I was scared of actually getting the deal done as much as I was to losing the deal.

When you have a duplex and tenants on both sides stay for ten years, it almost guarantees that something isn't right.I would study your market and determine the value of your rental, because I bet you are losing money every month.

This also leaves me with $3,750 stuck in the deal (not including financing and closing costs, which could easily add another $20,000).In total, if I had to include closing costs and financing costs, I’d have about $23,000 (if not more) tied up in the deal and lose close to $700/month before accounting for expenses.

This also protects my downside risk because I could very easily lower my rents if I had to in a market downturn and compete vs. being forced to sell because of losing money. 

If the deal goes south and you have next to zero money in the deal, selling a short sale or walking isn't as risky for you since you aren't losing much.

You have some people in here who are cool with and celebrate losing over $1,000 a month.

Lose the holier than thou attitude; this is personal finance not a religion3.

I wasn’t prepared to lose so much of my savings as carrying cost basically I paid for the tenants to live there for 3 months + my own living expenses in that time.

If neighbor says they own it I would tell them I plan to construct a new one next to it on my property line even if I needed to lose a couple of feet of yard. 

As when people lose their jobs, the vacations they take is the first choice to cut back on.