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. 

There's no magic pill.

If you are in this business long enough you will undoubtedly arrive at situations where taking the small loss even if not fair or warranted based on the circumstances is best if it keeps everything moving and avoids more costly delays, liability and inconveniences.In this case, if you withhold the $2K, you still have to find someone to complete the work to your satisfaction.

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. 

If I can afford the financial loss of it not being rented those months (2K mortgage) then maybe it's at least worth trying?

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.

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

It sounds like this may be a loss but I am sure you have learnt from it.

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

I run sum numbers for you please see comments below before refinancing and post refinancing .If I were in your position, I would approach it as follows:Initial Investment Assumptions: Market Value: $360,000 Purchase Price: $360,000 Equity: $0,000Financial Breakdown: Hard Money Loan (LTV 100%): $360,000 Interest Rate: 10% (30-Year Amortization) Monthly Payment: $1,995Upfront Costs: Origination fee (1%): $3,600 Closing Costs (3%): $10,800 Renovation Costs: $10,000 2 Month of Carrying Costs During Renovation: $5,390Total Upfront Required: $29,790Total Capital InvestmentPurchased price $360,000 Upfront Costs $29,790Total: $389,790To make this investment work, you need to rent the whole property for at least $3,165/month, refinance it let say after one year with 5% interest with a traditional mortgage.Year One Rent: Monthly Rent Income: $3,165 Monthly Rent Losses during renovations (2 Months): -$6,330 (-$527/month distributed over 12 months) Total Rent Income: $31,650 per year => $ 2,638 per monthMonthly Expenses: Hard Money Loan Payment (10% Interest): $1,995 / per month interest only Property Tax (Assuming $3,000/year): $250 per month Property Insurance (Assumption): $100 per month Utilities (Hydro, Gas, Water): $292 per month Assuming 0% Vacancy first year Assuming 0 % Repairs & Maintenance first year because unit has been recently renovated Total Monthly Expenses: $2,637Monthly Net Cash Flow: $1Post-Renovation Refinancing Strategy:So far, we’ve purchased the property, completed renovations, and rented it out.Next, you can approach the bank for a refinance to consolidate your initial investment of $29,790 plus your 360k debt into a mortgage.