At this point, I would be better off getting what cash I can out of the property and eat the loss to move forward.

If I was the landlord I would eat it once and then put a clause saying if it happens again we share.

Once you pay for the sale also remember that you will eat a 1031 exchange fee, and if you mortgage your new properties you will also be eating the loan fees for these new properties either on the front end which will lower your available cash, or the back end which would lower your monthly cashflow.

In the worst case, you have someone to eat lunch with, when you visit the market.

(I think someone was eating in bed :(@Purnell Cook ,I was leaving reviews first, but people just never followed up.

Property taxes in the Chicago suburbs can eat away at your monthly cash flow pretty quickly.

Furthermore ... after a bit of complaining ... he said the builder would eat the owner's title policy fee.  

That will eat up $125 of your planned cash flow right there.And have a conversation with the owner to try to get the price down from where he is right now.  

I could sell some of my rentals, but that would eat into cash flow and I would have all the tax implications or try to time a 1031 which means I'm either selling low or buying high. 

Don't want a heck of  a tax bill that is going to eat up any cash flow I might realize on the rental property.