Complicated short sale to end my investing career?

[Karl Mueller]

I need some expert advice.  I apologize in advance for the lengthy post, but I need to give some background on my situation.  In 2006 my wife and I bought a condo (I know...  Now) in Western CT for 280k in both of our names.  In 2010 the condo had lost around 80k of it's value due to the market crash.  We looked into a short sale at the time because we wanted to move back to the Midwest to start a family.  We decided against it due to the affect it would have on our credit, and thought a good option would be to rent it out, which we have done for the last 5 years.  We lose around $400/mo on this place. 

1st mortgage/taxes/insurance =$1450

2nd Mortgage =$350

Condo Assn. Dues =$350

Rent =$1725/mo

Owe 193k on 1st mortgage

Owe 33k on 2nd

My agent who is very in tune with the local market thinks the unit will sell for $190k.

As a side note, I got my first mortgage refinanced in 2011 from 5.5 to 3 something, the second I was unable to modify and is at 8.5% interest.  The place rents well, and I've never had vacancy.  My current tenant is on a month to month lease, but I'm bleeding $400/mo.  Now the association has passed a vote financing a new boiler, parking lot, and air exchanger which will be costing us $3600 payable over the next year. 

Here is where things get complicated, and I need advice.  After moving back to the Midwest and starting a family, I bought a fixer upper with cash, which we live in mortgage free.  I also bought 2 more positive cash flowing properties with bank loans.  Things are going great with those, I would like to have 100 more.  But I can't get more because I have this cash sucking property on the books.  Both my wife's and my credit score are slightly over 800, but we can not get another loan for investing due to debt/income ratio.  We also don't have a ton of cash reserves to just eat a $30k loss on a conventional sale with the CT property.  Also, the renter to owner occupancy ratio has changed in the building to primarily renters which means any would-be buyers are going to have to front 20% down.  Killing our potential sale price even further.  I can't begin to describe the stress and frustration this terrible investment has dealt us.  So... in light of the huge hit on repairs to the condo facility, we are discussing short sale options again. My questions are...

What would you do?

Am I in a situation where the hit to our credit wouldn't be that big of a deal?

Is the bank going to keep us on the hook for the amount of the 2nd mortgage?

Cut our losses and take the hit or keep throwing good cash at a loser property?

Every realtor I've spoken to (granted, they are fishing for commission) says that it will be a very loooooong time before this place will ever recover it's 2006 value and it's still on the downslide. It's been bleeding us dry for close to 10 years.  It's time to make a move.  Any suggestions?  Thoughts?