The judge always presumes that the landlord is wrong, and a lot of player tenants take advantage of that.

Real community players.

Congrats on taking the first step.Since you have multiple players involved, I would find an attorney to get contracts among you guys so that it's legit. 

Both players concern me and I believe we will always be looking over our shoulder as long as we are beholden to them. 

Even though you technically need an attorney for the closing, the process can still be simpler (and often cheaper) than with a traditional closing, simply because there are fewer players, and therefore fewer people "getting their cut." 

Since most experienced players in this space would want to do bigger deals as far as I understand, is it a bad idea to do a 5 unit deal?

Who are some of the big players in this arena?

The major players in the space will quickly be identified to you as most of us are very frequent posters on the topic.The markets that are most represented here in the forums are Memphis, Cleveland & Indy.

Also, for those of us who haven't built relationships with the main REO players in our area yet, would it be a good idea to just start making lots of lowball offers on REOs that we find on an MLS website like realtor dot com, or is that too scattershot of an approach?

Here is a great blog post written by @Joshua Dorkin on assembling a team and the key players you should acquire.