@Seth Hochberg On your second question it comes down to how important would that money be to beef up what I call your "eats bucket" of money.  

We enjoy going to sports games, eating great food, and enjoy fitness.

Your excellent real estate agent may be instrumental in this.A final consideration:  if the floor guy is willing to back up the $4/sq ft refinishing bid (i.e. if he biffs it he'll make it right and eat the cost) that's one thing. 

All of that is done on your schedule E at the end of the year and you will be able to deduct the mortgage interest, depreciation, repairs, taxes etc....Get with your CPA to figure out all of your options and how best to use them so it does not hurt your future purchasing net rental income.

The buyers even agreed to eat the difference if the house didn't appraise for the sale price (and it didn't).

Also it's hard to time that market bottom and in the meantime you're losing real money since inflation is eating up your cash (assuming you don't have it in something else that you can sell easily like stocks...which also might crash).

It seems like MIP is going to eat all my cash flow.

You are eating in the gutters with cars/bikers wizing past you and every 15 min you get a lovely view of a dog pissing 15' from you. 

The animals held their value in dollar terms and he could eat or sell their milk for short-term cash.   

I get the idea that the 150k payback delay is not going to make you eat cat food :-)Hopefully he does make it right when he can and does his best to repair the breach that this situation has created.