I have 2 weeks for completing inspection, and would appreciate guidance on areas to watch out for.I already noticed that the floor is creaking in a couple of rooms, there is no insulation, and there might be lead paint.

Still, the assignment would get recorded so you'll have the same issue with privacy, but perhaps a bit of insulation over the origination.Good luck, Julian.

I often wonder if they were ever affected by the 'bomb' chemical residues as they apparently never bothered to steam clean the carpets or even have the vents cleaned.I recently saw the home again after the current owner gutted the lathe & plaster to upgrade the insulation, electrical etc.

Insulation matters way more than heat source.

To achieve a fully conditioned crawlspace is just a tad more complex but is easily doable by anyone who studies- it's basically deleting any ventilation ingress/egress from the crawlspace, adding insulation to the walls, deleting insulation from the joists, installing a vapor barrier on the ground & walls, and installing a tiny air exchanger that will force air periodically from the conditioned main house into the crawl.   

Your personal assets and cash are on the line but does not come close to what you are being sued for.Regardless of if you did increase your coverage, if the insurance coverage is not adequate to cover whatever liability you face, and you dont have an LLC to insulate personal assets from business -- your personal assets is at risk.If you do have an LLC, theoretically, only the assets of the LLC would be utilized to address any tort that arises in the course of doing business as the LLC and would/should shield your personal assets if the insurance is not adequate. 

Also how well insulated is the home? 

The work included roof replacement, fully insulating the house, fixing the drywall, digging drainage ditches to relieve the hydraulic pressure on the foundation, and jacking up the house to rebuild the foundation.

GOAL: Insulate my mid-long (5-10 years) term strategy (have income producing real estate to pay for fixed living costs + 5K month cash flow for investing) even during a 2008 housing meltdown.I know debt can magnify the creation of wealth, but it can also magnify potential destruction.  

You could add her to title at some point later and perhaps insulate her from your deal.