With multiple properties you limit the loss of rental income from a single tenant.

I have never had to make this hard a decision but after doing the same thing over and over again, do we cut our losses.

Demand that the lender give a loan for the sewer repair, just to avoid a foreclosure and certainly high loss on the mortgage loan. 

the follow up question is whether or not it's possible to recover your "own" excess funds?

Time is money in rentals and every month is a loss.

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

Indy Class C #2 sell it and cut my losses or try to rent out at -$200 to -$250 cash flow (got an honest property manager feedback) and hope it stabilizes in 2 to 3 years.

Would you feel comfortable sharing your approximate "loss rate"?

You likely won't be able to offset the rental loss with your W-2 income unless you can claim real estate professional status or operate it as a STR and self-manage it.The answer won't change even if you own the property inside of an LLC.Best of luck.

The thought is, if the structure is rebuilt, you would be in the same (or most likely better shape) than pre-loss.