FHA to investment?

[Ryan Dossey]

So I have a beginner question. I was speaking with a guy I work with who has just recently started in REI. He bought a SFR 3/2 that was a foreclosure for right at 50k a few months back. He decided to rent it out and have the tenant pay cash. (I know this part of his "model" is unethical being an FHA). He has now decided he wants to convert it to an investment mortgage and said he has enough equity to do so with no out of pocket expense. Could I buy a foreclosure to live in for a few months to a year till it builds equity enough to cover the 20% down payment they require? I realize this would only be beneficial to someone who doesn't currently own a home and can't drop 20% down. Is that really do-able?