They find housing on own that can be covered by insurance if home uninhabitable and it is due to covered loss. 

If you want 100% of your investments in public equity, that is fine and you will reap those rewards or suffer those losses.  

I am not sure if it was just my market or more on their end but at the end it was a pretty big loss for us, so we cut it. 

Not sure is selling individually is worth the headaches or count my losses and sell as a whole, if there is any? 

It would have been a different story if we were selling at a loss or a very small gain, but we were happy with the profit we made from the sale, and more importantly the experience we gained, so all the time and effort felt worth it to us.

Laws are now passed that prevent you from renting to yourself and claiming all the losses.

Realistically, many properties that go to auction may be in such bad shape that they don't justify the high bidding amounts, leading to losses as I mention above. 

Make sure you understand the basic math, what qualifies as a good investment, how to manage your investment and prevent losses, etc.I would start with Set For Life by Scott Trench.

I have seen it too many times where an investor will buy an older property or even a new build, they net cashflow similar to you for a year ($100-$200 per month) and then a $5,000 repair or insurance/tax hike here hits them and it's a loss - they either get forced to sell or are majorly setback and unmotivated. 

However, they aren’t responsible for losses, debts, or costs—these remain the property owner’s responsibility.