@Preston Timothy, you can do this with FHA.

But investing is a decision business, do I make an offer?

That's definitely a good exercise and one we've been doing more and more lately (and thereby selling and selling more these days). 

Do you check Landlord references?

Although, we have a similar structure for our PMA’s, we do not treat security deposit as income but more as reimbursement for damages.

So if you can handle the financing for all this until the builder starts buying lots and building , You should do well 

I could do it but why?

Lets do some math, You have $40K to purchase which likely means $35K when including closing costs.  

Even if the owner seems like a really nice person, they will micromanage the builder and not like the specs of the house the builder needs to do, and/or the timing in which the builder gets it done, etc. 

I'm hoping to do an FHA 203(k) within the first half of this year and eventually rent it out after living in it for about 2 years.