What issues could I face doing this? 

Once I subtract the monthly debt payments, I could be barely cash flowing, if at all.

The seller was facing foreclosure, a fact we did not know about.

The bare minimum I'd need it to appraise for is 240,000ish to get my .75 Loan to Value and payoff the original loan (I understand I'll leave plenty of the rehab $ in this deal, still learning).

at bare minimum,  start by providing a written receipt each month stating the amount paid,  any balances owed and their category  ('rent" or "non rent" - it makes a different now)  -  both yourself and the tenant should sign the receipt. 

You can buy additional generic writing cables to handle pretty much any setup you might face.

I'll let you know if it all blows up in my face

After many years of barely having any properties listed in San Jose area, when I checked Auction tonight, there are 57 properties listed...I can't believe there are so many foreclosures listed now... 

. $100k/year +/- can be a lot to one person, but just barely scraping by for another depending on lifestyle and general cost of living since certain areas are more expensive than others.

What are the challenges you face and have people found success in this?