When to cut losses and pass on bad neighborhood?

[McKenzie Bagan]

This is a not happy post and we feel like we are in a difficult spot. I did my first Brrr property and things have been tough from the start. I was able to get the property renovated, refinanced and listed with a property manager. It has been a difficult process for the beginning. The repairs were more than estimated and the refinance came in a a not good rate. I can admit I made mistakes in buying this property and investing but it has been a very valuable learning experienced. I am in the process of getting it rented with a property management company. Unfortunately, when the PM was showing they found the property had been broke in to trashed. Looks like some teenagers came in and messed the house up. The management company was good an contacted the police for a report. We are going through insurance for repairs. We feel upset and saddened by the news of course. We feel like our hard work has been torn down. It just plain sucks, but we know that these risks are involved in reral estate investing and we were just unfortunate. 

The property is in a bad neighborhood and it has been difficult to rent. We have had no applications in 3 months despite lowering the rent rate. The latest rent reduction would have us not cash flowing at all. We would be ok with just having the mortgage and expenses covered but now that the broken in to and trashed we are thinking about cutting our losses and selling. We will go through insurance to have the property repaired but we are worried that it will just get broken in to again. Vacant properties in this area just get terrorized by teens and we are not sure how we could secure the property more even if we put bars on the windows. We would like to keep the property and make it work but we are worried that there is just no saving this neighborhood and wonder if its better just to accept the loss and move on with the lessons we learned. 

Does anyone have experience with cutting your losses on a property and getting out? Should we keep trying to fix it and get it rented evening though the area is not improving (or at least won't turn around for what we can see)? Can you carry forward real estate losses on your taxes? Do you have to right off all the losses at once or can you do it over time? Figure if we have to cut out we can look for a silver lining somewhere and save a little on the gains from our other ventures. Any thoughts, comments, or just support messages is greatly appreciated.  Thanks