Most people dump a few hundred dollars a month into a savings account without thinking twice. If you're losing a few hundred dollars a month I don't think that's a big deal. Think of that property as a savings account. Except that the mortgage balance is getting paid down ($), you get great tax write offs ($$), and if you bought a decent property then the rent will increase ($$$) and the value will go up over time ($$$$).
If it was me, I'd keep it and move on to the next deal. You can always reposition it later (refinance, re-rent etc....).
I bought a deal that was a negative cash flow from day 1 because of my financing (13% interest rate), and I knew it was under valued but that the market hadn't caught up to it yet. I purchased it for 90k and based on the current available comps the appraiser also said it was worth 90k. But I knew it was worth at least 120k, but there were no comps to support it. So I bought it anyways and lost about $300/m. I have a great tenant pool in that area FYI (very important). 15 months later it appraised for 125k and I refinanced into a small positive cashflow but a huge equity position.
Not all negative cash flow deals are bad.
