How can I be prepared? 

They called this PM and he prepared all the paperwork, rental estimates, etc. 

I assumed that we would end up basically owing nothing since depreciation, repairs and non-principle portion of our mortgage payment on the house greatly outstripped the amount paid toward principle.The tax preparer said we had to pay taxes on essentially the entire rental payment since our income was basically at 150k.

Do a search online, make some calls, choose one, and prepare for the long fight.

Be prepared to visit this same area 2-3 times(maybe just on weekends) to get a real feel for the city, the areas, etc., and once you build a network of off-market folks, an understanding of the neighborhood you can take full advantage of the stuff they are showing you.Right now, you're a casual shopper looking at the retail stores wanting the bargains.

When it comes to negotiating a price, it helps to have information about the market value of similar properties and be prepared to negotiate.

However, like @Ellis San Jose mentioned above, you will command more $$$ for your property if it is delivered vacant (unless you are getting top market rent for that unit).If you do sell with tenants, be prepared when the prospective buyer requests rent rolls, estoppel certificates, rent history, existing leases, rent due dates, security deposits, and any other written or verbal agreements.

I'm prepared to invest in myself, but I want my moneys worth.

Seeking recommendations for a duplex or fourplex builder in the Phoenix area and the construction cost per square foot.Four years ago rough estimates were at $100 sqft, now I'm seeing about $200 sqft with another $50K for site preparation. 

This also will cost more in tax preparation, and I know sound tedious to do it but that's really where liability is truly parsed.Taxes, insurance, title insurance, bank accounts, finances, basically everything is LLC run.