Cut your losses.

They also offer income loss protection. 

In some cases I can cash flow a property for years and still sell at a capital loss in the future.

My property manager's time is also worth more than this, and so it's a net loss to pay them for this service instead of CCL.

I decided to send a polite letter with photos to the tenant (who left shortly after the portable washing machine was discovered) outlining my losses not covered and asking for a small cash settlement from them.I thought they would either pay or discard the letter.

If you want to be active and want to be involved with some of the day to day decisions, as long as you have a great team in place the hours you will work will be minimal. 

I purchased this house for cash, did minimal work, and then listed it on the MLS and sold it to a builder.

Try to minimize financial loss in the process which is what you did.You can still try to pursue him for damages.

For what its worth most deals I deem meeting minimal IRR standards is 13-15% but you have to dig a little deeper to uncover the real placements of cashflows and capitalization events... and then dig even deeper to verify the assumptions such as occupancy, rent increases per year, and what reversion cap rate was used.Again I don't look for IRR cause its manipulated a lot instead I look at total return on a 5 year basis.

So here I am, having recently been laid off from a primary job (I have 2 full time tech jobs) and am not only SUPER glad I don't have that 3K a month mortgage to deal with (that said I am making the same from my one job now that I was when I lived there, it was only after I sold it that I picked up the second job but you'd be amazed how you get used to having a 30K a month gross W2 income, even with one job loss it still feels like you have none despite having a second...) and am living in a house that costs me less than 1K a month mortgage wise AND...that house that I sold has barely moved in value at all since I sold it.