard to bring the property back to life, some bullshit here, some there. Now Im dealing with a roofing company that caused black mold, thousands in damage, and many other issues. They skipped work dates and avoided emails even though we had a warranty to guarantee repairs. They knew I was in a desparate situation and were hoping I would hire someone else to fix the repairs. To avoid liability of course. I got the ROC and a lawyer involved and the Bills are stacking. The ROC told them they had to fix it, it was worse than I thought. \n2 months goes by and they didn't fix it properly. Right as I scheduled an evaluation, 3 more leaks suddenly appeared. All in different suites. I need a 1.5 million dollar loan in two months to refinance before the balloon payment.\n\nNow the economy is crashing and this is really bad timing for a (possible) recession. Are banks less willing to give loans in times like these? Or are they more willing to give loans?\n\nI feel like I don't even fully understand a financial statement. You commercial real estate folk are fuckin wild haha.", "replies": [], "depth": 2}], "depth": 1}, {"id": "fjyqyq5", "text": "Look for a bridge loan. Short term loan and they may even cover a portion or all of your leasing costs. Rates will still be attractive, and it buys you more time to lease out vacant suites", "replies": [{"id": "fjz3wmv", "text": "Came here to say this. Don't take a long term hit to your NOI to try and save a couple grand you'll pay for a bridge loan. If you need or want to sell during those terms it'll hurt. Keep your flexibility, get a bridge loan, lease the vacancies, refinance. That said, if market is $18 and you're asking $18 why haven't they leased yet? That tells me either market vacancy is high, your space value isn't $18, or your marketing efforts aren't effective.", "replies": [{"id": "fjzkctg", "text": "I am a bridge lender - the first thing I'd tell you about bridge financing is \"find a competent debt broker\" to source it for you. Don't try to do it yourself. I'm not soliciting your business - borrower direct never works out but send me a PM and I'll help you with what you need to know.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fjytrss", "text": "Loan broker here. What\u2019s the debt service coverage prior to the vacancy? If it\u2019s 1.25 or below, I agree with the bridge option. Buy at least a year of time and get some quality tenants in the vacancies. Feel free to dm me for more information, I can definitely help with this type of loan.", "replies": [], "depth": 1}, {"id": "fjz88ez", "text": "Dude you won\u2019t lease those in time. You need to find a bridge lender, can lock at l+270 today. Do that and then get a permananet take out once you\u2019re stabilized. You need to get moving like tomorrow on it.", "replies": [{"id": "fjzk6t1", "text": "I am a bridge lender - that's pretty aggressive what you're suggesting for rate  depending on the asset and size.  But I agree that OP needs bridge.", "replies": [{"id": "fk1d92e", "text": "You are right, small deal size. I manage a sector specific credit fund and would get a deal done at that rate through one of our syndicators but smallest loan we would touch would be like 10mm UPB. And we\u2019d probably have a full cash sweep until the thing stabilized.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fjzfq8x", "text": "Get people in there at market rent with a promise of a rent abatement/rent holiday later on in the lease.  That will satisfy the banks when looking at the rent roll.  \n\nHowever, this is under the assumption that the bank underwriters will not want to look at your individual tenant leases", "replies": [{"id": "fjzpczh", "text": "?? So commit fraud?\n\n&amp;#x200B;\n\nThe banks will look at the leases.", "replies": [{"id": "fk104ls", "text": "That\u2019s not fraudulent, I\u2019ve seen owners do it all the time to entice prospective purchasers.  Fraud, in terms of refinancing, would entail completely fictitious rentrolls (I.e., claiming rent for a spot where there is actually a vacancy).", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fjzu1x6", "text": "yes. month to month or short term.", "replies": [], "depth": 1}, {"id": "fk0t3vp", "text": "Try to lease them out with a high face rent but a lot of concessions. Like give them free 6 months plus 3 months move in with a higher monthly rent. This way when you go to finance your face rent on those leases looks higher even though the effective rent is actually lower.", "replies": [{"id": "fk0wimx", "text": "lenders read leases.", "replies": [{"id": "fk0wou5", "text": "Not always that carefully and it might not matter and things like early access may not even be written in on a small lease.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fkfz5cs", "text": "You really need a robust financial model where you can run scenarios to see what the IRR, refinance amount, cash on cash, etc look and then make an informed decision based on the numbers...in addition to knowing what you can realistically receive in rents, vacancies, etc.\n\nI\u2019ve always used the model templates at \nhttp://tsmfinancialmodels.com.  \nThey have multifamily acquisition models that have saved me a lot of time and money and helped make these decisions easier for me.", "replies": [], "depth": 1}]