Most young people make the mistake of getting in the "rat race early" after going to college, buying a brand new car, then trying to move into a fancy house, big fancy weddings, buying expensive furniture and financing everything under sun on credit then they work for someone or some company till their kids graduate college and never save a dime till the day they die.

Are purchases like furniture expensed or depreciated?

There are plenty of turnkey units that might just need some paint and a bit of new furniture. 

I also think Reno is rad, tons of fishing and outdoor activities. 

Is required Electrical at the outdoor and indoor installation points; (is it up to required code)?

This would include items such as smoke/co detectors, railings, windows functioning, screens, GFCI, outdoor motion lights, and repair anything that is broken.  

Can we write off the money we spent prepping the property (paint, new furniture, etc) this year on next years rental income?

For example, an outdoor spot in the West Loop close to restaurants/bars can make a more than what you had projected ($150-250).

I was contemplating leaving all the furniture and setting up a "room share" medium-term rental over a traditional lease agreement.

If you are not leaving the furniture, I would recommend long term rental.