Bryan, it sounds like you have a solid plan for rehabbing the duplex but are facing challenges with traditional financing methods like HELOC and home equity loans due to DTI issues.

Yes, in many jurisdictions, the previous owner will have certain rights that might allow them to "redeem" or at least "challenge" that auction. 

SMS does NOT solve the motivation of the seller challenge.   

Not to mention it could be a challenge to get traditional financing because even though you're debt free without a high enough paying job your debt to income may still not meet their criteria for a loan that large. 

With the college close by I figured demand would be fairly good.You said it's more of a challenging market and it's clicky, is that in regards to finding and keeping tenants happy when it comes to multiple personalities?

Also it would mean I get a different tenant pool for example travel medical professionals, displaced people due to insurance claims, digital nomads, etc and I really want to expand my knowledge outside of long term tenants and challenge myself to have a diverse portfolio of real estate! 

I have waaaay more debt than you and have to deal with inevitable corresponding challenges, but sleep well:)

Challenges?

Can this challenged or negotiated in some way? 

Investing out-of-state can be smart, but it has its challenges.