Your options would be to sell it, and most likely take a loss on it as you also will have closing and realtor costs involved which you can assume that would be 10%.

If your SPACE is considered as residence SPACE at the time of the sale, then your former business usage DOESN'T affect your gain/loss calculations, unless you took or were allowed to take depreciation for use of your home for business or rental purposes. 

If your going to loose you can take a loss or re fi into 7-8 percent dscr loan and hold for 5 years or so that is what I am seeing with the prepayment.

If you're still using "rules" to bid on properties , especially in this price range, you're destined for a loss.   

Since real estate for you will be treated as a passive investment, you won't be able to offset your personal income with losses.

@Jay Levy that's a lot of asks and is too much to type.So, here's copy & paste from our website that may answer some of your questions:-Robust Tenant ScreeningA bad tenant can lead to thousands of dollars of losses via unpaid rents, legal fees and property damages.

This negative position can consume years of cash flow to recover.

However, there's obviously no guarantee in what they'll find... so - how do folks mitigate the risk of the 2k-5k loss when looking to purchase a new property for a plan like this?

If there is no solution other than "you take the risk", it seems this would be a death-toll to selling houses at auctions absent a huge bucket of cash to cover losses if they happen.  

If this is an accepted practice in North Carolina then something is definitely off.It seems like an awfully underhanded way to finance a potential vacancy loss using the outgoing tenant.