In general builders have pulled back in a major way due to the decrease in buyer activity as a result of the sharp interest rate increases.

I would look at ways you can increase the income (especially if below market rents) or decrease the expenses (insurance payments, property management fees, etc...).

Another option would be to raise rent a little slower, like $100 for those going month-to-month, but decreased to $50 if signed a new lease.

No - Paying down a mortgage(decrease in liability) does not decrease the capital gains you have.

However, y'all are entering a period of increasing inventory and decreasing buyers along with sellers still having the mindset of "what could have been if I sold a year ago" .  

You get the idea.Now, there is a huge difference in pay between a Regional Airline new First Officer who only makes $18,000/year and a senior Captain at United in his last few years before retirement making $200,000 plus per year (and always decreasing, not like the good old days).The junior FO making $18,000 will have no choice but to rent a crash pad if he doesn't live in his base city.

@Mike Stevens Just saw an article in Remodeling magazine this morning, that the EPA is proposing a rule change to decrease lead levels on floors and window after lead removal work.EPA Seeks to Tighten Dust-Lead Clearance Levelshttps://www.remodeling.hw.net/business/epa-seeks-to-tighten-dust-lead-clearance-levels_o

Functional infrastructure can only maintain the value of a property, not increase it; non-functioning infrastructure will in fact decrease value.

I don't know if any seller would be comfortable decreasing the price $60k ($466k).Any advice or creative ideas on how I can move forward confidently with this deal?

In some neighborhoods this will be worse because as the property value decreases it takes less property distress to push it into the "Not worth the work" category.