Motivation is an emotional response to a circumstance, not the circumstance itself.Someone in foreclosure, job loss, tax liens, are all circumstances.

Factors such as competition, food trends, lack of management, ingress etc, can close these stores. 

You can't predict how someone will react to any circumstance.Let me ask you this:Where would you go if you were a hungry lion in the savannas of Africa to find food?

You get what you pay for in all cases: while shopping for food, clothes, attorneys, CPAs, Doctors and Realtors. 

Thoughts on (1) biting the bullet and starting the foreclosure process versus (2) waiting it out and trying to sell the property (at a loss)?

I’ve given food to hungry people, I’ve given the shirt off my back to an old naked woman, I've bought shoes for kids, built a school for aboriginal tribal families in the mountains, and handed out toothbrushes.  

Fewer doors to sell.I would compare loss of revenue to savings in loan.  

This all comes down to how you're structured, how the flip cost were accounted for, if there is a partner (you mentioned "we").If it is an S Corporation and you "distribute" or "sell" the property to yourself, if there is any loss on value, which probably there isn't, know it most likely won't be deductible if it's a related party transaction.  

I believe it tends to give me a slightly lower return, because the sponsor is going to be more careful, and if there is a severe downturn will prevent me from taking catastrophic losses.

Every turnover will cost you money due to vacancy, Plus you run the risk of additional losses from unpaid rent, cleaning, and repairs.