Am I just out of luck and need to consider it a loss and move on to someone else to finish the projects, or can I try to recoup that money?

This is a small taxpayer exclusion and allows up to a $25k loss annually. 

Loss of ability to function as a STR?

At a cash flow under $300 here are things to consider.Vacancy - loss of rent for 30-60 days plus repair cost - painting at a minimum.Mortgage (60 day vacancy) 1824 x 2 3648.  

Do people ever make decent offers on these things or is it typically going to be a major loss to sell this note?

All of this provides the public with more protection against major theft or loss of funds.

As a PM I do not want to deal with late rent for a couple extra bucks, which is really a loss, money wise for me considering, it takes time, some times lots of it, additional paper work, proper/legal service etc.Having high integrity and honesty at my core, the thought of incentivizing a tenant to pay late is crazy talk. 

Their accountant sent me an excel spreadsheet showing me the profit/loss for the apartments.

Maybe best ideal is to just get the deal accepted first with a price im comfortable at and try to factor in enviction/potential income loss from low rents into my purchase price. 

At $60/device I don't see this as a huge loss if guests come back with concerns and I have to pull them out of the space.