even if purchased off the MLS it will still be shown as a transaction in public records 

This means you have an LLC for a single business activity, which is filed correctly, has an Operating Agreement with clear and precise terms, you set up a separate bank account for that LLC and its related business activity, you do not use that bank account in any way for personal activity, and while it varies per state as being a requirement, you always want to make sure you have periodic filings and to take it even further, hold a "meeting" once a year...even if you're the sole member and there's not much changes that took place for the year. 

Living in an illegal unit, even temporarily, could jeopardize your eligibility for certain loan programs.I am a Loan Officer, and if you would like to chat further about your specific situation, I can answer any questions you may have.

My current situation: I found a buyer ready and willing to put down deposit before the rehab is even finished.

At worse you could be looking at denial of an insurance claim or even worse.

Rest is the only cure, and even that is uncertain.

- Sometimes you can even charge MORE for this type of rent.  

He stated some B's about me not being the owner blah blah blah even though hes the one who told me what to do infront of my landlord. 

From the bit of research I have done on Tallahassee for another investor, I would say LTR unless your fine with breaking even and low occupancy. 

Even then I keep my ears to the ground because a good guy can go bad due to human problems.