After all costs (tax, assoc dues, insurance) we have a positive cash flow of $940.00/mnth. 

Lastly if you read between the lines on all the feed back.  1)real estate is hard 2)everyone has a hard time with it 3)lots of people are in your position. 

Put someone  in a position where they are forced to look out for your interest as well as their own.

They wanted $240K for it, and I figured even with a 15 year mortgage, it would be more or less cash flow positive.

Between the annual reports and filing fees, and also the overhead necessary to maintain separation of assets so the corporate veil isn't pierced, the cost-benefit just might not be there.Might make the most financial sense (and most streamlined) to run her as a sole proprietor (Sch C) and carry appropriate and adequate insurance, which you should be doing anyway with an LLC. 

The positive engagements and compliments, as rare as they may be, are what keep me going in this business.

Why is positive cash flow mandatory in a real estate investment?

I would recommend researching "Capital Stack" - this may help you understand the borrower position vs. the lender position when it comes to equity and lien positions in real estate. 

@Stephen Herbert Way to stay positive.

When you "borrow against", the borrower maintains control over the underlying collateral for the loan.