I am in contact with their agent and working with my lender to determine a possible approach.  

There's a lot to learn...where to find NODs, how to search your county records, how long it takes to foreclose and how much time you have to contact your potential sellers, how to approach lenders if you need to (get a specific POA from the owner), what happens if the seller decides to declare bankruptcy, what to put on your contract, how to get and record the deed, if there is a second can you work a short, can you work the BPO, etc.  

To purchase a $320K property, you would need to have a minimum of about $150K in the plan.As @Darren Eadynoted, any future expenses associated with the property would need to come from the 401(k), so one always wants to be conservative when maintaining semi-liquid reserves within the plan to cover any unexpected costs.That said, the ability to leverage your tax-sheltered retirement dollars into a secure asset such as real estate, and receive a higher cash-on-cash return for your invested 401(k) funds is a great strategy when approached the right way.  

I just have to figure out how best to approach the expensive city of LA.I can help anybody here with questions about cabinet making or kitchen design.

You might go for the fireworks stand approach.

Whats the strategy and best way to approach a tired landlord?

If I take that same approach here, I am sure that I WILL be sitting on the sidelines.

The direct approach (asking) demonstrates your ethics and as the variations are typically "fill-in-the-blanks", I would venture you would get the consent.

A seller has approached me about buying her house.

IMHO, a more effective and longer term approach is to work with local trades and businesses to hire and train local youth to rehabilitate distressed properties and reintroduce them back to the community at affordable prices.