How do you handle if you are from out of the area?  

How would you handle this situation?

You will need professional help to handle a foreclosure.

Any advice on how I should handle the renewal?

I was curious if other investors encountered a similar situation and how it was handled.

I walked in and said "boss give me the keys, I have this handled.

I'd say you handled the situation well by explaining what you do, how it works, and why you deserve to make a profit for the service that you render.

I plan on having my real estate attorney drafting all the paperwork if he is ok with whatever option, getting an inspection and appraisal done, pest inspection and having a local title company handle the closing and other related items.

But they then stated that "seeing as they won't take the door with them when they leave, how would I like to handle it - should they just take the money out of the rent?".

The standard purchase agreement does have this but depending on who is handling the REO, they will have their own paperwork so to be on the safe side you should have your agent include an addendum that states utilities must be turned on.