Also you would be violating the NJ Landlord Identity Law by not registering. 

(but not zoned for) Property is currently offered at 750k , a property right beside almost identical was sold for 725k on conventional mortgage and it was initially offered for 769k. (5.72% decreased on a conventional mortgage that took almost 4 weeks from pending to sold).So based on this data I have estimated(not exact science) that I could give a lowball cash offer for 550k(maybe w/ some luck) but with some room to go up to 635K (which is a 14% decrease on the listing price and hoping to close fast with a cash offer) 70% of $900k is only $630k, which would be the max you could refi. 

Not living there and taking the financing for a primary residence is mortgage fraud."

@Levi Davis We went through a nearly identical situation last year.

This plan does not avoid capital gains or keep his identity secret.

I did not refinance with the intent to rent my home and do not want to be accused of mortgage fraud.

A red flag is something that needs to be investigated to determine if there is mortgage fraud or not, it happens all the time. 

We don't flip here in California as out prop 13 penalizes people trading often we pay $15,000 less in property taxes as an identical building sold next door 5 months ago. all improvements are an expense at this point but appreciation has over $1,000 per day on just one property.

Sounds like there's no way to do it by financing as a primary residence without committing fraud, since it won't be your primary residence.

HAVING SAID ALL OF THAT; Leaving one unit 'open' as your primary is mortgage fraud and never a good idea.