Any advice, recommendations or pitfalls to avoid going forward would be greatly appreciated.

Finding managing contractors, getting business loans, pitfalls, things to avoid in the beginning.

I've definitely made some money both on the cash flow and appreciation (appreciation was a surprise in most cases).But that being said, the exit strategy is difficult and I can see why people lose money on these ventures.Four pitfalls I see:#1 Lack of control:  Depending on property managers who in most cases do not have your interest in mind.  

Are there any pitfalls to look out for in such a deal?

If so, what are the pitfalls?

In my opinion, this is the FHA Pitfall.

I want to know if there are folks here on BP that have been doing this and so what are the pit falls, and implications on tax and other legal issues. 

The foreclosure process is complex and full of pitfalls, I would strongly suggest consulting with a Real Estate Attorney in your locality; depending on how your set up, you may be able to write off the expenses incurred in obtaing the legal advice. 

What words of wisdom do you have to avoid potential pit falls when purchasing a note?

All I need is someone to help me lookout for the pitfalls while I gain some traction.