I thought I was being smart by making my gain long term, but now I've been told I'm wrong and it's all short term because I technically "sold" it in June.

As long as your mail is going to that residence and you are technically living there, I don't see the problem.

So technically you should hope person walk away from the option to buy. 

@Gordon Starr, thanks for the follow up.Have you thought about selling your home and renting for awhileYeah, I ran the numbers on this and given the rent prices in our area, it just doesn't make sense.With cash to invest its easy to get cash flowThat's why we're taking the HELOC approach, though technically it's not cash since it's leveraged.

Just didn’t know if there was any technical timeline.

I feel like at this point the actual tenant is the one in violation and not their "guest" since the "guest" isn't technically on a lease anymore. 

I'm guessing that's because the in-law unit doesn't technically count as a separate unit. 

@Denise Finney good question...its a bit technical...personally, I've submitted offers on somewhere around 100+ properties sight unseen...but have always seen them during due diligence. 

Technically my first investment, I had a live in tenant who paid to cover all expenses/mortgage, plus a little bit of cash-flow (single family house hack).

That technically means that your tax return is actually the tax payer for the property.