Initially, our plan was to fix the drywall leaks, clean out the property, and relist it for a small profit.

I always am amazed when someone selling a $600,000 house brings me a listing agreement where they agreed to pay a stranger $30,000 to list their house for sale and they didn't even read the agreement much less spend the $250 to have a lawyer tell them that yes, if they sell it to their cousin during the listing period they still have to pay the $30k.

Despite paying fees, doing a deal and making some profit is better than sitting on the sidelines. 

Best pay compared to cost of living.

Don't pay LLPAs and take the high interest rate?

Set aside a big pile of cash or rely on a line of credit you won't be using.The oversimplified insurance concept is to pay a small premium to cover a large loss.

The tenant must pay the full amount owed to avoid eviction, even if the judge ruled in favor of the landlord.").  

But ya have to make some educated prognostications in life.Add this to the information your processing - What your talking about doing is eliminating around $4000 or interest expense (which is deductible anyway so really could be a real impact of eliminating $2800 or so) of debt in exchange for paying over $10K in capital gains tax (don't forget possible state gains tax as well).  

Lenders don’t pay for problems.

It’s waaaaay easier for a company to fail or be unable to pay rent than you think.