I'm curious to see if anyone has tried this approach or if there are any issues with.

There is nothing wrong with taking the independent approach to self-managing, and while there are plenty of great PMs out there, you'll still be paying a large PM fee.Nevertheless, there are definitely some tools that can help with managing things moving forward.

A big plus with your approach is you lower your risk of losing the property.

I guess my question is whats my best approach?

Do I just randomly approach each group and ask if they have a list of the properties they are auctioning?  

Plan is to force appreciation through renovation, raise rents to market rates, and house hack one of the units.This will be my first rental property and wanted to see if anyone could offer any insight as to how to approach the rehab and exiting the current tenants.

I think your approach and line of thinking on this subject is brilliant.

The existing owner is getting impatient and has indicated to the tenant that either she needs to buy it now, or he is going to put it on the market.My realtor approached me to see if I would be willing to buy the property for $120,000 and immediately turn around and offer to do a rent-to-own deal with the existing tenant.  

I am a career soldier approaching Army retirement in two years.  

While expanding your network, I would also be thinking about your approach to the people you will be meeting.