My partner is a savvy realtor and despite both of our best efforts, we have yet to see a cash flow positive month since we listed it in January. 

Here's an article I wrote recently for the BiggerPockets blog about short-, medium-, and long-term passive real estate investing options: https://www.biggerpockets.com/blog/gaining-financial-freedom...

I read last year you could rent out as STR for up to 90 days, but sounds like DC has eliminated that STR option this Febuary?!

I just received a letter stating that the only option they would offer me is a short-sale and that I was not eligible for a forbearance since I indicated I was interested in selling the home. 

Because the market is difficult right now, it may take much longer to buy your next property, but you will be better off saving and investing from a position of strength rather than borrowing money to borrow more money.

A well- maintained home will likely cause the tenant to view it positively which will cause them to take better care of it and stay longer.

And even if not passed, there have been some less than positive press on funds to acquire large numbers of SFR in certain markets, and local governments are becoming less accepting of them.

Repair and replace might be the most affordable option.

With $1M in cash and you clear investment goals you're in a strong position.

Some examples of strategies and mortgage options that can enhance investment are:- Check with a local credit union to join.