The legal contracts and documentation will be key to determining this.

What would be the best way and a legal way to minimize the tax paid?

A lease is a legal contract.

You don't want a situation to occur where daughter gives notice and moves, but now dad has possession (with whom you have no legal contract) and is not paying rent. 

You mentioned probate, did she die without will/trust, that matters as to who inherits and many legal and tax consequences.

I’ve heard that I need to register my LLC in that particular that I would be looking to buy in, in order to be able to legally get the property under my LLC. 

What forms would I need to create the note and how can I legally file this?

Generally, the laws get more restrictive as you get more local.

In the area where I have my SFR rental, laws restricts 3 or more unrelated people from renting a property.

If you want lower your standards that’s your choice but be prepared for issues either with damage or non payment of rent and going through the process of eviction all while you’re collecting nothing and having to pay the expenses along with legal fees.