There will be a gap up top, but that can be covered with a thick stop molding.  

Thick detailed report. 

If you have a forced air system, rooms (be they closets or a small room - but generally speaking an area with a door) and there is no supply in it, they can get quite cool - even if the bedroom is comfortable.Before poking holes in walls (which is all you really need to do, just drill a 3/4" hole and inspect... visually or by sticking your finger in it... very easy to fill/patch), I'd check to be sure that the area above and below were insulated if they are attic/crawlspace/unheated basement.If it's not insulated, you could remove the drywall and install insulation or you could use loose fill using a series of larger holes - just be aware that horizontal bridging will require two sets of holes for each stud cavity.As for installing cedar... depends on type and thickness, but I prefer having a substrate regardless.

I HOPE TO GET TONS OF FEED BACK ANYTHING YOU WOULD LIKE TO SAY IS GOOD....ANY KNOWLEDGE IS GOOD KNOWLEDGE..SO POOR IT ON THICK...

I don't know how thick that sloped concrete is, and if water is seeping in under the concrete and in through the window.

Positive cash flow is a must for investors through thick and thin.

You can just cut out that plywood or OSB (make sure the saw blade depth-of-cut is only slightly more than the thickness of the floor sheathing, usually 3/4 of an inch or a little more) in that area and replace it.

I have pretty thick skin and am eager to learn.

I think we have done new concrete for around 4-5 sq ft but have done repair work from anywhere to 7-10 per sq ft ( depending on job size , rebar thickness, spacing etc...) 

After my experience growing retail stores in the most competitive markets, I feel I have proper tools and thick enough skin to take on the venture I have always dreamed of.