They are for holding that property only - that money IS your cash flow. 

We were not aware of this at all, and now we feel like we are not getting the support we thought we would get with Rent to Retirement.

THEN you have to support yourself while you are working on your first deal. 

Like many new investors, I had little cash and no access to traditional lenders.

After more than 5 years, you should more than triple your cash investment.

My question is, do I just not touch the first property, use the cash flow to reinvest and pay down the mortgage or save up for a downpayment down the road OR do I pull cash out of the first property to buy the next property?

At $1200 in rent, you will probably have negative cash flow. 

I have noticed that almost no property at this moment is creating cash flow here in San Diego for long term rentals.

Quote from @Adolfo Herrera: I recently bought a piece of land(cash) in my hometown in Texas and I am looking to start building a home to sell.The lot sits in a new neighborhood and is in the more affordable side of the Rio Grande Valley.

This ordinance will drive out small, local owners, replacing them with cash-rich, out-of-town corporate owners.