I have about 10K saved up, another 12k in the stock market, and good credit- I just have no idea if this plan is feasible.  

You should still file the loss with your insurance IMO.

None of these numbers even factor in rent increases, which may be warranted or feasible now and/or in the near future (likely multiple times over 9 years).

That will probably be more loss than what the pm would cost and then you wouldnt have to do anything  so property management will be needed.  

I predict half, or more, of these people are going to be shook out of the market, but in the meantime I have to sit in a holding pattern and wait for them to either be foreclosed on or sell at a loss.

The issue we are faced with is trying to sell our house without taking a loss.

I am looking into the process, costs and a feasibility study. 

I am presently working with a seller that has nothing to offer in support of his numbers and as such he is looking at taking a big loss.

Let me explain.For ex. the decline in oil prices and resultant job losses in the Houston market caused many Class A tenants to downgrade to Class B, maybe even C.

This means the bank isn't going to let the property go for less than the balance, because they would take an unnecessary loss.