Hello Mike, It is nearly impossible to answer this question without taking a deep dive on the numbers of each but often times in expensive markets like Seattle the cost of construction is so high that it doesn't make sense to tear it down unless you can build something way bigger/nicer.

BTW, it is illegal for a seller to receive any proceeds from the short sale,  however,  they may be qualified for relocation $$$ or other reimbursable expenses.   

Finally, short-term rentals can offer potential tax advantages, as many expenses associated with the property may be deductible.

Advice: - learn to underwrite expenses.  

Fannie Mae has a requirement that if you want to use the rental income from the non occupied units, that you MUST have a current housing expense which means you cannot live rent free.

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.

Off street parking is typically more important for high end/expensive rentals.

I understand why it is extremely expensive down there too.

Any advice on expensive flips?

After every negotiation, reflect on what went well and what could be improved.Negotiation isn’t about “winning” at the expense of the other party—it’s about finding common ground where both sides feel satisfied.