(they aren't giving us credit for the deal being an income-producing MHP, therefore the value they base their loan on is severely under what it should be).  

On the other hand, even with average numbers flip should produce at at least 20k+ in profit. 

Putting 20% down will reduce your monthly mortgage cost and produce cashflow more quickly.

Set my two properties on a new glide path to produce better cash flow and in a position to pay down the balance faster and leverage the equity for future investments and purchase another rental property in the following year?

Markets with good cashflow don't appreciate as well, and markets (like Socal) that appreciate well don't produce as much cashflow.

However, don't forget about the income that the property itself produces. 

My plan is now to generate income producing properties.

Check your lease.It seems to be a judgement call if he produces a $5,000 receipt.

Despite the headaches, it continues to produce cash.

Unless you can afford to hold them without producing for some time until everything stabilizes again.