This is a legitimate business purpose for having the entity and is the very foundation behind the thesis of entities protecting the personal assets of the members behind an LLC. 

The legitimate use of quit claims are for situations where ownership is muddled.

More than just gaining the knowledge, its definitely helped legitimize my work and helped me meet new people in the business as well.

It's finding those LEGITIMATE experienced investors that's the hard part.

I also am a real legitimate contractor with hundreds of clients.

You may be able to contact RITA http://www.ritaus.org/ and see if there is some mechanism that can be applied or receive some legitimate guidance from that organization.

I'd double check your budget - 10 K would be cheap for an under the table handyman conversion, and its not even close to what it would cost permitted with a legitimate licensed contractor. 

Do you know any legitimate contractors? 

We do it legitimately, have her sign a 12 month lease, pay fair market rent, actually send me checks each month etc.Does this allow me to start making additional deductions as if my home was an investment property?

Of course, one must legitimately be self-employed with no full time employees to implement the 401(k) plan.There are workarounds for California investors in an IRA format that provide checkbook control and eliminate the use of a LLC and exposure to the California Franchise Tax Board.