I cant count how many things I have to do, nor problems arising daily at the moment, and I over extended myself financially.

Long partnerships tend to get messy when each party has different situations arise in life

Trying to have a plan if the problem does arise.  

The issue arises when the lender is not on as a loss payee and the owner takes the funds and runs.

The way i am doing this is , i am networking with people on bigger pockets and will partner with them as they will be on the ground to take care of any issues that arise.

Below is what you need to know that underwriting and programs guidelines don't tell you when considering a 223(f) apartment loan.AdvantagesHighest LTV in the marketEliminate refinance and interest rate risk with fixed rate terms up to 35 yearsLow fixed rates based on GNMA securitiesNon-recourse and assumable - makes for a great exit strategy especially in a rising rate environmentNo defined financial capacity requirementsNo geographic restrictionsNo minimum population requirementsSupplemental financing availableDisadvantagesLonger processing times - 120 days at a minimum (6-9 months is typical)Higher fees - HUD and FHA fees add to the overall cost of the loanMortgage Insurance Premiums (MIP) - Initial and annual premiumsAnnual audited operating statements requiredReplacement reserve escrows requiredHUD property inspections requiredOwner distribution restrictions and Cash out restrictions 2x a yearProperty condition is important to HUD, both during initial underwriting and over the life of the loan.

Assuming there are no looming big ticket items that I am aware of, would you/should I continue to save for reserves, or just maintain that reserve and replenish as expenses arise?

As a outsider I see certain situations arising.

I'll consult with a lawyer if the need arises.

But then this does not help the Seller because he has to take the bid lower than mine.2) Bid higher than the highest bid, but deal with this situation ethically.As you suggested, and I concur, I should tell the Highest Bidder that I will also be a bidder and bid higher than his.HOWEVER, this seems to be a situation which will upset that Buyer.This situation CAN possibly arise because I am an Investor with resources.