Under Chapter 13, if a wage earners income has a significant change, wins Lotto (LOL)  creditors may file a motion to recover debts on a different schedule, so they may not be out of the woods until debts are paid.If a bankruptcy has not been discharged, dealing in real estate with a debtor, get permission from the debtor's attorney in writing or better yet, consent from the Trustee.

I could manage to get 50K but that would drain me a lot and any mistakes or bad luck would put me in hard spot to recover. 

The property sold for over $150,000 in 2007, so not a war zone...now granted that was then, before the crash, but the if the market is projected to recover at some slow but predictable rate, then appreciation could happen, but won't if the intrinsic value of the homes has decreased because now they are vacant and boarded up.

You would likely spend more in lawyer fees than you would be able to recover.

The bankruptcy could potentially stall your being able to foreclose or recover your investment for a good deal of time though.QUESTION: Do I run any risk of losing part or all of my investment?

It's a REO which means the bank already got it back at the foreclosure auction, they own it, so now they are selling it to recover as much of their money as they can.  

It's best to make sure that your parents feel that you are putting them in the best place to recover their money should things go sideways.

The recession hit Dayton hard but it is recovering. 

Even if the entire project flops I would be able to recover long term as I am young and enjoy the risk.  

In market cycles those areas are last to recover and first to fall down.