Every month, property 2 has been paying most of the mortgage on that Property 1 home equity loan.

Now my question is; is ~$2450 rent enough to cover mortgage of $320,000?

It would be helpful to me at this time, to have about $25K in working capital for work on one of my multi-family properties.

However, this is not specific legal advice to you, just an opinion based on the circumstances described.  

It's a small place so I'd guess it won't rent for enough to cover your expenses anyway so I'd probably sell, especially if the loss is small, it unless it's in a great neighborhood that you think will do well over time. 

In my area, U&O inspections are done on every sale and varying rentals from annual to just on turnover.

Exclude any units that are out of your league and focus on similar comps. 

Feel free to ask if you’d like more tips on what to look for in a PM. 

Essentially, it was one account with the bank tracking individual tenant details on your behalf.That said, it’s critical to ensure your financial records remain accurate by reconciling the account on a monthly basis.

There will likely be a partnership return required where you flipped a house with a partner and lost $120,000.If you sold the other property within the same partnership, it will also be reported on that partnership return.The net result to you is that you will receive a K-1 showing your income / loss which you then use to report on your individual return.If you made no money within the same year, you likely pay no additional taxes / get no additional refund.Best of luck.