How to approach and acquire home owner in foreclosure?

[Vincent Plant]

So, I was made aware that a homeowner who lives next to one of my properties in default and possibly going to go into foreclosure shortly. The house is a mess and I know I could rehab it cheap and increase the value by a ton (because I just did it with the house next door). 

Anyway I have heard of investors taking advantage of situations like this. Approaching the owner, paying off their debt, giving them like $10K in a cash payout and having them sign the deed over to you. I just don't know how exactly this gets set up, or if that even makes any sense. 

Is there another piece to this move? Anyone have experience doing this? Suggestions on executing something like this?