This is what we are currently doing, we call it a slow flip, we live here and are finishing up the basement, but when we bought it, it had been completely stripped, and we re did everything, it's a high end home in this area and we hope to sell it this summer, and then put our equity into some more real estate.
When we bought it we had to get a construction loan to make it livable, we didn't end up using it all, we cash flowed as much as possible, but we put quite a bit into it, but fearing the unthinkable, it will have been a great investment, fingers crossed, prayers offered. It's hard when it's everything you have, well not really but a huge chunk of it anyways :)
So let us know how it goes!