Since you bought it primarily to resell and since you need the cash to replenish the coffers you're right to steer away from the 1031 on that one.Regarding your second problem I know exactly what you mean.  

I can replenish my reserves at a rate of about 2k a month so I would not have the line of credit open very long.  

Between budgeting for major expenses and replenishing your reserve when emergencies do occur, you should be able to maintain a much lower reserve than $10k/property.

It sounds like you have a common problem of deploying all your capital into deals that do not generate a ton of net cashflow you can use to replenish your downpayment kitty in a short time.

Time is money - but unlike money - you cannot replenish time. 

If you don't, I'd personally use some sort of cheap short-term fix such as a loan from 401k (again..don't know your financial position at the moment.)You're nearing retirement, whatever bottom line profit you make from the flip with your partner should go back to replenish your $23k you've spent from.

@Anastasia M.Could be a leak, could be kids running the water for fun, could be something else like a broken soft water treatment thing.I know recently I had a soft water processor in one of my houses that had an issue with refreshing/replenishing such that it would drain all day every day.

You would take the $45,000 from you self-directed IRA then refinance and use the money you pull out to either replenish your Self-Directed IRA or redirect the proceeds to another investment depending on the rules of your IRA.

For me, it's about business process - being efficient, protecting my time investment (unlike money, time cannot be replenished), and getting it done. 

I’ve gotten down to dollars in the bank account and it never fails it gets replenished right when it needs to.