I will only use my personal bank account for the property until the business bank account is setup.I assume this avoid the issue you are mentioning here? 

I'm assuming you are in DuPage, which is better than Cook, but the long term isn't pretty RE tax wise anywhere in northeast IL. 

I’m assuming you have a good salary job that you and your wife participate in.  

However, I have done sub tos WITH lender consent on some commercial properties.Subject to is commonly assumed to mean WITHOUT lender consent.  

I'm assuming that this situation wouldn't pass inspection, but one could argue that all the spaces the guests have access to (i.e. bedroom, bathroom) are safe and habitable + the guests wouldn't be exposed to the kitchen.Also, do the city inspectors inspect other parts of the home the guests won't access (i.e. inspectors check the basement for water infiltration even though no guests would ever be living or even going down there). 

I'm assuming the House is worth roughly $400k.Goals1.

I assume that will add at least $7k in value and you’ve been “made whole”. 

Kitchens, Appliances and relocating plumbing for revised kitchen layouts, adding in-unit laundry etc. are what generally drives these apartment renovation budgets assuming the mechanicals don't require complete upgrade or replacement. 

Also some important information is that my rent has been locked(I have been on this rent price for the past 2 years) I am assuming that the landlord will keep us at this price since she told us that we are month to month after the first year.

Assuming your numbers are accurate, I'm estimating your monthly "rent" or your contribution to the monthly expenses will be about $2,000.