Therefore, it would not really have been a $20K profit.  

But hired professionals for things like plumbing ($6100), AC/Heating ($15,000), electrical ($2000) and landscaping ($5000) All profit each month is directly applied to the principle.

I just want to have this strait before I start pursuing foreclosures.

Your 121 exemption would only apply to the gain/profit on the last transaction....all prior deferred gain would become taxable.

We thought about a self directed IRA but we would like the profits to come to us directly.

But we sold the building for $380,000 and after our closing costs our profit was $125,000. (380,000 - 255,000~).

I assume we should go to a bank to get pre-approval before we pursue a deal? 

Based on what I know about you and your situation (almost nothing) I would recommend you get a job and ensure you are financially stable before pursuing investments.

Should I show a profit on the farm, pay the taxes and be able to qualify for more loans or go with a HML?

For me the numbers on This return would fit more favorable with white collar cities because I would be able to landlord on autopilot or less hassle free than blue collar towns in rural areas where if one loses a tenant it may be months of vacancy which will eat up profits in no time.