However as you correctly point out this is far more risky and or its risk capital compared to buying a income property.. but the reward can be strati-spherically higher .. not just a little bit but it can be life changing profits on some of these deals.

OP your byline references Lakeway, Texas.

If you're referring to the Gain on Sale from your example, it's a Section 1231 Gain and is taxed accordingly. ...

When talking to property managers, ask questions regarding any guarantees they offer owners and refer to any online reviews to get a better idea of how tenants and other owners feel about working with the company.

What they could have done better is referred me to a better PM, who actually does better work, they could have helped me in analyze the property better, they could have atleast helped me get a property which does not loose value over time but gains it(which they clearly lied to me about).

Happy to provide you with references if you ever decide to try it out in Memphis TN.

Please let me know if I can refer you to my contacts to discuss. 

Finally, you post that your market is super hot for buyers, but then you don't mention what market you are referring to. 

Since this is my first go around - I'd really appreciate advice on the following:- any references on lawyers /firms to work with to go through the Barment and foreclosure process without breaking the bank.- Ball park ranges - what can I expect the cost of this process to be?

Also F is very important because it shows you are focused on small things that can have big rewards over the long-term and you aren't complacent.