We are looking for a quick legal document to split ownership of the house based on money we put in and time that we are taking to fix it up.

To me, there is both a legal way to handle it and also a "professional courtesy" way to do so.. 

My question is what the legal requirements are to rent this property to a 4 bedroom voucher tenant.

Not sure if I could get in trouble by a legal standpoint considering she is not part of the lease agreement.    

Private lender is as  @Rick Pozos  pointed out some one you meet at a gathering has no business card is a local professional with usually a few hundred grand in their IRA  and for those folks most states have a small carve out to do a few private loans legally.. 

The covenant has a lot of restrictions and I’m actually trying to get out of it.

Banks decline people that are self-employed, not because their tax returns are too complicated, but because they take massive deductions (legal, I know) which reduces their adjusted gross income.Incidentally, banks turn down W2 borrowers that take massive deductions for business related expenses which also reduces their adjusted gross income.I would suggest you look on BP to find an investor friendly local lender that you can sit down and have a coffee with. 

There are plenty of legal, profitable investments to be made.

I did a quick research and it seems many people are doing it and there isn't anything wrong ethically or legally, so is there something wrong in subletting for profits that I'm missing?

Are there any leasing restrictions?