I have been vigorously saving and investing my income to prepare for this next step.

Ping me in your post and I'll take you to the next step.

I would call your local planning and zoning office and ask about this to make sure the property is properly zoned and fits the initial criteria for multifamily.

.#5 Make Decisions Based on the NumbersYour real estate investing strategy should include the financial parameters by which you determine if a property is worth purchasing.Your strategy may include details about: Purchase price range.Investment cash needed for repairs and upgrades before leasing to tenants.Financing strategy for the short and long terms.Bargain purchase (the percent under fair market value a property must be purchased).Immediate value increase (the percent in increased value you expect after making initial repairs and upgrades).Geographic area.Net income.Cash flow.Net cap rate (annual net income/total value).When you find a potential investment property that fits within the guidelines of your real estate investment strategy, you can pull the trigger based on the numbers rather than emotions and personal preferences.#6 Don’t Buy from Unmotivated SellersMotivated sellers are usually willing to work with buyers, so focusing on finding motivated sellers can result in making great deals as a real estate investor.

I believe DIG would be more than happy to resurrect that subgroup, but in order to do so a volunteer first needs to step up to be the subgroup leader. 

She listed the property for sale by auction on the courthouse steps; no one showed up.

courthouse steps is a business and a tough one.. risk/reward  and in many markets competition has stripped reality.

I'm taking next steps too.

I believe I understand the steps for this financing option, but I'm trying to figure out how to go about securing the 80% from a small bank.

If she follows the plan, defers the tax and enjoys the income for the rest of her life when she dies her heirs will get a step up in basis so at her death the tax goes away.