As a general rule of thumb, an educated buyer will not pay substantially more than the average price for a home in a neighborhoods.  

My concern with the market here is that the homes that are selling in the 350 up range are all leveraged by buyers to the absolute max.

Call an agent and hire him/her to be your buyer's agent.

The end buyer was able to get marketable title on their purchase.

This would prevent another brokerage from marketing the property and also protect them from sellers that have found a buyer on their own and are trying to cut out the broker fee (this does happen).

A lot of people make it seem like this:1) see obnoxiously grassy lawn2) knock on door3) see a visually distressed owner4) ask if they want to sell their home5) they say yes6) get them to sign a contract for me to acquire their home for 30% off the value7) pitch to buyers8) sign contract to buyer.9) send docs to title company10) receive cheque...and BALL OUT/ReInvest lolI feel like this is partly true but maybe missing a step or two.

Also, I have found it to be very beneficial to get a home inspection after rehab and before listing so you know what to anticipate from a buyer's home inspection after you receive an offer. 

Show we just save up a down payment once we clear our debt and go the FHA first time home buyer route ?

You will be pleasantly surprised at the difference of having your tenants all in one place. 

If you are "broke" as you say and can't afford top dollar, he will just move onto another investor or better yet a retail buyer who is looking to live there.