I'm looking for a reputable agent and property management agency that are familiar with working with out of the area investors. 

@Marvin Barrera you can typically go to a local real estate agency's website and they'll have a search engine you can use to look at "for sale" listings on the mls.

A little off topic, but I used to work for an employment agency (for the agency) and made 100s of calls for job references.Many employers will only state black and white facts, ie if the employee worked there, the time frames, their salary and title. 

I might do it if the agency would be responsible for rent and security deposit/damages.

Generally speaking, for FSBO, can the buyers and sellers just use the standard MLS form for the applicable state, and simply cross out parts of the contract which deal with agency, etc?

If they are veterans, I would first send them to various VA agencies to ask what can be done. 

Local banks and credit unions do have a place when it comes to unique situations, creative financing, or unique investor profiles, but most of the time a mainstream lender can give you the same product, or in this case a product the local lender can't (FHA). 

Rent is always paid in full but the agency, if the tenants screw up, I can threaten them with calling the agency. 

I did this for years as a licensed broker in CA.. basically that's all I did.I did not enter into an agency with the seller I bought the property from the sellerI disclosed I was an agent and buying for profit or loss... 

What we had to do was to look for deals that were not your plain jane deals. 110 units has a HOA component of 38 condos, big institutions don't like and Agency debt is not an option.