My issue is that I don't want to buy the property for cash and then have my end buyer change her mind and back out leaving me with an unwanted property and no cash.There will be contracts involved for both parties but what specifically should I do to protect myself so that I don't end up getting stuck in the mud.

We bought 1 property for $15,000 and flipped it from top to bottom for a total investment of $43,000 We have also bought several in the price range you are looking at and been able to rent them with very little extra cost involved.

Or are there much smaller regional REITs that aren't publicly traded that I could become involved in?

I'm excited to get involved in the Bigger Pockets community, I've been reading through the articles and forums over the past few weeks, there's some great information and resources here!

Who is involved in the 1031 Exchange?

Has anyone heard of them or been involved?

The work involved in finding the deal is the same and the returns is higher.Regarding your question, instead of going for average cap rates, I would buy a property if it makes sense financially in a location with solid job growth.

If so, what's their involvement?

Generally the short sale lender wouldn't be involved with this.

Heck, if you do not mind me installing a keyless entry, I would build a web site for the property, pay for listing and handle all bookings and automatically email you every booking agreement as well as give you access to a web based system so you can see the details of all the costs involved in your property for 10% :)!