I'm concerned that because of the current moratorium on foreclosures that many potentially-motivated sellers may not be as motivated as they would be under normal circumstances.

I am not suggesting that the seller didn't do anything wrong but I am saying that you as the buyer are responsible for confirming all of the details of the transaction are correct before you close.Now if the seller straight lied to you that is a different story but if you neglected to confirm this then I would say you excepted this situation by closing. 

It is my understanding that you cannot have more than one FHA at a time unless there is some type of outside circumstances (I would be assuming none of these) or you were to refinance to conventional, but I do not see myself having enough equity after the first year to do this.

For what it's worth, and so you're aware, doing it the way you proposed may not even be legal under some circumstances and in some states. 

@Victoria Torres Do not use Quicken Loans under any circumstance.

Tax mitigation strategy should take into consideration your facts, circumstances, and goals. 

However, this would have to be a very special circumstance and is not easily done.

I was driving for dollars and I saw a home that looked neglected.

Well all involved parties neglected to tell the title company that the property was rented out and that such an agreement was made.

@Robert IovineOh, I see...I did read about one way, but its only for very specific circumstances and this doesn't look to be it.