However, the level of education your post suggest is not realistic and I do not know how to even get people that would be in this situation to a level of understanding that is suitable.

The level of scrutiny varies by inspector.I would say as long as your contractor is legit and not cutting corners, I wouldn't worry about the city inspection. 

@Sarah Lorenz Maybe  a separate level where your master bedroom is so that you can just lock that level and make it inaccessible minimizing how much stuff you have to put away.

The basement is open with a full bath (we recently added during a sewer upgrade); the 1st level contains the kitchen, living, dining, and mud rooms; the 2nd level contains two beds and one full bath; the third level contains two full bedrooms (a large, nicely converted attic). 

I find very few truly wealthy individuals would deal at the street level.. 

At a minimum, you will need to address all potential points of entry, such as egress and ground level windows. 

I appreciate your level headed response.

So the bank can lend to whomever they want and that includes people with "different" income levels. 

Maybe I'm being optimistic but I can't find any reason our house won't be worth 280K+ with the 20k in updates (we've already knocked out walls and done some cosmetics in the main level- what we're after now is hardwood floors and bathrooms). 

My first time attending was Wednesday night and there was a great mix of investors and lenders from different backgrounds and experience levels.