Final sales price was $138,000 and after all expenses we netted only $15,488.  

For the drawing up the paperwork, the one option you would have is to essentially be the bank and write up a deed of trust and promissory note and put a lien on the property payable with a due on sale clause or however you structure the payments. 

So I know i'm due for some taxes on the sale.  

Are they now the trustee in a foreclosure sale? 

My best friend has been waiting on a condo that's is a short sale .

Here it goes...Will contributing to a traditional 401k to reduce my taxable income now reduce my W2 income essentially limiting my buying power for acquiring more RE?

Sales price $156,0002. 

We are semi new to the market of whole sale and flipping houses.

This will not hold up in a court of law, as there is "Real Property" involved in the sale.

Most reputable turn key companies buy distressed properties further upstream (i.e. auctions, tax sales, etc) at much better prices than the average individual.