The house only spent a week on the MLS before it was sold in a multiple offer situation.

There are a thousand situations where insurance will not and cannot cover you so why in the world would someone rely solely on that? 

If your financial situation changes between now and the refi then you will have a hard time getting your money back.

Some of the larger expenses-Interior/Exterior Paint, Storm shutters for a few of the front large windows, added additional cabinets to one unit,  New refrigerator from Dent/Scratch store after old one died,  Laundry units that tenant pays +$50/mo for etc. 

We bought the house 2 months ago knowing the pump situation isnt best and were going to replace it during a renovation anyway.

Hello BP community, I have a situation and would appreciate some of your input.

There are other strategies out there, and I don't know your financial situation, but you should plan on showing up with some money.

Here's the situation.  

@Andres Felipe Aristizabal, There's two situations where it might be worth your while to consider a 1031 on a property that's underwater.1.

Congrats on creating a great win/win situation where everybody comes out happy!