@Keith Marble you are missing a lot of the expenses (property management, repairs, maint, vacancy, loss to leas, reserves, etc.)There is no way insurance is $320/year for a $200K property.

It might also set the new property taxes rate, and your gains (or losses) rate...

Let's say the water heater started leaking and ruins some clothes, or the roof leaks, or their refrigerator goes bad and ruins their food?

The bank will sell at a loss and the next owner will evict.

Come to find out SC does not allow for out of State Sched E losses.  

He purchased lower than they paid, so it does beg the question of why they are leaving Memphis at a loss?

Food for thought. 

You would be hit with a 10% penalty, plus income taxes on the TSP, plus have less money growing in your TSP until the time you withdraw (opportunity loss).  

Are you saying total construction cost + loss of rents was $89k and you were paid $95k and pocketed the rest? 

If you've completed a BRRR and later on the rent falls below your expenses AND you're underwater, you're taking a loss.